Chasing the next generation of fans
In 2040, members of four American generations — X, millennial, Z and Alpha — will be in, or entering, their prime adult spending years. Gen Zers and millennials in particular will be between the ages of 31 and 59. Together, those two groups will make up 41% of the U.S. population; only one-third of Americans will be older than millennials.
What impact will these generations have on the sports industry in the next 20 years? Looking at their formative experiences and generally shared behaviors gives clues to some possible answers.
By 2040, Gen Xers will be between the ages of 60 and 75. Sports industry pollster Chad Menefee thinks that group, many of whom will be empty nesters, is the safest bet for traditional sports fan spending. But the three generations that follow will consume most of the sports industry’s attention and resources in the next two decades.
In Menefee’s opinion, one fear should bounce around the sports industry’s collective thoughts late at night: its struggle to make lasting connections with young fans. He shared SSRS/Luker on Trends polling data that shows, among 12- to 34-year-olds, the percentage of avid fans of the NFL, NBA, MLB, NHL, college football, college basketball and pro soccer all dropped in the past 20 years, as much as 7% for some sports.
Fewer young people developing avid fandom means there are likely to be fewer people in the sports tent going forward. And it means that the sports industry needs to start winning the fight for young people’s shorter attention spans. Now.
By the numbers
1 in 7
Millennial marriages that are interracial, a rate three times higher than baby boomers at the same age. (Brookings Institute)
American adults who are smartphone-only internet users, a figure that has more than doubled since 2013. (Pew)
Cord-Nevers as of April 2019, constituting 12% of American adults (up from 9% in 2017). (MRI-Simmons)
Millennials who give importance to corporate social responsibility when making purchases, compared to 35% of the general population. (Nielsen)
Teens who feel pressure to only post content that makes them look good to others. (Pew)
Millennials who are influenced by social media to spend money on experiences, more than Gen Z (44%) or any other generation. (Charles Schwab)
13- to 17-year-olds (in 2017) who used messaging apps instead of texting to communicate. (Think With Google)
Americans ages 18 to 29 who primarily watch TV through online streaming services. (Pew)
Teens who say they play video games of some type, whether through a computer, game console or cellphone. (Pew)
Male teens who say they play video games in some form. (Pew)
The average annual cost of tuition, fees and room and board at a public four-year college in 1999-2000. In 2019-20, that cost had grown to $21,950. (College Board)
Outstanding student loan debt in America, according to a report from late 2018. The report indicated that roughly $1 trillion of that debt total resides with people ages 18 to 29. (Bank of New York)
“People don’t just become sports fans when they’re adults,” said Menefee, SSRS/Luker on Trends’ executive vice president of strategic intelligence.
Millennials and Gen Zers’ unprecedented racial and ethnic diversity, the unique reasons behind their time and resource allocation, and their technology-centric existences will challenge, and shape, sports business.
“This Gen Z is going to upend sports,” said Todd Merry, chief marketing officer for Delaware North. “Some [in the industry] are going to prosper, and others are going to have a tougher time.”
Changing face of America
The diversity of the generations at or approaching adulthood will change America during the next two decades.
■ Nearly half of Gen Z is a racial or ethnic minority (48%), at least 9% more than any other American generation in history.
■ U.S. Census Bureau statistics from 2017 showed that every age of Generation Alpha is composed of more minority children than white children, a generational milestone in the nation’s history.
■ According to the Brookings Institution, at least a quarter of millennials speak a foreign language at home (compared with 11% of baby boomers in 1980), and millennials are three times as likely as boomers to marry across racial lines.
Many millennials and Gen Zers have a foot in two cultures. Even those who don’t still seem comfortable trying different things because they have world views broadened by increasing diversity and internet and social media. Sports business is responding to that willingness. Merry said that Delaware North changes menus at its stadiums on a weekly basis, almost always including new offerings from around the globe.
