Note: The Stream Report will be going on hiatus for the foreseeable future. We thank you for tuning in every week and hope to send to you all again! In the meantime, we appreciate your continued support of Flixed and, for a look at what’s popular on streaming, you can subscribe to our other newsletter, The Popcorner.

Now, enjoy the issue!

With the strikes and financial losses coming to an end, streaming companies need to plan for trends that will shape their businesses in the long term. One of the biggest trends is Generation Z’s entry into the market. In this issue, I will look at what analysts predict from the coming wave of digital natives.

In this issue:

• Gen Z by the numbers

• Streaming habits of digital natives

Gen Z by the numbers

I want to start by saying that lumping millions of people into generic identities is fundamentally flawed. Were the free-loving, flower-power hippies in the ’60s and ‘70s also the Reaganite yuppies and soccer moms of the ‘80s and ‘90s? No. Yes. Neither.

Generational labels are about mass marketing, a tool or crutch for ad agencies and media companies. In other words, the streaming industry. With apologies to everyone else in the world, looking at America’s youth from the perspective of media executives can help cord-cutters understand where the industry’s heading.

Born between 1997 and 2012, Generation Z is the first fully digital native generation. The World Wide Web, Wi-Fi, and mobile phones have always been part of their lives. Facebook, YouTube, and the iPhone launched before the oldest left elementary school.

Now, 93% of Gen Zers have a smartphone with instant access to the internet wherever they are.

Streaming habits of digital natives

Given how much this young generation has already shaped the entertainment industry, media companies and advertisers are understandably interested in how Gen Z watches video content. Here are a few numbers showing why YouTube has scrambled to keep up with TikTok:

• 72% of Gen Z who use TikTok watch it daily.

• But only 48% of Gen Z YouTube users watch it daily.

• Forced to choose, 51% of Gen Z would drop YouTube before TikTok.

The studios’ streaming businesses look at that and see they must prepare for Gen Z’s growing market power.

TV content has more competition

One survey found that Gen Zers aged 13-24 only spent 31% of their screen time watching studio-produced video content — about half of older generations. The rest of the time, they watched user-generated content. That’s consistent with other surveys that found 61% of Gen Zers prefer user-generated content over other media (TV was in a distant fourth place).

However, a Deloitte study shows that Gen Z is most likely to cancel subscriptions when services have nothing worth watching.

Televisions aren’t the top choice

While an easy stereotype, it actually isn’t true that young people spend all their time staring at smartphones. Gen Z actually watches TV. How much they watch depends on who’s asking.

A Roku survey found that 76% of Gen Zers watch streaming video on demand (SVOD) on connected TVs.

On the other hand, a company that doesn’t sell connected TVs reported different results: Gen Z spends 17% of their screen-based leisure time watching TV.

Even when watching television, though, Gen Z isn’t watching television. 90% multitask on another screen while watching TV.

Sometimes Gen Z isn’t that different

This younger generation may consume a more varied mix of content on other devices, but when you look at which streaming services they use, Gen Z isn’t that much different from anyone else. They watch Netflix the most, followed by Hulu, Peacock, Max, Disney+ and Prime Video.

Our takeaway: Take Gen Z surveys with a grain of salt

Most studies of viewing habits are conducted by companies with something to sell. As a result, the insights and recommendations tend to align with what already exists.

The main lesson Roku’s advertising group took from its Gen Z survey shouldn’t be a shock — companies should spend more advertising with Roku:

“TV streaming is one of Gen Z’s main leisure activities — and the ads they see while streaming help them discover new products and follow through with purchases.”

InMobi is a marketing company that specializes in mobile advertising. It reported Gen Z’s preference for user-generated content (mostly accessed through mobile apps) over studio-produced content (mostly accessed through TV apps), concluding:

“To win over Gen Z as they come into purchasing power and boardroom and political influence, [user-generated content] will be the critical lever across the content ecosystem.”

Another reason for skepticism is that Generation Z’s life stage skews their survey responses. The oldest members are just starting their careers in a post-pandemic economy. A recent Bank of America survey reported that 73% of Gen Zers over 18 are changing lifestyles due to inflation, while 37% experienced a financial setback in the past year.

At the same time, most Gen Zers still live with their parents. Many are in secondary school or college. A third of older Gen Zers aged 18-25 have moved back home rather than spending half their income on rent.

Why do smartphones dominate their viewing habits? Because those are the only screens they control.

Why are they most likely to juggle subscriptions? Because they can’t afford to keep every service.

Streaming execs need to learn the right lessons. Slashing production budgets and raising prices when Gen Z has more options — and more affordable options — might boost short-term earnings. But at what cost in the long term?

The Watchlist

Emily Blunt and Chris Evans join forces for a pharmaceutical scheme in Pain Hustlers. The film hits Netflix, Friday, October 27th.

Keep an eye on those security cameras! Five Nights at Freddy’s comes to theaters and Peacock, Friday, October 27th.

Season 15 of the popular series Ink Master begins on Paramount+, Wednesday, November 1st.

Could you win a quiz show with your sister to save your mom from her gambling debt? Sandra Oh and Awkwafina star in Hulu’s Quiz Lady, hitting the streamer, Friday, November 3rd.

Fingernails is a sci-fi romance that follows a woman who, while unsure of her own true love, takes a new job at a love testing institute where she meets another man. The movie premieres on Apple TV+, Friday, November 3rd

Amazon Prime Video hopes to give us more superhero scares with season 2 of Invincible. The animated series returns on Friday, November 3rd.

In this slightly modern take on a classical era, The Buccaneers follows a group of young American women sent to London to find husbands and gain titles in the 1870s. The series comes to Apple TV+, Wednesday, November 8th.