How gaming could upend the streaming wars

As Hollywood and tech heavyweights compete for streaming supremacy, the gaming industry lurks as a surprise challenger among younger consumers.

Why it matters: The streaming wars are already expensive enough, and now companies might need to even further bolster their offerings as younger consumers gain more spending power.

• When there are no more content companies to buy, entertainment giants could look toward gaming.
• "The acquisitions that we're seeing now and the rollup of a bunch of production studios, the buying of some smaller game houses that fit in well, I expect to see more and more of them," Kevin Westcott, vice chair of Deloitte's U.S. TMT practice, tells Tim.
• The gaming industry is coming off its largest deal ever with Microsoft's $68.8 billion takeover of Activision Blizzard.

By the numbers: According to Deloitte's latest Digital Media Trends survey, 24% of Gen Z consumers listed playing video games as their top entertainment activity, vs. 16% who listed watching TV shows or movies at home.

• Older consumers still veer toward more TV and film. Boomers overwhelmingly favor watching TV and movies, with 40% of that age group citing it as their most preferred entertainment activity.
• Gen Z and Millennials were the two generations least likely to view movies and TV shows as their favorite and the most likely to prefer gaming.
• Gen Z's love of gaming is not just concentrated to the U.S., either. Gen Z consumers in the U.K., Germany, Brazil and Japan all favored gaming over TV and films, and the divide was even greater than in the U.S.

The big picture: Netflix is already trying to get ahead of the others by making games a part of its service.

• The streaming giant has bought three smaller gaming studios, including Boss Fight Entertainment last week, and has released 16 games at no extra charge to subscribers.
• Last year, Netflix hired Mike Verdu, a former Facebook and Electronic Arts executive, to head up its gaming division.

Be smart: This is where Apple and Amazon are playing a different game than their streaming competitors.

• Apple TV and Amazon Prime already use streaming video as part of a larger ecosystem. Amazon Prime includes discounts on shipping and at Whole Foods, while Apple attaches access to Apple TV+ for those who buy new tech products.

What's next: Sony is expected to unveil its new PlayStation streaming service as soon as this week, Bloomberg reports.

The bottom line: Streaming services are fighting for people's time as much as their money. And these days, there are plenty of ways to spend both.