No, tablets aren’t getting physically smaller! But the NUMBER of tablets being sold continues to fall. Analyst firm IDC reported yesterday that tablet sales for the first quarter of 2017 were down 8.5% compared to the same period in 2016, falling from 39.6 million units to 36.2 million. This marks the tenth consecutive quarter of negative annual growth.
This is very much in line with our 2017 prediction on tablets, which calls for a 10% unit decline for the year as a whole, to fewer than 165 million units, compared to over 180 million in 2016. See the chart above for the updated quarterly tracker, showing all quarters since the tablet form factor took off in 2010 with the launch of the Apple iPad.
Lots of reasons for the decline in sales. People keep tablets longer, and don’t upgrade as frequently as phones. Since 2010, our smartphones have gotten bigger (yay #phablets!) and our computers have become thinner and lighter. But a critical problem for the tablet market is the demographic donut hole in the middle.
Kids under 10 quite like tablets And those over 65 use them a lot. But people in the middle, especially millennials 18-35, are not the same. Asking them about tablets is like asking them about DVR players. They know what one looks like, know how to use it, and may even own one. But they almost never use it.
Not to spoil the surprise, but a study I have written that will be launched on June 21 in Paris looks at French Gen Y/millennials. Across over 55 types of behaviors, ranging from shopping and finance to travel and entertainment, tablets represented only 2% of all activity! Hard to get the kids to buy new tablets when they aren’t using the old ones much.
Another survey from Global Web Index shows that tablet ownership is actually beginning to fall. See chart below.
More updates on tablets as IDC publishes their numbers, of course.
Advice to a 25 year old: so we had coffee, talked about your job hunt, and I made some introductions?
I have “coffee meetings” with people looking to make a career change or start a new career dozens of times per year. I am always happy to do it, of course…but my time is valuable. So they owe me and so do you! 🙂
What do I want in return? Saying thanks is great, and you already did that, with a prompt, fulsome, and heartfelt email the next day. Well done, you were raised right!
But what else might you owe me? I don’t want money, no flowers needed, and I have no interest in your first born child. What I would like is brief but meaningful information sharing, preferably via email or Messenger. Two kinds please:
1) If I introduced you to persons A, B and C…let me know how it is going after a week or two? “Hi Duncan: I have a meeting with A on Friday, B next week, but C hasn’t been replying to my emails.” Why do I want to know this? Because I take our conversation seriously, and my commitment to help you equally seriously. If I made the offer to have you meet the right people, there is a little flag in my mental “to do” list until those meetings take place. If C isn’t getting back to you, let me know, and I will gently assist; you will get your coffee chat, and I will sleep better at night knowing my job is over!
2) Please send me brief follow-ups after each meeting? Why? Because I want to know how useful my process of making introductions is. If I am sending you (and others) to meet people who are rude and unhelpful, then I need to cross them off my list. Equally, if the meeting outcome is “They said it was a waste of time, and they not only hate me, they won’t even talk to you any more” then that is an important thing for me to know about too! If they hire you to be CEO of their company, then I will be happy for you, and not worry about coming up with any more names for you to meet. Finally, if they liked you well enough and referred you to other people or firms, I might be able to help you there too.
To be clear, you’re only 25! I am not criticizing you for not knowing all of the above. I didn’t know it when I was your age, and most of your peers don’t communicate well in this way either. I also know that it isn’t laziness on your part: you worry that you’ve taken up a lot of my time already, and don’t want to “bug me” with a bunch of follow up emails. This note is let you know that you are NOT bothering me, and that I would rather get more information from you than less. If you start spamming me…don’t worry, I will be sure to let you know. Immediately. 🙂
And maybe not everyone my age who makes introductions has the same preferences I do. But I think most do want to hear back about whether the meeting has been set up, and how it went. I hope you don’t mind me sharing my preferences.
The Nielsen Total Audience Report for Q1 2016 came out this week, and (as always) it is filled with a trove of information for those tracking the traditional television industry, and the habits of viewers, especially the key 18-24 year old demographic. You can download the full report for free.
Those who know me know that my view on the US TV market is “erosion, not implosion.” Across a number of metrics, people are watching only slightly less traditional TV and a few are cancelling cable, but not as many as you think. The only real area of concern for me is what is going on with those 18-24 year old millennials: they may be a bellwether. In my post on the Q4 2015 data, published on March 26, I put up a chart of the year over year changes in live and time shifted TV minutes for the 18-24 demographic, and said:
“…annual declines of 25% feel like they were an exception, and were likely a bit of a one-off. Next, it is possible that annual rates of decline may stabilize at around 10% in the US, or that they may improve even more, and we may see single digit annual decreases in traditional TV viewing. I don’t have enough data yet to know, but my hunch is that a 10% annual decline is the most reasonable assumption. The five year CAGR is exactly -10% since 2010.”
I nailed it: in the same quarter last year this age group watched 155 minutes per day of traditional TV, and in 2016 they watched 140 minutes daily, for a 10% annual decline. (9.8% if you want to be exact!)
It is nice to have your hunches confirmed so quickly, and I am going to stick with that hunch: I am predicting that viewing minutes for 18-24 year olds do not start dropping by crazy amounts, but neither have we hit a floor. Viewing minutes will continue to decline at around 10% per year for this age group, and this is a very real, very serious issue for traditional broadcasters and cable/satellite/telco bundle providers. See below, but the rate of decline in TV minutes for young people is about ten times the rate for the overall US population.
Additional observations from the Nielsen report:
1) Traditional TV for the population as a whole is declining…but SOOOOO slowly. Adult (18+) live and time shifted TV dropped from 5 hours and 7 minutes daily in Q1 2015 to 5 hours and 4 minutes daily in Q1 2016. That is THREE minutes less TV per day, or a 1% decline. Not quite the death of TV, eh?
2) Paying for traditional cable, satellite or telco TV bundles is falling. Cord-cutting is a thing, and is growing: there were 100.77 million homes paying for TV last year, and only 99.22 million this year. That loss of 1.5 million homes is meaningful, but needs to be put in context. The number of US homes paying for traditional TV fell 1.5% in the last year. That’s not good, but neither is it catastrophic. It will likely continue to fall, but may still be around 90 million by 2020.
3) In my view, the key source of FUTURE cord-cutters are those who watch the least TV. (Duh!) In Q1 2014 the 20% of Americans with internet access who watched the least live and time shifted TV (48.2 million people) watched 29.2 minutes of TV daily. By Q1 2016 that quintile (now 47.5 million people) watched only 15.4 minutes daily, or 47% less in only two years (see chart below.) Although TV viewing for the average American is barely dropping at all, for one in five Americans it is collapsing. These are the cable cutters, the Netflix-only folks, and they tend to be young, well-educated and highly employed. This matters to advertisers.
4) The PC continues to hang in there too. Yes, smartphone usage is up year over year, but time spent on a PC for those 18+ rose by over an hour per week (from 5h36m to 6h43m), and it even rose for 18-24 year olds (4h26m in 2015 to 4h32m in 2016.)
The Nielsen Total Audience Report for Q4 2015 came out this week, and (as always) it is filled with a trove of information for those tracking the traditional television industry, and the habits of viewers, especially the key 18-24 year old demographic. You can download the full report for free.
Everyone who follows TV knows that younger viewers are watching much less live and time shifted traditional TV (the stuff you get on your cable package, but not Netflix or YouTube) today than in the past: in Q4 2010 American 18-24 year olds watched 244 minutes of TV per day, and that number was down 41% by Q4 2015 to 144 minutes. That is still well over two hours per day on average, but 100 minutes less PER DAY is a big drop. Unprecedented in the media industry, in fact…unless you look at what happened to young people buying CDs, or reading newspapers!
Media analysts are divided into two camps: those who believe that younger viewers are abandoning traditional TV the same way they abandoned print newspapers (“We are never ever getting back together” to quote Taylor Swift) and those who acknowledge that viewing has indeed dropped for this age group, but 1) the decline seems to be moderating, and perhaps we will find a new plateau of viewing at a stable-but-lower level; and 2) as this age group gets older and has children, their traditional TV viewing may start rising again.
