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Perspectives

Gen Z Study Reveals Three Trends That Will Redefine Tomorrow’s Digital Lifestyle

2019-05-23


Younger consumers crave tech simplicity, will increase device and channel use, and want more content control. But they are also concerned about the use and misuse of personal information by brands. We share three major trends that will redefine tomorrow’s digital lifestyle.

The ubiquitous adoption of mobile devices, and the wide range of services offered on them, has profoundly raised and changed consumer expectations of communications, internet, entertainment and content providers.

Meeting these younger customers’ demands will require understanding future desires for new services such as virtual reality (VR) and controllable content as well as the tradeoffs between privacy and innovative services based on personal data.

To help chart a path forward, we commissioned the Center for Generational Kinetics to study the digital content consumption habits, perceptions and trends in the U.S. for three groups over the next three to five years:

  • Gen Z (ages 15-22).

  • Millennials (or Gen Y) (ages 23-41).

  • Gen X (ages 42-53).

The below findings challenge service and content providers to consider providing new services in new ways to support new business models. For communications providers, think, for example, of retraining your service techs as virtual IT departments to offer a higher level of service for residential customers as they embrace new technologies. Or for entertainment and content providers, consider creating interactive movies and TV shows that let customers select their own endings or narrative flow.

Changes to your organization, technology and content delivery strategy to meet such new needs won’t be easy. But they will be essential to create lasting differentiation and new revenue streams in the evolving world created by ubiquitous broadband and faster wireless connectivity.

Here are three of the most compelling findings from our research, with suggestions for how to respond to each.

Gen Z just wants tech to “work”

Appealing to the needs of Gen Z is essential for future growth. These young consumers spend considerable time ensuring that their smart devices stay connected. And their willingness to pay for a service to maintain their connected home devices reflects a fundamental desire for technology that works reliably with little effort on their part. When devices don’t work, Gen Z is most reliant on others to fix things and is open to paying for such help.

Only 52% of Gen Z respondents said they usually fix their smart devices themselves, compared with 63% of Gen Xers and 72% of millennials. Fifteen percent of Gen Z respondents already hire someone to fix their devices, and over a third said they would pay between $50 and $100 per month for a service that would set up, monitor and repair their smart devices.

Done right, providing such services can improve customer experience and loyalty. Acting on the insights gained will allow providers to add even more value in the form of new, relevant consumer products and services.

We suggest:

  • For insights, use both “thin” data (such as large-scale market research) and “thick” data (in-depth, in-person customer observation) to reveal not only obvious customer expectations but also hidden needs and desires. This approach likely goes beyond exploring traditional performance and functionality metrics (e.g., clicking on “purchase” displays a shopping cart within .3 seconds) to designing products and services that are easy as well as delightful to use and meet hidden needs. 

  • Conduct more in-depth research about customer needs, and prototype ways to provide “white glove” customer service. Imagine, for example, offering a combination of traditional onsite tech support and a personal IT department that understands, and proactively meets, customers’ individual needs.

  • Give field technicians the information (and the incentives) they need to not only fix problems but to also up-sell and cross-sell other products and services. For example, a technician troubleshooting a wiring problem who hears a baby crying in the next room might suggest a new, wireless baby monitor that can also track sleep patterns.

Consumers want to control their content

Rather than passively consuming content, younger customers want deeper interaction with and more control over content, especially in collaboration with (or competition against) other users. More than half of Gen Z and millennial respondents, and 45% of Gen X respondents, said they’d like to control the content of a movie or TV show in the future. More than half of Gen Z and millennials, and just under half of Gen X respondents, said they were likely or very likely to use virtual VR to watch shows and movies or play games in the next three to five years.

We suggest:

  • Use the shift to immersive content as an opportunity to sell not only bandwidth but also higher-margin offerings, such as interactive movies, TV shows and video games.

  • Experiment with content, consumption and engagement models to monetize these experiences. This could involve, for example, co-creating interactive shows and games with studios and video game developers and sharing revenue from the purchase of premium features or virtual objects in games.

  • Explore use cases for driving new customer retention and revenue streams using augmented or virtual reality. Along with the current focus on entertainment and online gaming, consider alliances with industry or professional groups to become the preferred provider of, say, VR-enabled services for equipment repair or medical care.

  • Aggressively explore new options for enabling users to create and control their own content, and to monetize the creation and sharing of that content with others. This might include prototyping new tools and platforms to make such content control easier.

Consumers trust each other, not your impersonal ads

Online advertising is one of the most reliable ways to monetize user attention. But our research shows young customers are conflicted about how much personal information companies should gather and use to target ads to them.

More than two thirds of all respondents are concerned that companies know too much about them from their online activities, and an equal number think that their digital assistants listen to them without their permission — which they deem as unethical. More than 4 in 10 feel that customized advertising based on information gathered from a personal assistant would be a violation of their privacy.

Most also view random online ads as an interruption and feel that ads relevant to their online behaviors are only modestly better than random ads. And nearly half said inappropriate, offensive content will make them associate a nearby ad with that off-putting content.

Advertisers are already reacting to such concerns. AT&T announced in January that it will resume advertising on YouTube, two years after a number of advertisers found that some of their ads appeared during or before videos that promoted hate speech, terrorism and other disturbing content. The streaming video service has since ramped up its efforts to ensure advertisements would not appear alongside offensive videos.

However, 40% think online ads related to their browsing history or entertainment preferences are more effective than random ads. We were especially struck by the finding that 37% think that within the next three to five years user-generated content will have more credibility than content from a company or an independent source.

We suggest:

  • Aggressively explore new techniques for ad placement other than contextual (only based on the user’s identity and the type of content they are viewing).

  • Learn how to use deeper levels of personalization, such as causality, to help identify and understand variables and super variables that affect ad impact and purchase behavior.

  • Experiment with platforms that make it easier and more useful for customers to create their own content and access content generated by others.

Next Steps

The common theme among these findings was how quickly needs and expectations are changing as younger consumers enter the market, and how much more we need to learn in order to meet them. For example:

  • Over time, will the “contaminating” effect of offensive ads on nearby content grow stronger or weaker? Is there a corresponding positive effect on customer likes from ads appearing near content?

  • Are customers willing to pay someone else to manage their device connectivity? If so, how much will they pay and for which specific services?

  • What types of user-generated content do customers find most valuable? What needs for such content are not being met by current social media platforms, such as Facebook and Instagram?

  • What are the best opportunities for service and content providers to increase customer retention, revenue and profits by meeting these needs?

These challenging questions also pose exciting opportunities. Start exploring new ways to meet the needs of the new digital content market by downloading a summary of the report results or scheduling a conversation with us to discuss all our findings and recommendations.

To learn more, see “How Gen Z Is Shaping the Future of Media and Entertainment,” “Gen Z and the Future of Higher Education,” and “Gen Z: The Future of the Internet and Social Platforms.”

To learn more, download the ebook Gen Z: The World by the Thumbs, or contact us.

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Gen Z Study Reveals Three Trends That Will Redefine Tomorrow’s Digital Lifestyle