As an investor with a focus on social experiences (and as party-lovers ourselves), we mourned the covid-induced collapse of the nightlife industry. And so did young people all over the world. But the thing is, their tastes were changing anyway. The pandemic has just accelerated the movement.
For example, take Generation Z, the generation of Greta Thunberg. They’re surprisingly health-conscious and not exactly famous for being party animals. A lot of them reached drinking age during the heights of the pandemic, but when the clubs and bars finally reopen, many will stay away. Why? To find the answer, we’ll need to examine their attitudes towards partying.
But not just that. Because for them, fun doesn’t revolve around drinking. We need to look at the other ways they spend their leisure time. For example, a latent effect of the pandemic is that they’re choosing new ways to socialize and build communities. And they’re leveraging new technologies that were designed to fill the void left by shuttered clubs, bars, concert halls and airports.
So we see some exciting new opportunities arising out of established and emerging consumer trends among younger generations. Here’s a summary of what we’ll be covering;
- The increasing demand for healthier drinking alternatives
- The advent of social gaming and in-game events
- The general popularity of live events that are accessible online
- The comeback for offline experiences (aka roaring Twenties 2.0)
Young people want healthier drinking alternatives
Gone are the days of teenagers and twenty-somethings binge drinking until they pass out. Today’s younger generations (Generation Z and millenials) are far more likely to abstain from heavy drinking or even from consuming alcohol at all.
The lockdown has simply accelerated this trend. The absence of bars and clubs means less temptation. Many young people are even discovering that sobriety has sex appeal. The Dry January movement and the #soberissexy hashtag have attracted millions of global participants for several years now, but January of 2021 saw a significant uptake in interest.
For example, YouGov surveyed nearly 15,000 Americans last December and found that 15% of adults had planned to participate in Dry January, up from 10% last year. And they aren’t shy about sharing this fact on social media (amplifying the social proof effect).
Running in parallel , is the tendency to prefer lower alcohol alternatives to traditional beverages. Young people who don’t abstain completely are choosing options that won’t make them flat-out drunk. They want to enjoy the finely-crafted taste and the complex flavors without the compromising effects of stronger alcohol percentages. Again this isn’t new, but it presents an opportunity to coax younger consumers out of their lockdown hibernation and party in a healthier way.
Low-alcohol brands are on the rise
In the US, Hard Seltzer has become a healthier upgrade from the alcopop — a fruity alcoholic beverage that achieved notoriety for camouflaging booze in the candy colors of a softdrink. Hard Selzers on the other hand, generally have less sugar and lower alcohol content. US brands such as White Claw (“there ain’t no laws when you’re drinking claws”) are incredibly popular and are part of a wider boom in the market for “No and low” (NOLO) alcohol alternatives.
Non-alc spirits sector is estimated to reach 700,000 nine liter cases by 2024 by IWSR; based on our consumer reasearch on Gen Z & Millenniels, the potential Non-alc alternative market size is over €1 billion by 2024.
Pernod Ricard has pounced on this trend and recently bought a majority stake in Ceder’s — an alcohol-free spirits brand. Diageo too has upped their shareholding in alcohol-free spirits brand Seedlip. And more investors are partnering with brands like these — brands that are expected to ride the crest of this trend.
Brands riding the NOLO trend
Games are becoming a place to party
Since we’re all trapped at home and longing for entertainment and distraction, social gaming has been able to flourish. Unlike old-school gaming and esports, young people now use games to have fun and make friends without taking the gaming aspect too seriously. So games with a focus on social interaction have risen in popularity.
For example, Animal Crossing and Among Us have become one of the hottest go-to places to bond with friends and colleagues online. And in April 2020, Epic Games broke their previous streaming records when their most popular game Fortnite became the venue for an in-game concert by American rapper Travis Scott. The event was titled “Astronomical” and it undoubtedly lived up to its name when 12.3 million players joined to watch the 9-minute virtual performance.
This trend has inspired traditional brands to make inroads into the gaming world. A great example is DHL’s sponsorship of the Dota 2 tournament run by the Electronic Sports League (ESL). EffiBOT, a digital avatar of DHL’s autonomous mobile robot, delivered goods to players in game, prompting the crowd to chant “DHL, DHL, DHL” in delight.
Andreessen Horowitz has described this next generation of games as ‘..the new mall’ and ‘the next social network’. Eager to catch up, more gaming companies are introducing more social features such as voice chat, live streaming and customizable avatars.