Ticketing is another area where younger generations’ willingness to try new things can pay off for sports properties. Atlanta-based company Inwego offers monthly subscriptions in each of seven select cities that provide tickets to a variety of sporting events, concerts and festivals in the chosen city. Inwego general manager Chris LeCraw said that 80% of the company’s subscribers are millennials or Gen Zers.
“One hundred percent of them tell us they tried something new that they would never have otherwise done before,” LeCraw said. “They tell us that’s what they love about it.”
The increased diversity and global exposure of these generations contribute to their liberal leanings, according to Brookings’ William Frey. Fifty-nine percent of registered millennial voters are, or lean, Democratic, according to Pew Research Center, and even conservative Gen Zers are more centrist than older Republicans. Millennials came of age as same-sex marriage, marijuana and gambling became increasingly accepted or legalized.
Younger generations are also cause-motivated. A Nielsen report on millennial shopping habits showed that 70% of respondents were more likely to buy from a company that was perceived to handle a social issue well.
What that means in 20 years for sports properties, leagues and broadcasters could make “sticking to sports” a less appealing option in 2040.
“I think how sports institutions react and interact with these very racially diverse millennials will say not just how well the sports industry is doing but a good barometer of how the country will be dealing with its diversity,” Frey said.
One question could have a big say in the sports industry’s 2040 health: What impact will the Great Recession and student loan crisis have on millennials’ future financial security and decision-making? That’s especially important for black and Hispanic millennials, who were disproportionately affected by both, according to Brookings research.
A generation is a group of individuals born in a similar period of time that experienced a shared set of formative life experiences. Sports Business Journal used widely accepted definitions of the five most recent generations to look at each generation’s unique DNA. — Bret McCormick
Born in the years 1946 to 1964, baby boomers are named for the period of 18 straight years with elevated birth rates that followed World War II. Boomers were the first generation to grow up natively with television and rock ’n’ roll, and their childhoods coincided with America’s huge postwar economic growth. Many boomers came of age during the politically tumultuous 1960s and ’70s, experiencing Civil Rights, assassinations of key political figures, feminism and the Vietnam War.
Gen Xers were born between 1965 and 1980 and were the first natives of personal computers, video games, cable TV and the automated teller machine. They’re also the first generation to grow up with both parents working. Gen X experienced key 20th century moments of world peace and reconciliation, including the dissolution of the Soviet Union, the crumbling of the Berlin Wall and the end of South African apartheid. But economically, Gen X became the first generation less well off than the preceding one.
Born between 1981 and 1996, millennial childhoods occurred during the economically successful 1990s, but the generation came of age during 9/11, lengthy and costly Iraq and Afghanistan wars and the Great Recession. Millennials were the first to grow up with the internet. They also were the first to feel the effects of Title IX legislation — millennial girls embraced sports participation from the earliest ages like never before.
Gen Zers were born between 1997 and 2009. Gen Zers are complete digital natives and most can’t remember life without smartphones, social media, fantasy sports, mobile purchasing or streaming. They’re more comfortable communicating digitally than in person. Gen Zers grew up with America’s first black president, constitutionally backed same-sex marriage and increasingly legal marijuana.
Born in 2010 or later, this is the first generation entirely born in the 21st century. The oldest Alphas will turn 10 years old in 2020, so there isn’t much information about them yet. But they are the first generation in history whose parents widely used mobile device screens as pacifiers. The long-term effects of that are unknown. Expect Alphas to continue accelerating many of the diversity, education and technology trends that started with millennials and Gen Z.
The Great Recession contributed to what’s been called millennials’ “slow start.” For much of the last decade, millennials showed either a reluctance or an inability to engage in the big purchases connected to adulthood.
But the slow start hasn’t stopped them from spending altogether. Charles Schwab’s 2019 Modern Wealth Report indicated that 48% of millennials have spent more money than they can afford to participate in an experience with friends, while 49% are influenced by social media to spend money on experiences. Both figures were higher than Gen Z or the general population. The Schwab report also indicated that 61% of Gen Zers pay more attention to how their friends are spending versus their own saving, and that they’re heavily swayed by social media influencers.
