Understanding Generation Z

Digital video initiatives tend to be focused on millennials, as they are the generation that is shaking up the traditional business. But as always, there's another generation coming -- Generation Z. Defined by Nielsen as those born between 1997 and 2015, the older segments of Gen Z are now of college-going age, and are just starting to move out of their parents homes. In coming years, they will have a greater impact on media consumption and device penetration, as they make more independent choices.

Understanding Gen Z is increasingly important, because this is the largest generational cohort in the US today, comprising 26% of US TV homes. Coupled with millennials, these younger audiences represent approximately half (48%) of US TV homes.

A key finding in Nielsen's Total Audience Report is that both Gen Z and millennials are more multicultural in their overall race/ethnic composition than previous generations. In particular, Gen Z has the largest percentage of Hispanics and non-Hispanic blacks, at 22% and 15%, respectively.

Given the younger age, they are also more likely to live with and be supported by parents than millennials. This means they can take advantage of their parents' higher incomes, according to Nielsen. But otherwise, just like millennials, they are early adopters of digital technologies.

Going through comparisons of device/service adoption by each age segment the differences between Gen Z and millennials may have more to do with living with family and living alone, rather than anything else.

The main differences are in the adoption of devices such as DVD players, DVRs and gaming consoles. Penetration of such devices is higher among Gen Z homes than millennials. But that is probably because of older members of the family. DVR and DVR penetration is higher among Gen X and baby boomer segments and lowest among millennials -- so the devices in Gen Z homes may be there, but aren't necessarily brought in by members of the cohort.

Gaming console penetration is highest among Gen Z, and drops steadily with age. That is a little surprising, as I would have expected console penetration to be equally high among millennials. It's not a huge difference (73% penetration for Gen Z versus 66% for millennials) but it's significant. Conversely, millennials are the most likely to have a multimedia device (i.e., Apple TV, Roku, Google Chromecast or smartphone, computer/laptops, etc. connected to the TV).

The other notable differences are in the penetration of tablets, which is highest among Gen Z homes. That may be aimed primarily at the younger members of the cohort: I have not seen hard data to back me on this, but in my experience households with young children are more likely to have tablets to entertain them in and outside the home. As children grow into their teens, the smartphone gradually replaces the tablet as their preferred viewing device, often because it's their personal device while the tablet is typically shared with other family members.

Other devices and services, such as smart TVs, subscription video-on-demand (SvoD) services, broadband, smartphones etc. are all approximately the same between the two age cohorts.

Reviewing the data, it seems to me that millennials are further along shifting their allegiance away from the traditional TV set-up. They are more likely to use multimedia devices connected to their TVs and subscribe to SVoD services than any other age group, and less likely to have a DVR or DVD player than any other group. In general, it seems they are more likely to be shifting to an all-online kind of video experience, even with regard to gaming consoles.

Gen Z appears to match their preferences for the most part, but still have devices like DVRs, consoles and DVDs. But given that Gen Z data includes very young children and that they tend to live within families, it's difficult to know whether these are meaningful differences or more to do with decisions their parents are making.

One data point that does provide some insight is time spent with more "traditional" TV consumption. In fact, Gen Z spends less time viewing live TV and time-shifted TV than any other cohort. Millennials spend almost 45 minutes more per day than Gen Z-ers, and the difference between Gen Z and still older cohorts is in hours. This suggests that even though penetration of more traditional TV platforms is high, they are of less relevance to this age group.

A deep analysis of older Gen Z members would probably offer more insights, especially those who have moved out of their home and are making their own decisions about their entertainment platforms. But from my review of this data, they seem to be following video consumption patterns set by millennials. If anything, they are moving even faster in their replacement of traditional TV.

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation