The document discusses insights from McKinsey's iConsumer research on digital behaviors of youth consumers aged 13-34 compared to older consumers aged 35-64. Some key findings include: 1) Youth consumers are early adopters of new digital devices and services, owning 1.5-2 times as many smartphones, tablets, and using social media, video chat, and on-demand video more. 2) Youth digital lives revolve around mobile devices, spending over 3 times as long on mobile activities compared to older consumers. 3) Youth are more likely to pay for digital content like apps, videos, magazines, with mobile as their primary content access point. 4) Social networks have replaced

1. Insights from McKinsey’s Global iConsumer Research
The Young and the Digital: A Glimpse
into Future Market Evolution

2. iConsumer Maps Shifts in Digital Behavior Around the Globe
This article is one of a series documenting the changing digital lives of consumers.
Previous reports—The World Gone Digital and Gaming Expands Its Presence in the
Digital Universe—are available on McKinsey.com. McKinsey began its exploration
of consumer digital behavior in 2008. By the end of 2011, we had surveyed more than
100,000 consumers across North America, Europe, India and China to understand how
consumers conduct a range of activities, from core communications like e-mailing or
socializing, to consumption of types of content (video, audio, games, etc.) to commerce
and creative applications. iConsumer research now covers 15 countries globally. As
discussed in this article and the previous reports, digital has upended how we interact,
how we entertain ourselves, how we buy, and how we work. The analytics and insights
from our iConsumer data can help companies identify new trends at the global, market
and consumer segment levels as well as isolate consumer use, buying factors and
attitudes. iConsumer has been used to identify investment themes, augment proprietary
research and segmentation, improve multi-channel execution, and build value-creating
customer lifecycle management capabilities.

3. The Young and the Digital: A Glimpse into Future Market Evolution
Insights from McKinsey’s Global iConsumer Research 1
Bridging the Current and Future
Digital Divide
How well do you understand young consumers—those folks under 35? Could you describe how they
communicate, with what devices, and why fairly accurately? Important questions to answer, particularly
for high tech, telecom and media firms. Half-trillion dollar questions, actually, as that is McKinsey’s
estimate of the aggregate market that will be affected by this cohort. While many commentators note
the swift uptake of all things digital by younger consumers, new insights from McKinsey’s iConsumer
research quantify the distinct differences in digital device usage and digital content consumption
between U.S. consumers aged 13-34 (youths) and consumers aged 35-64, and the implications these
differences raise for telecom, media and entertainment, and high tech companies.
What we found is that American youths have digital lives distinct from older consumers: they don’t and
won’t buy PCs or many laptops preferring smartphones or tablets. Landlines are a curious waste to
them, as are CDs and most hard copy media—newspapers, magazines, and books. Not surprisingly
they are almost twice as likely to own portable digital devices as older consumers, and lead the way
in adopting new services such as video chat, social media for many types of communication, and
on-demand video.
But it’s not only their current behavior and preferences that present a challenge to many companies, or
even the greatest challenge. It’s what it portends for the future. Based upon current youth penetration
and usage, projected cumulative revenue from youths in emerging digital streams over the next three
years tops $15 billion across mobile advertising , mobile apps, on-demand digital video, and social
network advertising. However, their choices in devices and content providers will affect $500 billion
in annual estimated spend across PCs, mobile/landline voice, and paid TV. Brands that ushered in
the digital age such as Microsoft, Sony and Yahoo! don’t resonate with youths as much as Apple or
Google as the digitalization of life continues. Is losing this market a foregone conclusion for more mature
companies? No, but it will require some new thinking. Companies will need to invest in capabilities,
services, partnerships and business models that reach and retain this critical segment. In short, take
action to bridge the divide before it becomes an abyss.

