In the never-ending search for the “new normal” in the entertainment industry, niche streaming platforms have carved out their own space alongside industry giants. As these platforms seek to differentiate themselves and attract loyal audiences, one demographic stands out as particularly crucial: Generation Z. Born between the mid-1990s and early 2010s, Gen Z represents a significant and growing consumer base with unique content preferences and consumption habits.
For streaming services, one key to capturing an audience lies in an unlikely combination: anime and foreign language content.
Understanding Gen Z's content preferences
To appreciate why anime and foreign language content hold such potential, it's essential to understand Gen Z's distinct characteristics as content consumers. As digital natives, they've grown up in a globally connected world, with an innate openness to diverse cultures and experiences. Having access to the world’s content (through services such as YouTube) has resulted a desire for authentic and diverse content that extends beyond one’s own immediate cultural sphere.
Gen Z is also known for its attraction to subcultures and niche interests who often prides itself on championing unique, under-the-radar content. This tendency has made them ideal targets for niche streaming platforms that specialize in specific genres (mediums – more on that later) or types of content.
The Anime phenomenon
At the forefront of Gen Z's content interests is anime, the Japanese animation style that has exploded in global popularity over the past years.
Anime's appeal to Gen Z audiences is multifaceted. Often mistakenly described as a genre, anime is more a “medium” that offers range of genres and storytelling styles. This range helped the CV19 “stuck-at-home” audience find many different types of content to try. Crunchyroll, the OG of anime streaming, experienced rapid growth to 15M subs by mid 2024, while major players like Netflix and Hulu have invested heavily in both licensing and producing original anime series.
This trend underscores why niche platforms used anime as a cornerstone of their content strategy (mainly Crunchyroll and HiDive). In fact, even in NFL obsessed America, Gen Z preferences lean in another direction. In a study done by Polygon, 42% of Gen was found to watch anime weekly, with 25% following the NFL. Gen Z athletes such as 100M Gold medalist Noah Lyles or even Myles Garret of the Cleveland Browns freely express their love of anime.
At present, Japanese anime attracts a predominantly young male audience, which is valuable for SVOD platforms, which have a typically heavy female-skewing audience. When we look at the present demographics, two pure-play anime streamers (Crunchyroll and HiDive) skew to a higher male audience than the other streamers. Interestingly, other niche services such as K-Drama service Kocowa lean heavier to a female skew.
Hallyu-Wave
Beyond anime, there's a growing interest among Gen Z viewers in international TV shows and movies from various countries.
This trend aligns with their global mindset and desire for diverse cultural experiences. Some niche streaming platforms have capitalized on this by offering a wide range of foreign language content with both subtitled and dubbed options, catering to different viewer preferences.
One example is previously mentioned Kocowa, the Korea-language service that has benefited from The Hallyu-wave (popularity of K-content, music, TV, etc. Once again, often labeled a “genre” K-content is more a medium with genres within it. Titles such as The Extraordinary Attorney Woo has little in common, genre-wise, with either Squid Game or Parasite.
The breadth of topics covered by Korean creators has given it staying power and consistent growth over the last decade-plus. The breakout artist for K-Content in the US is arguably PSY with “Gangnam Style,” which was YouTube’s first video to hit 1B views.
Once again, it is Gen Z leading the way with interest in K-Content. According to Parrot Analytics, more than 70% of the audience for Japanese shows and 60% for Korean is made up of people younger than 30 years old. This is an attractive demographic for streamers and advertisers as their buying habits are more fungible than older demos. The time to create brand loyalty is now!
Follow the money
In a world where scale and money matter most of all, foreign production and anime have a bright future.
Deadline reported in July 2024 data from Ampere Research that found Netflix and Amazon had “ordered the majority of their titles from out the US” and are ahead of rivals in the race for global commissions. Ampere reports that Netflix and Amazon accounted for more than half (53%) of all SVOD commissions globally in the first three months of 2024.
Cost of production in the US, lingering impacts from 2023 strike and the need to garner new subs outside the already saturated US market, add fuel to this fire. In Netflix’s last earnings call, the company reported that APAC drove subscription growth, accounting for 35% of their subscriber growth. There are now 50M Netflix subscribers in APAC, in a region of 4.3 billion that represents over half of the world’s population.
Challenges and considerations
While the potential of anime and foreign language content is significant, streaming platforms must navigate several challenges.
Licensing and copyright issues can be complex, especially when dealing with international content. Ensuring cultural sensitivity and providing appropriate content warnings is crucial to avoid alienating viewers or causing offense. What will be even trickier will be “ad safety,” an issue which will grow as streamers seed their feeds with ads.
Technical challenges, such as providing high-quality subtitles and dubs, as well as maintaining streaming quality for a global audience, require significant investment (although this seems like low-hanging fruit with the changing pace of AI). Additionally, competition from larger streaming platforms that are also recognizing the value of anime and foreign content means that niche services must work harder to differentiate themselves and provide unique value to their users.
As the streaming industry continues to evolve, niche and other platforms have a unique opportunity to capture the attention and loyalty of Gen Z audiences through anime and foreign language content. By understanding and catering to this generation's desire for diverse, authentic, and globally minded entertainment, these platforms can carve out a significant place in the market.
The future of content consumption is increasingly global, with boundaries between cultures becoming more permeable through digital media. As Gen Z's influence and purchasing power grow, the platforms that have successfully tapped into their unique preferences will be well-positioned for long-term success in the competitive streaming landscape.
Doug Montgomery CEO of Global Connects and former senior analyst covering content strategies and monetization at Aluma Insights. Douglas a 20+ year veteran research and analyst in the entertainment and retail space. During this time, he worked for Walmart Stores in Global Merchandising, aiding in integrating newly acquired overseas retail chains into Walmart. After this, Montgomery worked 16 years for Warner Bros. in 3 different countries (U.S., Japan, and U.K.) as a consultant / analyst for both WB management and their major retail partners. Montgomery managed the worldwide team that consulted to the global accounts (Amazon, Microsoft, Walmart, etc). In 2021, Douglas founded “Global Connects Media”, where he serves as CEO. Global Connects Media aids its clients in gaining access to the world entertainment and retail market through strategic insights and research. Douglas co-founded and produced “Global Stage Hollywood” Film Festival, focused on providing a platform for diverse groups around the world. The company’s key partners manage these changes and provide the best experiences for all stakeholders.
Doug is former Chairman of the Japan America Society of Southern California, a 115-year-old Non-Profit operating in California. During his time as Chairman, he founded and produced the successful Global Stage Hollywood film festival. Doug earned an MBA from The University of Southern California (Dean’s list) and a Bachelor of Commerce from The University of Alberta.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by StreamTV Insider staff. They do not necessarily represent the opinions of StreamTV Insider.