The ‘Experience Economy’ Is Here, but It’s a Digital One
Data from the American Consumer Expenditure Survey confirms that there has been a shift in consumption towards experiences, but that these are largely digital rather than real world. Between 1994 to 2014, average household spending shifted almost dollar for dollar from goods ($-1467, -23%) to digital experiences ($+1,436, +125%). The shift was more pronounced among those aged 25-34 (goods: $-945, digital experiences: $+1,489). Meanwhile, consumption of real world experiences as a share of household spending declined somewhat for the population overall (-5%), though it rose among 25-34 year olds (+12%).
Note: The authors define ‘digital experiences consumption’ to comprise screen-based and digital music experiences, including: hardware, data, software and services. ‘Real world consumption’ includes restaurants, trips, and venue admission fees.
The growth in digital expenditures seems to reflect the rise of new technologies since 1994 (personal computer, internet, mobile, social media), their rapidly growing usefulness and their frequent upgrading. The shift from a goods to a digital experiences economy is not necessarily a more sustainable one. This economy will likely expand with the growing capacity of digital products and services (internet of things, gamification, AI, VR/AR, and 3D printing), and as generation Z (‘always connected(link is external)’) become consumers themselves. At the same time, the growth in real world expenditures among 25-34 year olds raises the question of whether it could signal a generational shift in consumption over their lifecourse or rather be a defined period in time (wage stagnation, minimalism trends, ease of online shopping and selling) reflecting the life stage of these consumers (primacy of dating, social life, living at home, student debt). Real world experience industries (in arts, culture, entertainment, sports) need to consider what digital means for them as digital experiences may grant cheaper access to these real world activities.
Source: The experience economy has arrived and it isn’t what we thought