4. 2
Youth Segment Drives Current and
Future Digital Consumption
“Early adopters” may be an understatement, at least in some categories of activity. In the past
five years, there has been rapid proliferation of new platforms and digital offerings and youths
drove adoption of many of these devices and services. Compared to consumers aged 35-64,
youths are 1.5 to 2 times more likely to own a smartphone, tablet, internet enabled gaming
console, or internet video box. Similarly, youths are more than 1.5 times more likely to go online
to communicate through social networks and VoIP/video chat or access entertainment such as
online and OTT video. (See Figure 1).
Figure 1: Youths have 1.5–2.0X penetration of connected devices and online digital activities 13-34
35-64
Penetration rate of device ownership Penetration rate of digital activities 1
Percent, 2011 Percent, 2011
63 85
Smartphone Online video
38 1.7x 58 1.5x
19 86
Tablet Social networks
13 65 1.3x
1.5x
44
VoIP/ video chat
23 1.9x
45 41
Internet enabled
OTT video 2
gaming console 23 2.0x 22
1.8x
Internet video box 11
(e.g., AppleTV) 6
1.7x
1 Penetration rate based on users who do the activity at least once a month across any device (PC, mobile, tablet)
2 OTT (over-the-top) is defined as consumption of internet-based video on TV via connected devices
SOURCE: 2011 McKinsey survey of ~20,000 US internet users, aged 13-64
Surprisingly, when further segmenting youths into the most common life stages—teens (13-17),
college-aged (18-21) and young adults (22-34)—there are minimal differences in penetration
rates of devices and activities. The two exceptions are online gaming, which skews slightly
towards teens, and VoIP/video chat, which is favored by more college-aged youths. The most
dramatic drop-off in usage occurs after consumers “age out” of their youth in their mid- to

5. The Young and the Digital: A Glimpse into Future Market Evolution
Insights from McKinsey’s Global iConsumer Research 3
late-30s. The most probable explanation is that this post-youth stage of life is when many
consumers have young children and career demands that combine to limit the amount of time
available for device usage or quick adoption. The high level of familiarity with digital devices and
channels and the consistency of digital behavior before consumers reach 35, however, suggest
an opportunity and challenge to device makers and content providers alike. Companies will
need to work harder to create offerings that would maintain usage by the 35-44 year old cohort,
and adopt different customer management approaches for this time-starved group.
EEven more compelling than adoption of devices is the higher willingness of youths to pay for
digital content. We found that across the content menu (see Figure 2), youths are 1.5 to 2.3
times more likely to purchase premium content subscriptions and apps. Many use their mobile
device as the predominant gateway to news, entertainment, and communication. Unlike
older consumers, youths may not have existing non-digital subscriptions to magazines and
newspapers, or even a landline phone or paid TV service, so they are not duplicating channels
or costs by paying for digital content. The relative portability also drives consumption of
digital content.
The implications of this are significant for content owners who are looking to drive more revenue
from subscription services. Combining subscription/transaction services of youth-oriented
content optimized for digital platforms could habituate more consumers to turn to digital
channels exclusively, which could extend into later life stages.
Figure 2: Penetration of digital content spending by activity/product by age segment
Youths Other
Content type (13-34) (35-64) Difference
Paid subscriptions
Subscription for premium video content on your PC 20% 12% 1.6x
Online newspaper subscription (e.g., Wall Street Journal Online) 11% 5% 2.3x
Digital reader newspaper subscription (e.g., New York Times on Kindle) 31% 18% 1.7x
Online magazine subscription (e.g., The Economist) 12% 6% 2.0x
PC2Phone (e.g., SkypeOut) 20% 13% 1.5x
Mobile or tablet app purchas (users who spent more than $0)
es
Purchasing a game app 31% 19% 1.6x
Purchasing an app version of a magazine or newspaper 16% 10% 1.7x
SOURCE: 2011 McKinsey survey of ~20,000 US internet users, aged 13-64

6. 4
Mobile Devices as the Preferred Vehicle for
Communication and Entertainment
With the rapid proliferation of smartphones, mobile is quickly becoming the device of choice for online
activities. This trend is particularly noticeable in youths who spend over three times the number of minutes on
their mobile device for common online activities than those over 35+. For example, both the youth and 35+ age
groups spend more time on email on their PCs than mobile phones, but as a proportion of time spent,youths
spend 26 percent of total email time on their mobile versus only 12 percent for the older age group (see Figure
3). Youths’ preference for mobile is also evident in the time spent browsing the web and using social networks;
our survey shows that even when they are near a PC or laptop they often prefer using their smartphone to
access and consume content because it is more convenient and personal.
Furthermore, while mobile voice has long been cannibalizing land-line phone usage, traditional telecom
players are now seeing the next wave of increased competition from VoIP/video chat (e.g., Skype, Facetime).
Especially in youths, minutes devoted to VOIP/video chat are starting to reach that of mobile phones and
have overtaken landlines, whereas older demographics are still heavily reliant on traditional methods of
communication (see Figure 4).

7. The Young and the Digital: A Glimpse into Future Market Evolution
Insights from McKinsey’s Global iConsumer Research 5
Figure 3: Youths 13-34 spend over 3x the time on their mobile than those 35-64; in addition, youths spend
a greater proportion of each activity’s time on mobile than on PC
Percent of each activity’s time spent on
MOU on mobile activities mobile vs. PC
Indexed minutes of use per day Percent
100
31
Browsing 28 Social network
19
30
Music
3.0x 23
Social Network 26
28
Browsing
15
Music 18 33 27
Games
13
10
Games 13 6 26
Email
5 12
Email 8 5
Video 8 5 16
2 Video
10
Aged 13-34 Age 35-64
SOURCE: 2011 McKinsey survey of ~20,000 US internet users, aged 13-64
Figure 4: Older audiences rely more on traditional talk and landline while younger ones employ
video chat over landline
Voice activities usage by age
Percent total MOU by platform, 2011
57 53
Mobile Talk 60 60 63
68 64
6
13
VOIP/ 22 12
21
Video chat
27 17
41
30
24
Landline 18 18 15
10
13 to 14 15 to 17 18 to 24 25 to 34 35 to 44 45 to 54 55 to 64
1 Voice media usage as defined as average minutes of use for mobile talk, Voip/Video chat, and landline usage
SOURCE: 2011 McKinsey survey of ~20,000 US internet users, aged 13-64

8. 6
Social Networking as
Communication Central
With the continued demand for real-time communication with and among multiple people,
social networks, particularly Facebook, are emerging as a core online activity. For youths,
social networks have displaced email (by proportion of online minutes of use per day) on both
PCs and mobile phones (see Figure 5). Of those who own smartphones, 75 percent of youths
use mobile social networks at least once a month vs. 48 percent of older smartphone owners.
Social networks also are becoming information and entertainment portals as many youth
consumers see them as the most convenient way to share videos, photos, and other content
among friends and family. As a result, marketers should be adapting their digital strategies
to incorporate social networks as an increasingly important communication channel to drive
word-of-mouth marketing.
Figure 5: Youths focus on social networking, while older audiences spend significantly more time on email
PC activities usage by age Mobile activities usage by age
Percent total MOU by platform, 2011 Percent total MOU by platform, 2011
Email 7 8 7 Browsing 6 7
12 11 12 13 10 14
16
24 Email 12 10
Video 20 18 33 9
20 16 14
14 14 11 19 27
Video 12
13 11 33
Browsing 21 22 10 11
30 9
34
35 Social 31 38
7
43
36 36
Music 23 36 32
22 30
20
16 27
14
9
8 Music 37 34
Social 30 27 26 26
25 23 25 23
20 18 19
13
13 to 15 to 18 to 25 to 35 to 45 to 55 to 13 to 15 to 18 to 25 to 35 to 45 to 55 to
14 17 24 34 44 54 64 14 17 24 34 44 54 64
SOURCE: 2011 McKinsey survey of ~20,000 US internet users, aged 13-64