As you look at the chart at the top of this post (guess what I was doing all Good Friday?!) you can see the live and time shifted viewing minutes for US 18-24 years olds for each quarter between Q3 2010 and Q4 2015 (blue line and the left hand axis), as well as the annual change in viewing minutes on the right hand axis in red. I don’t think anyone else has ever published this data in exactly this way before, so feel free to share, or ping me for the data file.
You will notice that the blue line is declining over time, but is kind of wiggly: it is always important to make sure you compare viewing across the same quarter, since there are seasonal effects in TV viewing habits. People watch less in summer, for instance. When I look at the red line, which indicates the year-over-year decline, a few things jump out at me.
1) 2012 data saw some pretty consistent declines approaching 10%, but the rate of decrease lessened into 2013 and it looked like a new viewing plateau around 200 minutes daily might be the new normal. In Q3 2013 the annual decline for 18-24 year olds was 0% — time for a party in the TV industry!
2) Oops, not so fast. 2014 was NOT a good year for TV watching for this demographic: annual declines of 24% and 25% in two quarters were the nadir. That kind of year over year change is (so far as I know) without precedent – neither CD sales nor newspaper subscriptions ever fell that steeply! Needless to say, a raft of “TV is dead” articles started being written around this period, and for good reason. If that level of erosion continued…
3) But it didn’t. For every quarter since Q3 2014 the year-over-year change in viewing minutes for this age group has been getting better/less awful. In fact, in the most recent quarter, viewing was down “only” 10% from a year earlier. That isn’t going to cause TV execs to burst into song, but it isn’t nearly as bad as the 25% drop from a year ago.
4) A REALLY interesting additional point can be seen in the chart above. Enders Analysis in the UK has the semi-annual viewing data for various age groups in the UK, and the three youngest demographics are lines in various shades of green. An exact match of the US viewing trends is unlikely, but you can clearly see that the UK data has a roughly similar shape to what happened in the US. Moderate declines at first in 2011/2012, maybe a bit of stability in 2013, a terrible collapse in 2014 (although muted compared to the US data – UK viewing was down 12-14% compared to 20+% in the States!) and then some signs that the worst is over and the annual changes moderated across all of the younger demographics in 2015.
What do I think? Well, first off…annual declines of 25% feel like they were an exception, and were likely a bit of a one-off. Next, it is possible that annual rates of decline may stabilize at around 10% in the US, or that they may improve even more, and we may see single digit annual decreases in traditional TV viewing. I don’t have enough data yet to know, but my hunch is that a 10% annual decline is the most reasonable assumption. The five year CAGR is exactly -10% since 2010. Our Deloitte TV Prediction for Q1 2016 was that 18-24 year olds will watch 150 minutes (2.5 hours) daily, which would be a 12% year-over-year drop. We will see! Now, what about that having kids question?
Take a look at the chart above: one in six (16%) of US 18-34 year olds who live on their own without kids are broadband only. They have no cable package and no TV antenna, and therefore are getting all of their video Over-the-Top (OTT) through the internet, and services like Netflix, YouTube, Hulu, and so on. (I need to note here: those who don’t watch an average of 3-4 hours of traditional TV per day are still watching 3-4 hours of VIDEO content per day. They just aren’t getting it from the traditional broadcasters and distributors, which is a $170 billion industry in the US.) But once those 18-34 year olds start a family, the percentage of broadband only homes collapses from 16% to 6%. Stage of life does seem to matter.
And if you look at the next figure, it matters not just in terms of video source, but also in terms of traditional viewing minutes: people with kids watch over an hour (62 minutes) a day more of traditional TV than those living on their own! This may be good news for the existing TV industry: some younger viewers are perhaps having a brief fling and enjoying OTT hookups only (why do you think it is called “Netflix and chill?”) but once they settle down with kids, they will return to the traditional TV viewing habits of their parents…perhaps with a little OTT added as spice?
That is certainly what the TV bulls would say. I am a little less sure: the Nielsen data is great, but the problem is that relatively few 18-24 year olds are starting families, so the data for those with kids over-represents 25-34 year olds. It will be interesting to see if that same “once you have kids you return to traditional TV” finding still holds true over the next few years? My gut says it will be partially true, but less so than in the past. Too many people with three year olds keep telling me that Netflix plus YouTube has more than enough content for their children. I have no opinion – my kids are too old for children’s TV, and haven’t started spawning yet themselves.
