Bain & Company: The rise of generation #hashtag

03 December 2014

As digital technologies are more and more intertwined in consumers' lives and digital devices are becoming more cost-effective, a new wave of media is arising. This 'third wave of media', which consists of media forms that are digital native, generates a new group of content users: 'generation #hashtag'. This generation creates the need for new business models to which media companies need to adjust to survive, concludes consulting firm Bain & Company.

Global business consulting firm Bain & Company recently released its 2014 Digital Media Report, ‘Generation #hashtag: A new wave of content for the age of Digital Natives’. For this report, the firm surveyed the digital abilities and habits of more than 7,000 consumers in 10 countries in Europe, the US and the BRICS.

In the year 2014, 70% of the respondents from developed countries own a smartphone, which is a rise of 6% from 2013, and 47% own a tablet, compared to 39% in 2013. The number of smartphone and tablet users has also grown in developing countries, with an increase in smartphone users of 7%, from 37% in 2013 to 44% in 2014, and an increase in tablet users from 9% in 2013 to 18% today.

Smartphone and tablet ownership continues to rise

The combination of cost-effective digital devices and fast-developing communications networks are firmly embedding digital content consumption across all age groups. This so-called 'third wave of media' consists of "unbundled, long- and short-form content, streamed at will and paid for through subscriptions, micro-transactions or advanced advertising solutions" and generates the rise of a new segment of content consumers: 'generation #hashtag'. This group combines people who are to young to remember life before the internet, the 'digital natives', with those older than 26 and who prefer digital media, the 'digital migrants'.

The survey from Bain & Company shows that although people younger than 36 may consume  more content digitally, the group 36+ is closing the gap on video, music and games. With currently 63% of 35+ adults watching videos online, compared to 78% of people aged 26-35 and 87% of 15-25. The differences with online music listening are even smaller, with 93% of 35+ listening to digital music, 96% of 25-35 year old and 98% of people aged 15-25 years. The biggest rise for both digital formats is found in the 25-35 year category.

Use of digital among different ages

The rise of generation #hashtag will have profound consequences for content industries as native digital companies, such as Spotify and Netflix, are disrupting the market and claiming their market share. “Content industries are, once again, facing the critical need to adapt to survive. As new models that hold no analogue legacy gain traction, and as demand from generation #hashtag grows, the future success of media companies hinges on their ability to reinvent their entire approach – from content creation to distribution and monetization,” comments Laurent Colombani, Partner at Bain & Company’s Media Practice and lead author of the survey.

According to the researchers, the growth in media (as in most industries) is centred in the developing markets rather than in mature economies of Europe and the US, and as such, media companies should not only develop and publish an entirely new wave of formats but also learn how to play in new markets. “While media companies are being challenged in their core markets, they also have equally vast opportunities abroad. Just as emerging market consumers jumped directly from no phones to mobile phones, with no landline phase in between, they will likely leapfrog from physical formats to third-wave media, creating game-changing growth opportunities for companies that that can quickly master the techniques that appeal to Generation #hashtag,” says Dave Sanderson, Head of Bain’s Global Media Practice and co-authors. 

Industry revenue by media and region

For media companies to be successful, their executives and creators need to understand generation #hashtag and embrace their preferences. The firm lists three areas of focus for these companies to succeed: investing in native digital formats – mixed models that include bottom-up and crowd-sourced elements, rethinking the monetisation play-book – look beyond traditional consumer-pay and advertising models to ‘freemium’ options, and strengthening the alliance between content and networks – provide always-on networks and lightning fast connections.