Fandom and Brand Loyalty: The Next Generations
Understanding the differences between what works for millennials and Gen-z will be the difference between success and extinction for companies in sports, entertainment, travel and hospitality.
In 2030, the average Gen Z-er will turn 25. Out of college, with burgeoning careers, they’ll begin their upward economic trajectory, exercising more agency over how they spend their accruing wealth—and spending it. At the same time, millennials will be almost five times wealthier than they were in 2020, as they reach the prime of their professional lives—and stand to inherit more than $68 trillion from their boomer parents. Understanding the differences between what works for these two generations will be the difference between success and extinction for companies in sports, entertainment, travel and hospitality.
For millennials, consumption is largely driven by the so-called “authentic experience.” But Gen Z-ers demand new layers of authenticity—transparency and access—which guide their ethics and their desire for self-expression. And although they are in pursuit of an empirical truth, Gen Z has barely known an existence without the glossy patina of social media; they are digital natives, whereas millennials are citizens of the physical world. As a result, their respective emotional spending—the capital they’ll drop on pastimes, recreation and travel—will differ greatly, too.
Over the next decade, lifestyle brands will mobilize their fan bases to move laterally across experience-driven industries (a Gucci hotel, anyone?). But at the same time, younger consumers will increasingly engage with esports, short-form video, online communities and augmented reality (AR) with the stigma-free sincerity that the older generations lavish on their “real-life” pursuits. In short, Gen Z will erase the distinction between the real and the virtual, and successful entertainment and hospitality companies will have to learn to seamlessly integrate both worlds.
“If you lose a generation, it destroys value and connective tissue. Big sports leagues are nervous: Could we lose a generation because we didn’t give them access to what they want?”
—Ted Leonsis, owner of NBA, NHL and WNBA teams
DYNAMIZING BRAND LOYALTY
The brands that resonate with ascending generations are synonymous with an experience-driven product. For brick-and-mortar retailers, the key will be to leverage these experiences in their stores to compete with online sellers. After opening a luxury hotel—before the pandemic—Equinox was growing a portfolio of weekender workout-themed excursions. Dick’s Sporting Goods is installing batting cages so people will come into stores to try out new equipment. The possibilities are endless to corral like-minded fans with strong brand allegiances: Large beer and wine retailers can offer guided tasting by experts in-store. Bicycle makers could offer actual bike trips led by cycling pros.
But in order to make the leap from millennials to Gen Z, brands will have to relinquish control over their messaging in exchange for some vulnerability and transparency. The psychology of fandom is no longer predicated on place, like hometown sports teams of the last century; the digital realm has democratized consumption—brand loyalists can be from anywhere and from any walk of life so long as they have access to the internet.
Tech-savvy Gen Z-ers are also used to having the receipts; they are allergic to opaque jargon, they want supply chain clarity and a believable story about how the company benefits the planet, both socially and environmentally. They also want a clear answer on how their personal information will be used or stored. High-profile brand ambassadors, like athletes, will have to embody their organizations’ core values. Superlative skills or fame will no longer excuse antisocial behavior.
EXPERIENCE DRIVES SPORTS FANDOM TOO
No longer wanting to be spectators but active participants too, the emerging generations will be less inclined to watch a traditional sporting event without proverbial skin in the game, especially as competitions further inhabit the digital realm.
Esports, now worth over $1 billion, is soaring at a rate of over 14 percent year-on-year; traditional sports leagues remain on a steady but modest growth curve of just under five percent annually. The esports market is expected to reach almost $4 billion in 2030, by which time there may be no distinction for younger fans between watching “real” sports and attending an esports contest.
Only a small percentage of Gen Z— and an even smaller proportion of Gen Alpha—will watch a three-hour live sporting event, preferring video highlights on YouTube, TikTok and other outlets, usually curated by social media stars. Live rights are now worth about $50 billion and are forecast to surpass $60 billion in the mid-2020s. Hig lights, in-play clips and off-field content are worth less than $5 billion but are growing so rapidly they could eclipse the value of live rights in the 2030s.
