Generational Differences in Streaming

As consumers move into using streaming platforms a majority of the time for their in-home entertainment, understanding who is using which platform is critical not just for streaming services, but for advertisers and marketing departments as more and more platforms are offering ad-based subscriptions. In our previous post, Trendency compared subscription growth among the different streaming services and highlighted those who have made steady gains over the past three years as well as those who have slowed down.

Overall, Netflix remains at the top when it comes to the number of subscribers while Amazon Prime Video and Hulu have clearly etched themselves into second and third place. Just because they sit at the top, however, does not equate to these platforms having the highest net gain in subscribers, as Netflix (along with Disney Plus and Max) has dropped in the percentage of Americans reporting that they have a subscription. That being said, Netflix is still the go-to service holding the highest concentration among consumers regardless of how many streaming subscriptions they have or the generation of which they are a member. 

Age and gender are two big indicators when it comes to subscription growth for streaming services. Starting with age, if we compare subscription differences by generation, we see that Gen Z is clearly leading the pack as they have the highest concentration of subscribers for main services such as Netflix, Prime Video, Hulu, Disney Plus, and Max. Of the subscriptions we tested, Peacock and Paramount+ are the only two services with a higher concentration of Millennial or Gen X subscribers.

Overall, Netflix’s share of subscribers decreased in the past year (dropping 4 percentage points from 59% to 54% of Americans reporting having a subscription), while Prime and Hulu both have shown steady growth over the past three years, the growth and contraction are certainly not universal based on the age of the subscriber. Additionally, as ad-based subscriptions have become more popular (at least from the provider’s perspective) the choice between ad-based and non-ad subscriptions is also not universal in nature. This creates a challenge for both companies looking to advertise and the platforms themselves who are trying to prove value to paid advertisers without losing subscribers. Each platform brings a unique challenge and pattern in subscription rates, and types of subscriptions adding to the overall challenge of delivering targeted advertising. 

Netflix

Netflix has clearly etched themselves as the household favorite when it comes to streaming services, however, this percentage of market share dominance has decreased over the past year. Interestingly enough, known as the streaming service driven by the wants and preferences of younger generations, Gen Z and Millennials are the ones responsible for the majority of the market share decrease. Gen Z subscription rates have decreased by 14 percentage points and Millennials by 6 percentage points resulting in two-thirds (67%) of both generations reporting that they have a Netflix subscription. On the opposite end of the spectrum, we see Gen X subscribers have steadily increased over the past three years. While market share is decreasing among younger generations, Gen Z is much less likely than their two older cohorts to opt for the ad-based subscription. Currently, 77% of Gen Z subscribers to Netflix have a no-ad subscription. While a majority of Millennial subscribers and Gen X also are opting for the ad-free option, there is a much higher concentration of these consumers who have an ad-based subscription to Netflix.

Amazon Prime

Amazon Prime has made steady gains in subscribers over the last three years partly due to its unique bundling of video access with their Amazon Prime subscription focused on consumer purchases. Amazon also has some unique deals in place, including arguably their most important with the NFL and the exclusive rights to the Thursday night game. Additionally, Amazon recently changed their subscription model, with the option included with Prime membership now including ads, unless an additional fee is paid. These approaches have helped increase market share with two of the three youngest generations and have also pushed most people into ad-based subscriptions. Gen Z has been the leading driver in Amazon’s subscription uptick with a 14 percentage point increase over the past two years, resulting in 56% of the youngest adult generation having a Prime Video subscription. Gen X has the lowest concentration of subscribers (barely) however viewership has increased over the past year. Millennial consumers have been on a bit of a rollercoaster ride over the past three years, with a nearly 10-point increase followed by a similar decrease last year. Compared to Netflix, Amazon Prime Video has more success in implementing ad-based subscriptions as we see a majority of subscribers based on generation having opted to not pay the additional fee for the ad-free subscription. Amazon’s new pricing structure is relatively new and it will be interesting to see how their approach affects these numbers over the next year or two. 

Hulu

Hulu has caught up to Amazon Prime Video over the last three years in total number of subscribers and has continued to make a name for themselves in the world of growing streaming services. This increase in market share can be attributed to Gen Z and Millennial viewership steadily increasing while Gen X has slightly decreased over the past year. Hulu has picked up the slack when it comes to offering new TV shows and movies such as The Bear which dominated this past year's Emmys winning an impressive number of awards compared to other binge-worthy shows. What is important to note is that well over 50% of each generation has a Hulu ad-based subscription. Hulu’s ad campaign is similar to Amazon where they focus on quick 15 to 30-second videos for their viewers, however, they also are testing out new approaches including allowing the viewer to pick an ad from two or three options. With the highest concentration across all generations of ad-enabled subscriptions, it feels safe to assume that Hulu is planning on continuing to push the envelope on ad delivery.