Expect the sports industry to increasingly play up the experiential and social aspect of offerings over the next two decades. The Atlanta Braves hosted several “Selfie Sundays” this season where fans were allowed onto the playing field to take selfies with Braves players, and they also let Braves players take turns playing DJ during batting practice sessions. The players’ music playlists were then posted on Spotify for fans to access.
As the Braves have found, most Gen Zers would rather take a selfie with a pro athlete and share on social media than get an autograph. That’s a good trend for sports, which is full of social influencers, whether star players or the celebrities sitting (or standing) courtside.
“Sports are going to have to keep up with that trend,” said Doug Watson, Riot Games head of esports insights, “otherwise alternative forms of entertainment and influencers are going to start cutting away at the underlying business models.”
The esports paradigm
The tech fluency of Gen Z is the defining generational characteristic that will most affect sports. Gen Xers and millennials are digitally savvy, but Gen Zers have only known a world abundant with digital convenience and entertainment options. A Pew report from 2018 noted that 95% of teenagers had a smartphone and that 45% of them said they were online almost constantly.
Accordingly, the competition for Gen Z’s attention is unprecedented. A 2017 Think with Google report on the group said that 71% of 13- to 17-year-olds spent three or more hours per day online watching video, and nine out of 10 teens play video games on either their computers, smartphones or game consoles, according to Pew.
“This is an audience, which is probably the most highly educated that we’ve seen, that has the most information at their hands, that has a number of alternative options for their leisure time available to them,” Watson said. “And they demand innovation.”
Winning the attention of millennials and Gen Zers is the challenge for the sports industry. But because their phones are always in their hands, LeCraw said they’re easier for sports marketers to reach than previous generations. If done well, that could lead to increased brand exposure over the next 20 years, crucial for reaching a group of people motivated by their digital lives to spend money.
Those same phones can also potentially provide properties with valuable data on fans that can be used to tailor their experience. The ever-faster pace of change will make those kinds of business insights invaluable.
“You can’t stop learning about these people. This is a constantly changing, fluid group,” said Delaware North’s Merry. “We know we have to continually take the temperature of this group, understand what they want.”
No part of the sports industry is more closely linked to Gen Z than esports. Esports offers unprecedented access to its stars, streams everything, and uses cutting edge technology for viral moments during big events. In pursuit of younger fans, traditional sports will continue to borrow ideas like those from competitive video gaming.
Esports was well positioned to ascend because of millennials and Gen Zers’ affinity for video games — 97% of male teens play video games, according to the Think with Google report — but it will likely grow its position as a cultural force in the coming decades because of how it resonates with millennials and Gen Zers in key ways: an innovative digital-first product that is accessible on demand, on any device, and inexpensively; that’s full of culturally influential star players; and that’s played/watched/discussed by a diverse and global audience.
So, recent news that the U.S. Navy, just two years removed from spending $20.2 million on TV advertising, cut TV out of its 2020 advertising budget entirely shouldn’t come as a surprise.
Instead, the Navy will spend 97% of its advertising dollars — about $33 million — online. The bulk of that will be shifted into esports, in which the Navy will become a prominent sponsor and field a team. Research showed that the Navy could find its target audience — 17- to 28-year-olds — in the digital realm.
Lou DePaoli, the New York Mets’ executive vice president and CRO, knows that Generation Alpha, whose members have grown up with screens as pacifiers, are well on their way to joining that digital realm, too.
“I have a granddaughter who is 2 1/2, and I’ve seen her — this was at a year and a half — pick up my daughter’s iPhone and she knows instinctively when a notification comes in, to flick it up to get it off the screen,” DePaoli said. “So, 20 years from now, when she’s maybe working in professional sports, or is an athlete or just a fan, what’s it going to be for her?”