This tendency works in the opposite direction too: introducing gaming features to the digital hangouts that have become ubiquitous during the pandemic. For example, startups including Bunch and Houseparty have implemented games in their group video chat experience to spice things up and prevent conversation from drying out.
So, there’s a huge opportunity for traditional gaming companies and communication startups to shape the future of this space and invent the next hybrid experience.
Games and apps that encourage social interaction
Re-imagining the live music experience
After shows were canceled, artists and promoters tried to maintain visibility by live streaming events on social media. In March 2020, DJ D-Nice streamed live on Instagram for the first time, with an audience of more than 100,000 turning in.
The bombastic electronic dance music festival Tomorrowland produced its first digital festival in July 2020. With no limits on audience capacity, over one million viewers tuned in during the live stream – more than double the expected number for the physical event. What’s notable is that partygoers were still willing to pay for the privilege, with the cheapest tickets selling for €12.50. On the back of this success, Tomorrowland followed up with a New Year’s Eve party that was attended by people from more than 151 different countries.
We’ve also seen traditional nightlife experiences enhanced by VR and AR. One of early pioneers in this emerging technology is Wave. The concert-streaming company creates interactive concerts by capturing performers’ real-life motions, whey they use to recreate the show in a VR environment. To date, Wave has released VR concerts from big-name artists such as John Legend and The Weeknd who has since invested in the company.
We expect more live-streamed music events to emerge with a focus on artist-fan engagement. This is because the events industry will be one of the last to be released from lockdown and will likely remain online-only until 2022. Even when live events are possible again, we believe that hybrid online/offline events will become the norm. After getting so much experience in organizing online events, event producers will continue to harness the unlimited capacity of online attendance while preserving the irreplaceable ambiance of an in-person event.
Again, the opportunity here is for technology companies who can best address the requirements of online event promoters and attendees.
Technology platforms that have reshaped how we experience live music
Embracing offline revival
Despite the proliferation of novel online formats, we still yearn for new real-life experiences. Before the pandemic, we could satisfy this need by traveling to unfamiliar destinations. Now, the restrictions of movement have forced us to rediscover what we’ve overlooked in our own backyard. And the increased isolation has led us to savor face-to-face communication even more.
Maybe you’ve noticed the subtle change in the air. Even die-hard introverts are making more small talk with the neighbors or lingering longer for a bit of small talk at the local späti. Since we’re all in home office, we hardly leave our neighborhoods and this has given us a new appreciation of our local communities.
Consequently, more consumers are forgoing to big-box stores for smaller businesses in their neighborhoods. An increasing number of people are looking to support their local restaurants, shops, salons and bars in an effort to keep them afloat. A lot of this activity is organized on neighborhood networking platforms like nebenan.de, which saw an incredible upswing during the pandemic.
Additionally, people are staying closer to their home base and traveling more within their own countries. Indeed, spending through domestic tourism is expected to rise by 80% until 2029. So, demand is increasing for apps that facilitate authentic local experiences.
Soulpicks is one example — it’s a social recommendation platform for places of interest and “a community of like minds, experts and locals sharing places they love”. There’s also Hollabox where you can find video reviews filmed by people who are exploring your city. Those are just a couple of examples. We believe that there are still many untapped, innovative ideas for using technology to enrich local communities and bring more citizens together.
Technology companies connecting communities and people with local expertise
The nightlife ecosystem is shifting dramatically, but although some changes are hard to bear, we believe that this shift offers up many exciting new possibilities. Alcohol has always been the bedrock of the nightlife industry, and we’re seeing the rise of new brands and products that reflect the wellness-oriented mindset of today’s youth. This trend is only going to continue. We’re also seeing a burgeoning openness to new digital platforms as a viable alternative (or supplement) to in-person events and gatherings. And lastly, we’ve seen that local knowledge usually leads to the best nights out and people want more of it. Not just to party but also to discover authentic local experiences and connect with your neighborhood. Lastly, history has told us that there is always a counter-trend to a trend so we won´t be surprised (and unhappy) if we are heading towards another roaring decade after the pandemic is under control.
We won’t let this crisis go to waste. Through investing and supporting the future of the nightlife industry, our vision is to drive innovation and rethink Best Nights. And who knows — maybe one of the next unicorns will be founded during these challenging times?
If our mission resonates with you, and you feel inspired to join the fray, reach out to our team @LinkedIn or @M-venture.de