Disney Plus

Disney Plus is the top service in the second tier of service, at least based on the concentration of subscribers. Three years ago, there was not much difference between generations (a six-point spread) however currently there is a 17-point difference between the top and bottom levels. Gen X and Millennial viewership has decreased over the past two years, although the road traveled is different for each. Millennials have been slowly decreasing while Gen X subscribers dipped from 2022 to 2023 but then rebounded slightly over the past year. Gen Z on the other hand has been steadily increasing over the past three years. Our best guess on these patterns is that as more and more Gen Z adults become parents, the concentration of subscribers will continue to increase while the opposite will likely be true for Gen X and Millennials. Given the importance of Gen Z consumers, the increase in subscriptions is certainly worth noting. However, the vast majority of this generation of consumers is opting for the higher-cost, ad-free subscription.

Max (formerly HBO Max)

What once was the pinnacle of TV viewership with hit shows like Game of Thrones, The Sopranos, and The Wire, HBO Max, now known simply as Max, has significantly dropped in both popularity and streaming viewership compared to the streaming giants in the last three years. Gen Z viewership has increased while both Millennials and Gen X have lower subscription rates than they did in 2022. When it comes to subscription type, we see that all three generations are close to a fifty-fifty split suggesting neither success nor failure when it comes to running ads for Max. Looking at the data, Max seems to be much more driven by the success of their content than other services, although it is tough to pinpoint this fact.

Peacock

Compared to the previous services, Peacock has struggled to make headway in the world of streaming despite their number of subscribers increasing each year. According to our data, this growth can be attributed to an uptick in Gen Z viewers as subscriptions among this generation have increased by 10 points since 2022. Millennials have been at the forefront of overall viewership by generation while Gen X has remained the most consistent over the past three years. Similar to Amazon Prime Video, Peacock has put a focus on live sports including broadcasting popular sports events such as Premier League soccer games, NFL football games, and this past summer’s Olympics in Paris. This content change that came into effect last year has definitely helped increase viewership across all generations.

Paramount Plus

Similar to Peacock, Paramount Plus has struggled to make a name for themselves in the streaming industry partly due to the fact they are still the new kids on the block. However, this does not mean they haven’t made gains since their inception as we see most of the increase in subscription levels occurs among Gen X viewers. We also notice a heavy increase among Gen Z viewers from 2022 to 2023 but the viewership took a significantly large dip over the past year while Millennial viewership has remained the same over this same period of time. Considering their overall lack of viewership compared to some of the bigger streaming services, Paramount Plus has successfully implemented its marketing strategy as we see that all generations prefer ad-based subscriptions. Part of this could be because Paramount Plus mainly features ads of previews which include trailers of upcoming TV shows and movies that are going to be released on the platform. There has been much discussion in American media revolving around Paramount potentially acquiring the movie studio Warner Brothers which would come as a massive help for the streaming service as they would have access to a vast library of content that many enjoy watching.

Apple TV+

Lastly, Apple TV+ has struggled to make a name for itself in the streaming industry as its total number of subscribers has remained the same since 2022 which is the lowest compared to all other streaming services. Even though they have had shows such as Ted Lasso, Slow Horses, and The Morning Show that are constantly on the list of “best shows”, this does not translate into subscription growth. Gen Z is the highest concentration of subscribers for Apple TV+; however, nearly 3 in 10 are unable to report whether they have an ad-based subscription or not, signaling just how disengaged they are with the streaming service. Among the other two generations, both Millennial and Gen X viewership has steadily decreased over the past three years showing that Apple TV+ has failed to cater to older members of society. Out of this very small fraction of individuals among the Millennial and Gen X generations, we see that both are mostly fifty-fifty split when it comes to having ad-based subscriptions versus ad-free.

As the world moved online, where and how people consume information drastically changed and became more diffuse. The same is now true for entertainment. Long gone are the days of predictability of “Must See TV” on Thursday nights. We are now in a world where multiple streaming subscriptions are the norm and with this shift, the difficulty of reaching consumers has skyrocketed. The introduction of ad-based subscriptions has changed this dynamic somewhat, but as we have been discussing, the results vary widely by generation. For Gen Z consumers, two services have the desired combination of higher subscription rates coupled with those subscriptions being mostly ad-based. At the same time, the service with the highest concentration of subscribers also has the lowest concentration of ad-based subscribers.

As we move to older generations, more of the services are moving to higher concentrations of ad-based subscriptions, however, there also tends to be lower subscription rates overall. While the overall movement towards higher concentrations of subscribers with ad-based subscriptions is arguably better news for marketers, the drop in concentration of subscribers likely cancels out many of the gains.

Gen X consumers are closer to Millennial consumers than Gen Z with most of the services having higher concentrations of ad-based subscribers while the overall level of subscriptions is lower.

Across all three generations, Prime Video and Hulu offer the best bet for reach while other platforms are more age-dependent. While the additional revenue is clearly a driver for many of these platforms, they do run the risk of losing subscribers if the streaming experience becomes too similar to cable. Based on the delta between what ad-free and ad-based subscriptions cost, it does not appear that the platforms are making a lot of money from advertising, which is a little surprising given how targeted the ads arguably could be. At the same time, very few consumers are clamoring for a reproduction of broadcast TV putting the platforms in a difficult position of not wanting to turn down revenue while also not wanting to lose subscribers. This will be a tricky balancing act and very important for the services with less cushion when it comes to the number of subscribers to get right.