This post is already way too long, but I should add a few things.
Please download the Nielsen report: it is filled with much more useful information. I would particularly highlight Table 5C on page 25. It divides American homes that have internet in five quintiles, or groups representing 20% of the population each. Although the average American watched over four hours of TV per day in Q4 2015, some watched more and some watch less. The lightest viewing quintile watched only 16.4 minutes per day, which is a record low for that group. If you are wondering where the cord-cutters of 2016 are going to come from, I have to point to that number: hard to justify paying $60 per month or more for pay TV when you watch that little.
The other thing I want to add is that our Deloitte TMT 2016 Prediction on US TV is tracking really well. The number of homes paying for a traditional TV bundle (cable, telco or satellite) fell by 1.5 million, and we are predicting 1-2 million for the year. The number of homes that rely on an antenna for TV (broadcast only) rose by 650,000, and we are calling for growth of about a million. The daily live and time shifted viewing time by the population aged 18+ fell by only three minutes compared to 2014, and we are looking for slightly bigger drop of about ten minutes. Might be the televised election primaries…the Republican debates have been drawing bigger audiences than expected: Trump makes for compelling TV, as we all know. 🙂
An article from Ad Age, published yesterday, said that we should “forget generational differences” and “…the notions that support the traditional concept of a generational cohort are becoming less meaningful.” Really? REALLY?
Don’t get me wrong, some generational analysis is silly: I doubt millennials are that much more or less idealistic than previous cohorts, regardless of what you read online. But I happen to be working through the data from a recent survey done in Canada. It’s not published yet, but I pulled one question more or less at random to see if there is any validity to the idea that generations aren’t that different from each other. Over 1,500 respondents, with over 230 in each age break.
As you can see in the chart above, 18-24 year old Canadians (aka trailing millennials) who own a laptop are much more likely to own a Mac than other age groups. There is a large gap (27% compared to 16%) compared to leading millennials 25-34; and they are more than THREE TIMES more likely to own a Mac than all Canadians 45+. (There is no statistically significant difference between 45-54 year olds, 55-64 year olds, or 65+!)
Demographic analysis and cohort analysis still matters. In fact, it may matter more than ever.
Just a couple of extra comments:
1) I know some people might get turned off by all the numbers in this post. But I think it is really important for readers in 2015 to be not just literate, and not just numerate, but also able to read survey and polling data accurately. That I give you the survey size, the number of people in the age groups, and all of the data points is important for YOU to be able to judge what I am saying.
2) A big problem with demographic analysis is sorting out age effects from cohort effects. A lot of today’s 18-24 year olds like to spend all their money on beer and dancing with friends. That probably will be less true 40 years from now when the 58-64. That’s an age effect. But preference for Mac over Windows is a behavior that is likely to be conserved over time. Operating systems tend to be “sticky”, so this is likely to be a cohort effect that will be true for some time.
The good folks at comScore have released their Global Mobile Report (free download), which looks at multiplatform audiences by demographic in the US, Canada and the UK. The single most important finding is the data on smartphone usage for Americans 18-34 (aka millennials or Generation Y) versus what Canadians and Britons are doing.
As you can see on the chart below, Americans 18-34 spent 61% of their digital media time on smartphones in March 2015, compared to 47% and 50% for Canadians and Britons of the same age! And that seems to be coming out of their computer use: American millennials are on PCs only 31% of the time, compared to 49-50% for those of us with the Queen on our coins. (Please note that comScore uses the word ‘desktop’ to describe all computer use: laptop or desktop, PC or Mac.)
Put another way, American millennials are on their smartphones 30% more than computers, while the non-American smartphone usage is only 8-10% more. Given that the US market is sometimes a leading indicator or bellwether, this raises serious questions about if the rest of the world is going to follow in their footsteps?
Before we go there we need to look at another comScore chart. As you can see below, mobile consumption (the orange square represents smartphones and tablets combined) by American 18-34 year olds is massively out of whack compared to what we see in the UK and Canada: their monthly mobile time spent of 88.6 hours is a full 30% higher than the UK/Canada average of about 68 hours.