9. The Young and the Digital: A Glimpse into Future Market Evolution
Insights from McKinsey’s Global iConsumer Research 7
On-Demand Video has Growing
Following
As digital platforms multiply, consumer video-viewing habits have changed as well. Overall
TV viewing time has increased slightly across all age groups, but youths are displacing regular
(linear) TV with more on-demand internet-enabled video. Over-the-top (OTT) has traction with
41 percent of youths, who watch OTT video at least once a month versus only 22 percent of
consumers aged 35-64. This could, in part, be driven by the proliferation of internet-enabled
gaming consoles owned (or at least controlled by) youths as many are already integrated with
leading OTT video service providers (e.g., Netflix). Roughly a third of all OTT viewing today is via
gaming consoles, which skew heavily towards youths (41 percent of youths, who watch OTT
video at least once a month versus only 22 percent of consumers aged 35-64. ) (Figure 6).
Across non-TV devices (PC, mobile, tablet), youths’ online video adoption rate is 46 percent
higher, and time spent viewing is nearly 2 times that of older consumers. This demand for
anytime, anywhere video is driving opportunities for new areas of competition and innovation
across multiple platforms for both traditional and emerging video players.
Advertisers must refine marketing plans so that they reflect this new video-viewing behavior
and get creative about targeting youths who are time-shifting and consuming video
on-demand across devices.
Figure 6: Older audiences are watching more live TV and younger ones are watching OTT
55 54
60 61
Regular TV 65
73
78
13 11
11 10
PPV/VOD 12
12 19
13 17 8
DVR 11 6
18 13
11 14 12
OTT 10 10
4 2
Audio 2 4 3 3 3 2 2
1 3 to 1 4 15 to 17 18 to 24 25 to 34 35 to 44 45 to 54 5 5 to 6 4
SOURCE: 2011 McKinsey survey of ~20,000 US internet users, aged 13-64

10. 8

11. The Young and the Digital: A Glimpse into Future Market Evolution
Insights from McKinsey’s Global iConsumer Research 9
Youth Brand Affiliation and Online
Preferences are Also Distinctive
In addition to the differences in digital behavior between youths and older consumers, it is also clear that
some brands and platforms hold particular appeal for younger consumers. Given youths’ reliance on mobile
devices, as well as their general interests and digital behavior, it is no surprise to find Facebook, VEVO, Apple
and Viacom Digital among the top online properties for youths,. The challenge for companies seeking to serve
more of the youth market themselves is learning from these sites, and finding how to leverage or affiliate with
them (or adopt their attributes) to generate more interest from youths. Companies may need to rethink their
creative ad content and placement, for example, and experiment with combinations of content and ads to
determine what actually drives higher penetration in the youth segment.
Youths are the leading indicators of future digital demand. Devices such as smartphones and tablets, and
online offerings in social networks, online and OTT video, and VOIP/video chat are but a few examples of
emerging changes in the digital revolution. The current youth generation will grow into an older generation
of relatively tech-savvy adults compared to the current group of 35+, but youths as an age group will likely
continue to drive adoption of the latest devices, content, and digital services yet to come.
***
The $500 billion future that young consumers will drive has actually begun, although their current impact is
unevenly distributed. But we’re confident that more and more youths’ preferences will shape the digital world
as they gravitate to and integrate certain brands, platforms, and activities into all facets of their work and
personal lives. Companies that don’t win youths’ attention now may be in danger of creating the next VHS of
the digital age–a business that will wither as this influential cohort declines to engage with it.
McKinsey’s iConsumer research can provide companies with deeper insight into the critical youth segment
and help companies become more relevant to it by:
1. Ensuring that they are active in and optimizing the right platforms to reach youths, be it mobile, tablets,
social media, streaming on-demand video or all of these
2. Helping them affiliate with or become one of brands youths care about by refining services and products,
and marketing, to appeal to the segment
3. Adopting a business model that reflects youths’ digital behavior, this may mean rebalancing ad—
versus subscription-based revenue models, or making greater use of mobile apps to support products
and services.
Many brands and content providers have already taken steps to become or remain relevant to youths, but
some have not and will pay the price, either in terms of lost share or missed opportunities. Vigilance is critical,
allowing companies to adjust their approaches as quickly as youths’ change their digital behavior.

12. For more information on McKinsey’s iConsumer research, please contact:
Bertil_Chappuis@McKinsey.com
Ewan_Duncan@McKinsey.com
Naomi_Neruda@McKinsey.com
January 2012
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