The Philippine government's plan to impose a 12 percent value-added tax (VAT) on digital transactions points to the growing importance and value of the digital economy.
Once in effect, this tax on digital services is expected to generate P11.7 billion in government revenue. Not everyone is happy about it, for sure, but considering the trends surrounding digital media it's not surprising how much focus is shifting to that other reality.
According to Deloitte's 2023 Digital Media Trends, millennials and Gen Zs are driving the shift to an increasingly blended reality of the physical and digital. The way these younger cohorts are consuming digital media and interacting in this space is making it just as important as the physical world.
Some of you may still remember a time when folks went online to get more information, maybe socialize with other online users, but always with a view that the space was not the real world and that one could always log out and return to interacting with real people. This is not necessarily the case for millennials and Gen Zs.
Fifty percent of them agree with the statement, "I believe online experiences are meaningful replacements for in-person experiences" compared to just 19 percent of those from the Gen X, boomers, and mature generations. Nearly the same fraction — 48 percent — of millennials and Gen Zs admit to spending more time interacting with others on social media than in the physical world.
The richness of that digital space is one of the key reasons these consumers have taken to investing more of their time and resources there. Gone are the days when people consumed content using TV screens, in movie houses, and from radio stations in silos.
Now, millennials and Gen Zs are consuming content on streaming video, social media, music, and gaming in interconnected and interdependent ways. The games they play may find their way to a streaming service as a series, which can then go viral on social media for the compelling storytelling, allowing them to grow the community of fans even more. Despite the success of the series I referenced, streaming video providers face major challenges in keeping their millennial and Gen Z audiences. Subscription growth for these services has slowed and there's a growing trend of Gen Zs and millennials who subscribe to these services to watch specific shows and movies only to cancel that subscription when they're done.
The millennials who drove the adoption of streaming video on-demand (SVOD) are also unsubscribing at the highest rate as economic uncertainty has turned most everyone into more cost-conscious consumers. They are also more likely than other generational cohorts to cancel paid gaming and music services. One option for consumers with tighter budgets is to switch to free, ad-supported versions of SVOD. If this trend picks up, SVODs may have no choice but to consider letting in the advertisers to keep revenues flowing.
Another option for digital consumers looking for free content is user-generated video feeds. Half of Gen Zs and millennials said they prefer this kind of content to streaming video services because it comes at no cost, they can watch videos about topics they're interested in, and there is always new content. These videos also contribute to the trusted communities millennials and Gen Zs are building online.
For these consumers, the creators they follow on social media become trusted guides and intermediaries. More than half of millennials and Gen Zs say user-generated content helps them discover new products and services and they are more likely to purchase these products after watching a review by trusted content creators or influencers. Less than half of Gen X and less than a quarter of boomers and matures agree with this statement. At a period when it has become so much easier to fool people with fake news or manipulated videos, trusted content creators continue to play a critical role in helping brands connect with consumers in an authentic and persuasive way.
The challenge for organizations is where and how to engage their audiences in such an interconnected and vast digital media field. Considering the way millennials and Gen Zs are moving across these mediums seamlessly — streaming videos, social media, video games — and finding both social and emotional value in doing so, brands have more opportunities to establish strong relationships with their target market. As the lines between the physical and digital worlds continue to blur for these consumers, expect more brands to prioritize how they create value in this profitable digital market.
Source: Manila Times