And the reason why I think this is important is the blue squares in the chart above. Millennials in Canada and the UK are very similar to each other, using computers for digital media time (other computer use isn’t being measured) about 44.6 absolute hours per month. American millennials are a lower at 39.1 hours, but that difference is much smaller than the percentages would suggest, and is only about ten minutes per day.
My conclusion? Younger Americans aren’t really using computers that much less for digital media, instead they are using mobile that much more!
And I think that way of looking at it is critical: the computer isn’t going away, the smartphone is instead growing the total digital media pie.
The Nielsen Total Audience Report is essential reading for those trying to predict the future of the TV and media industries. So I was shocked when I ran the numbers from the Q1 2015 report, released on Tuesday, and saw that one of their charts tells a profoundly incorrect story.
The media coverage has focused on the graph above, which at first glance seems simple. Americans 18-34 watch less TV than other age groups, and across all five major platforms (TV, radio, PC, smartphone and tablet) they also spend less time consuming media each week. True enough. But the chart also seems to show that 35-49 year olds spend less device time than average, and the column for those over 50 is about the same height as for all adults.
As I was crunching the numbers, things started to look weird. You have to convert the hours and minutes watched to hours in decimal form, and add each of the five categories together, but the results do NOT match the picture that the Nielsen chart portrays. The youngest age group does have the lowest total usage at 51.7 hours per week. The average adult is 65.1 total hours, while 35-49 year olds are 67.4 weekly hours. I have redone the chart TO SCALE, and added gridlines, below. I tried to keep the same colours and so on as Nielsen:
Although the chart shows Gen X as noticeably lower than all adults, they are in fact higher. Next, the population 50+ isn’t about the same level as all adults, they are using these devices 73.7 hours per week.
You might think I am making a mountain out of a molehill, but that mis-depiction distorts some important facts. The first is that although 18-34 year olds spend about 13 hours less on the five devices than average, those 50+ are about 9 hours more. This a critical truth about media measurement: young people spend more time studying, socialising, and being outdoors while older people are more sedentary, and spend more time on various media devices. That’s not a new trend – it has been true for decades.
Now that we’ve established that, take a look at the chart below. It is a stacked chart, where each category on the X axis will add up to 100%. It hides the fact that 18-34 year olds spend less time on devices, but it does correctly show how they allocate that time. Of the total time spent on the five devices, younger Americans spend about 42% of their “device time” watching TV. That is lower than the average for all adults, but it’s not terribly different than the 49% for 35-49 year olds. The original Nielsen chart doesn’t show that relationship properly.
Don’t get me wrong: younger Americans watch less TV than older Americans, and less than they did three years ago (about 25% less, in fact.) And they will likely watch less in the future. But for now, the “generation gap” between millennials and Generation X is much narrower than you might think.
[Edited. I had a wonderful phone chat with the folks from Nielsen. Other people noticed the error too, and they have already redone the chart. If you download the report, you now see the version below. Kudos to Nielsen for the quick response, and obviously caring enough to do it EXACTLY right.]
The TechCrunch article was headlined “Millennials Are Destroying Banks, And It’s The Banks’ Fault” and the first sentence was “Millennials are rejecting home ownership across the land.” The article went on to say how millennials want to see banks “completely destroyed.”
Based on some research I’ve done, this is not an accurate statement of generational attitudes: most millennials are dealing with banks now, and expect to deal with them in the future. They are indeed sometimes different in what they want from their financial service institutions, but those differences are more complicated than you might think based on the media stories around the demographic trends.
Let’s take a look at the home ownership part of the argument. Mortgages are a big business in the USA: about $1.2 trillion per year of origination annually as of 2014. If millennials always rent and never buy, that would be a profound change for banks and other lenders.
Have 18-34 year olds really stopped buying homes? No – my oldest daughter’s boyfriend just bought a condo, and he’s not even 25. Our neighbour’s daughter got married last May, and she and Dan (32) just bought a place.
Are Josh and Dan the only ones buying? No – according to the data, nearly four out of ten (38%) 25-34 year olds in the US owned their own homes as of 2012.
OK, but that’s lower than in the past, right? Yes – in 1980, just over half (52%) of 25-34 year olds were homeowners. That demographic has therefore seen ownership decline by over a quarter in 30 years.