Wagering may be the secret weapon that will keep live sports relevant, as it’s embraced as another form of participation: proposition (“prop”) bets, fantasy competitions, in-game betting and same-game parlays. With fantasy sports participation on the rise, even routs remain of interest because people aren’t betting simply on who will win. Sports betting is now legal in 30 states; in five years it’s likely that all 50 states will have legal wagering on sports.
CAN LIVE CONCERTS AND FESTIVALS REMAIN SACROSANCT TO FANS?
In 1985, the Live Aid concert simulcast famous performers singing “We Are the World.” A half-century later, in 2035, almost every major concert will be available throughout the world. Most festivals of the future will have two types of tickets, one for live in-person and one for VR-augmented streaming. In 2020, the Lavapalooza music festival streamed inside Microsoft’s Minecraft platform for two days featuring top young talent. Future fests will give you the virtual opportunity to head to the front of the stage and of course visit the merch table.
These festivals remove financial and geographical barriers, opening fandom to a wider demographic. But there will still be VIP action: build up enough Flatbush Zombies fan crypto tokens and you could get a pre or post-show conversation with the band or even an extremely rare in-person meet-and-greet.
The professional convention circuit has long incentivized deskbound careers with travel perks. But with employees now unstuck from their cubicles, the flow of workers on the move may start to function in reverse, with staff occasionally traveling to their corporate headquarters instead of away. The increased virtualization of career networking may lead to the dissolution of the lucrative professional convention industry, which could pose an economic problem for smaller economic centers — second or third-tier cities that thrive on the regular influx of convention attendees.
Leisure and hobby conventions like Comic-Con—opportunities to meet actors and performers and interact with like-minded fans—face the same issues as live concerts, with the ascending generations placing less importance on the need for an in-person experience.
EVERYONE IS AN INFLUENCER
By 2030, virtually all consumers will make their emotional purchasing decisions (from travel to T-shirts) based on recommendations from social media. They will not, however, typically be swayed by the conventional “influencer” who has already begun to be perceived as a disingenuous sellout. Instead, influence will get increasingly personal; advice and recommendations on where to spend one’s disposable income will be shared on social platforms among trusted connections.
The niche nature of the future of influence will continue to erode power once held by a few large companies, decentralizing media and entertainment across a smattering of platforms. As personal content creation becomes an amalgam of self-expression, art and native advertising, slick or overwrought production values will be swapped for the handmade variety.
ARE MUSEUMS AS ANCIENT AS THEIR RELICS?
Attendance at major museums worldwide has essentially flatlined over the past decade, replaced by visits to immersive exhibits. Innovative companies like Meow Wolf and teamLab are leading the charge with a panoply of interactive exhibits that blur the line between reality and fantasy and further the pervasive need for an experience championed by younger generations.
Museums will wake up and join the battle for those culturally curious patrons. When you visit the Louvre, you won’t have to wonder why Mona Lisa is smiling like that—thanks to extended reality and deepfake technology, she’ll be happy to answer your question herself.
WANDERLOST?
Beyond the fact that Gen Z is a smaller swath of the population than millennials, other predictive factors indicate a potential decline in travel in a couple of decades among ascending American and European adults. For Gen Z, the digital realm is equally as vital as the real world. Growing up among the omnipresence of online engagement, Gen Z—unlike previous generations—does not ascribe a lower quality to interactions over social media. Friendships and communities forged in the digital space are perceived as possessing equal merit to in-person groups and friendships. Gen Z is also thriftier. Young adults tend to emulate the spending behavior of those who raised them, and millennials and Gen Z-ers are no exception to the rule. While millennials mimic the purchasing habits of their boomer parents—consuming experiences the way their mothers and fathers acquired material things—Gen Z-ers are the offspring of Gen X, an age group that has traditionally held its purse strings tighter, having grown up in more uncertain economic times. Conservative Gen Z spenders are likely to see the rising costs of travel as an impediment to the ease of movement that has largely characterized the globalized millennial’s way of life.