Aha! So this is a terrible thing for banks? Probably not. Home ownership rates vary over time, and for a whole bunch of reasons. Interest rates, affordability, youth employment and wage rates, government policies, consumer or student loan debt levels, and overall economic conditions all play a role. Take a look at the chart below: the home ownership rate for Americans under 35 (the bottom line in purple) has always been low. It was over 40% in 1982, fell to the mid-30s level by 1994, rose to the mid-40s before peaking in 2004, then was already trending downward even before the 2008/2009 mortgage crisis and recession.
Still, that decline since 2004 could reflect new anti-ownership attitudes from millennials? Maybe. One of the big problems with making broad statements about different generations is there are some effects that are persistent over time (called cohort effects), and others that are transitory (age effects and period effects.) For example, today’s millennials are unlikely to start subscribing to print newspapers or buying CDs when they turn 35. It is unclear if the current relatively lower level of home ownership is the beginning of a trend, or just a reflection of some large and disruptive event that has delayed ownership, but not permanently.
Ummm…like the worst recession in 70 years, which saw millions lose their life savings due to home ownership? That’s a reasonable assumption! 🙂 You can see from the chart below that home ownership in the US (this is for ALL age categories, not just 25-34 year olds) rose at the beginning of the 20th century to 1930, then dropped following the Great Depression. That was a real drop, and significantly affected the US banking system. But by 1950 home ownership was rising faster than ever before, and was well above the previous peak. It is possible that the current decline in home ownership is the start of a long term trend, but it is also possible that once the memories of 2008/2009 fade, ownership and mortgages will rise again. The only way to tell the difference between cohort effects and period effects is to wait a decade or two.
But we still know that millennials hate banks? I don’t think so. If you look at the image below, you can see that the reasons that millennials haven’t bought yet varies by region. They may not have the down payment, they have too much student loan or credit card debt, or they don’t know where to start/worried about their credit score. None of those seem to indicate that the banks themselves are the problem: in fact, the survey suggested that more than half of millennials are planning on buying in the next two years.
“Generation rent” can more accurately be called “generation rent…for now.”
In my next column, I want to take a look at how millennials are likely to do business with banks? Are they going to be digital only, fully self-serve, and do everything over the internet? Can banks need to get rid of human mortgage lenders?
I just found an additional $6 billion in annual legal media spending by North American millennials 18-34! When I first tried to estimate content spending, I was able to find good data on spending patterns by age for the eight categories above, which was $750 per year, or $62 billion across the over 80 million millennials in the US and Canada. But I couldn’t find reliable demographic information on theme parks, live theatre, ballet and dance, magazines, comic books, and so on. Those categories are not likely to be that large: lots of young people go to rock concerts or buy books, and relatively few go to live theatre. Live music and books is over $15 billion per year for 18-34 year olds, and plays are probably around $500-750 million.
Based on a conversation I had this weekend, I realised that all those markets we failed to count…still count! They don’t change our forecast much: we’re likely only talking about another 1% of spending, or $6 billion per year. That is small compared to the other figures, but for the imperilled media sector, finding another $6 billion in annual audience is a definite win, and worth talking about.
The generation of young people aged 18-34 will pay for legal media content: about $750 per year per millennial in North America. I stand by that research, but I had an interesting conversation this weekend that shows that millennials are much more complex than we think. Some of the key data points from my research were: 1) millennials were spending about $750 per year on legal content; 2) not on recorded music, but on live music such as music festivals; 3) although they don’t pirate everything, they are willing to do so pretty cavalierly; 4) and in the chart above, we gave the idea that we were capturing all the important categories of millennial media spending.
I popped into my local Roots store, and spotted what looked like a cute top for Barbara – see above. The Nice Young Lady (NYL – about 25?) in the store was very helpful, but said that they didn’t have Barbara’s size. I made a joke that the top would be perfect at the Coachella music festival, which is this weekend. Here is the abbreviated conversation:
NYL: Yes, it would look nice at Coachella. I don’t go to that sort of thing, but my friends do.
Duncan: Oh, but you go to other live music concerts?
NYL: Not really. I do love music, but almost all of it is from iTunes. Some of my friends do the illegal download thing, but to me that is just stealing from the musicians, and I would rather pay.
Duncan: So you don’t go to concerts because you spend all your money on iTunes?
NYL: No, not at all. I am a theatre major, so while I spend a bit on music, I really spend the most on live theatre. Tickets for student productions are pretty cheap – only $15-20 per show.
Duncan: Cool. So how much would you say you spend per year?
NYL: I hadn’t thought about it that way, but I would guess I’ve been to about 20 shows in the last year. But I was at Queens, and now that I am in Toronto I think I am seeing fewer shows.
Lesson #1 – Our category list is not comprehensive: Our eight media spending categories were an honest attempt to capture what seemed likely to be the biggest factors in the average millennial’s content budget. First, they were not meant to suggest that EVERY millennial spent that amount on each category: they are only averages across 83 million 18-34 year olds in the US and Canada. Second, these were categories for which I could find annual spending information, AND demographic data. But not every form of media has published data the way TV or movies do!
As an example, I know that about 50 million Americans have seen live theatre in the last 12 months, and US spending is over $3 billion. But I have no idea how millennials are represented in that figure. Same for ballet, opera, or comedy clubs. Or what about theme parks/amusement parks? I know that many Toronto millennials buy season’s passes to Canada’s Wonderland: that’s $90 right there, and the Disney parks are even more! But there is no public data. 😦
Therefore our $750 annual millennial media spend estimate is almost certainly the floor, not the ceiling.
Lesson #2 – Not all Millennials are at SXSW and playing computer games: I am not suggesting that my Roots sales person is typical. But it is worth remembering that millennials are almost certainly as diverse in their interests as older generations. It doesn’t take a lot of 25 year olds spending $400 a year on live theatre to ‘move the needle’ and add up to a significant market.
Lesson #3 – Even though many millennials are prone to stealing content, not all of them are: Even more importantly, the reason they don’t steal is the right one, in my view. They aren’t afraid of being caught, or technically incapable of figuring out how to download. They refuse to do it because they believe it is theft, it is morally wrong, and it harms the artists who create the content they love. I honestly believe the current prevalence of illegal music and video downloading/streaming is a temporary thing. In the future, digital piracy will be less common than it is today, and much less socially acceptable.
Lesson #4 – Media spend across categories is often not constant over time, but total spend may be: Demographic categorisation of generations is weird. We are lumping together 18 year olds with those nearly twice their age. University or college spending habits are almost certainly different from where media dollars go once millennials enter the workforce and it likely shifts again in the 28-34 year old group, with many getting married and even having kids.
My acquaintance from Roots has already seen her spending patterns shift. Queens University is in Kingston, Ontario: about 120,000 people. Going to affordable student productions was a great choice over a particularly snowy winter…but I am not surprised she is exploring other options in the Toronto metro area of 5 million.
I am not a millennial, but I look at my own history. When I was at UBC and 21, I loved the Vancouver live theatre scene: I saw some fantastic plays at the Arts Club on Granville Island and at the “Cultch” in East Vancouver. After I married and moved to Toronto at 24, we spent almost all our media budget on cable TV, and going to the Toronto Symphony Orchestra. Within a year, the Blue Jays were having great success, and we moved almost all of our money to live sports, first at the Old Exhibition stadium, then the new SkyDome.
In the space of four years I shifted nearly all of my media spending from category to category to category…but spent about the same ‘media budget’ on an annual basis. I lack the data to prove it, but I suspect today’s 18-34 years are likely to follow a similar pattern over the next few years.
Conclusion: Those in the media industry may want to use our chart of millennial media spending as a guide. But it isn’t perfect: lots of 18-34 year olds also go to live theatre, or other categories not captured on our chart. When Barbara and I went to the ballet in Stockholm, the average attendee may have been about our age…but there were also dozens of much younger people too.
The clichéd millennial…rocking out at Coachella, then going home and stealing the songs they just heard while watching Netflix or playing computer games isn’t inaccurate. But it can be misleading: just because some (or even most) fall into those spending patterns doesn’t mean that all of them do!
This week’s headlines (see screenshot above, and here’s the article) gave the impression that movie attendance has collapsed in North America, and that the internet, Netflix and millennials were to blame. The number of people who went to a movie theatre in North America in 2014 was the lowest it has been in 20 years: that is true. But just how brutal a ‘collapse’ was it?
As you can see from the chart above, the number of US movie tickets sold annually varies a bit year over year, depending largely on the economy and the slate of titles available that year: movies ARE a popularity contest. But instead of freaking out about the 2014 decline, it is much more accurate to say that while it was a weak year, it falls within (albeit at the low end) the historical range of 1.2-1.6 billion tickets per year. No dramatic collapse that I can see.
As the next chart shows, there is even a positive way of seeing it when we look at both admissions and revenues. Total movie box office dollars have gone from under US$6 billion in 1995 to over $10 billion in 2014. Yahoo – that is a growth industry!
Not so fast: the value of a dollar changes over time, and I recalculated. In the chart above, all revenues are now re-stated in constant 1995 dollars. As you can see, looked at this way, revenues grew quickly until 2002, and have been declining since then. Not quickly, and the 2014 figure is still nicely up from 1995. Higher ticket prices and 3D movies, almost certainly.
But we need to back up a second. Although the number of tickets sold in 2014 was flat with 1995, there are more Americans too. We need to adjust our numbers again, and look at the per capita purchases of movie tickets, and only for Americans over the age of two, since kids younger than that get in free or don’t go at all. As the chart above shows, the picture for moving pictures is suddenly less positive: Americans used to buy nearly five movie tickets per person per year, and that is down to about four. Even so, that is a pretty gradual decline, and hardly ‘brutal.’
The last chart above puts it all together, and is really the most useful way of examining the industry and discerning the long term trends. We now show the box office revenues in constant dollars and adjusted for population. It’s not the most exciting pattern I have ever seen, but it is (yet again) not terrible. In 1995, Americans spent a little over $20 per year attending movies in theatres. That rose to just a shade under $28 in constant dollars by 2002 (which was a banner year: Spiderman, a Lord of the Rings movie, a Harry Potter movie and a Star Wars flick!) and has since declined back to just over $21 in 2014. That is quite a stable range for 20 years of consumer spending on any given medium.
Three final thoughts:
That’s not brutal – this is brutal: if we compare the numbers (properly analysed, adjusted for population and inflation) we can see that movie theatre attendance is in a range, not free fall. For a traditional medium, that is a heck of a lot better than CD sales, DVD sales, movie rental stores, newspapers, magazines, and so on. I don’t think a movie theatre owner would be ‘Trading Places’ with any of those!
I’ve got a bad feeling about this too. The decline isn’t brutal, and it’s not the end of the world. But the trend is fairly clear from 2002 on: the internet and things like piracy and Netflix aren’t positives for movie attendance. I think it would be reasonable to expect that the per capita attendance of movies is likely to continue to decline slowly, and that per capita spending in annual constant dollars may continue to be under pressure. Don’t get me wrong: there could still be years with very strong slates, but the overall trend seems slightly down.
Won’t somebody please think of the teenagers? When we talk about changing media habits for traditional media, the assumption is that millennials have stopped paying entirely, and the medium is being propped up by older generations. What about movie attendance? False: while the population as a whole went to about four movies per year in 2014, those 12-24 (which aren’t quite the definition of millennials, but we have to work with the data we are given!) went to about 7.1 movies each. That’s down from last year, but it is interesting to note that younger consumers still over-index on attending movies.
For data geeks only. My figures are for the US box office only, and are from The-Numbers.com. The figures that most of the articles written this week were based on are from the Motion Picture Association of America and are North American stats, and include Canada. Which is fine, but calculating per capita and constant dollar numbers for combined US & Canada stats would have been too hard, so I used the USA only data.
[Edited to add: This post might be seen as an attack on the journalists who are writing the stories (to deadline!) on the attendance figures. In all fairness, journalists have two problems with this kind of story.
1) The headlines about ‘brutal declines’ get WAY more clicks than my kind of analysis. This isn’t new or related to the internet: journalism has ALWAYS been “if it bleeds, it leads.”
2) They have deadlines. And reporting a year over year decline is fast. Finding the 20 year data, rebasing it for constant dollar and population growth takes time. I spent about two hours doing the data analysis for my post. Very few editors would stand around waiting for their reporters to do the same!]