The future of youth: Education, entertainment, and relationships transformed

Investment implications

• We believe edtech could be a winner-takes-most market as opposed to winner-takes-all. It requires serious investment in IT training, pedagogy, and connectivity. Winners will likely be national champions with large home markets or business models that can gain international traction.
• Existing online platforms are poised for success as they possess strong development resources, expertise in key enabling technologies, cheap access to plentiful capital, entrepreneurial cultures, and low customer acquisition costs.
• This is an EM story first as EMs have weaker competition from public services, large young populations, and growth potential from extending penetration into new populations.
• Legacy education providers may retain some value but must change. They have content, brand value, real estate, and human capital resources but competition will drive corporatization of education systems. Qualification frameworks may become more competence centric.
• Education companies may partner with governments and existing educational institutions to digitize the traditional way of instruction and provide a holistic educational experience – rather than being entirely independent.
• Potential winners could be big tech, top-tier education brands, online content providers, digital talent platforms, EMs, and AI hardware/software developers.

Innovative entertainment

EM teenagers like Aisha are set to drive an explosion in gaming, which is highly likely to be an increasingly important part of their entertainment diet. EMs have a long runway to catch up with developed markets in both gamer penetration and spending. This is expected to quickly expand in India, China, and across EMs more broadly.

Within this trend, blockchain and non-fungible tokens will enable individualized virtual-item trading systems for users like Aisha to buy digital assets in games. As life becomes more virtual, collecting digital assets within games will likely be increasingly important to Aisha and her peers.

Furthermore, esports is a massively expanding market with enormous room to grow. While traditional sports spectator revenue is already 80% of sports participatory revenue, the esports market size is currently less than 1% of game revenue (Figure 2). We believe that esports will be huge for Aisha’s generation, particularly as improving technology (5G, mobile accessibility) and infrastructure (franchised leagues, training of e-athletes) help it rapidly expand.

The gamification of other industries will also be powered by the same innovations and youth demand, with broad potential in areas like education, training, and recruiting. We may see a future where gaming helps young people like Aisha learn or gain skills while enabling employers to evaluate her on characteristics like teamwork, leadership, and loyalty. 

Investment implications

• Leading game developers who own game IPs could benefit the most through expanding pie of esports and virtual items. Virtual-item trading could also bolster blockchain providers.
• Infrastructure enablers like esports operators that have more advanced content creation technology, work with a variety of game publishers, create diverse esports experiences, or help brands to reach mass audiences could see significant growth.
• Companies/founders with the gene of game development or a vision to revolutionize their traditional business through gamification may benefit.
• Game development may be platformized as a service and could help companies evaluate or train candidates/employees through games.

Relationships of the future

Perhaps the broadest implication for Aisha is her development of a digital identity. Tech’s impact on relationship building will reach far beyond dating to include social and professional relationships. As more interactions shift online, and privacy concerns are properly addressed, young people will increasingly develop online identities and personal brands that companies and users can potentially monetize. Surveys show young people place more value on projecting a certain brand/image, shared interests, and immediate feedback made possible by online relationships. Critically, they are also more comfortable sharing data and receiving sponsored content.

Aisha’s digital identity can help her with remote working, studying, online dating, recruitment, and participating in interest groups. She can maintain a personal brand that increases in value as her network and skills grow. AI-as-a-service can also offer Aisha increased odds of matching for dating or job opportunities. As these services develop, value-added features will likely differentiate platforms and portals through optimization, gamification, and security. Importantly, though EM is a huge market, localization will be critical as niche markets could have high growth potential.

Tech adoption in social, professional, and romantic relationship areas is in its early innings in most EM markets but has massive potential. Connectivity allows future youths like Aisha to find contacts and opportunities outside of traditional networks and locations. Moreover, mainstream entertainment is being replaced by livestreaming, social media, discussion boards, virtual celebrities, and short-form videos, many of which can offer Aisha digital communities. Across every aspect of her life, more relationships may happen outside of physical communities, with interactions heavily impacted by AI’s deep understanding of each individual — potentially having huge societal implications.

Demographic tailwinds — like rising affluence/discretionary spending, increased workforce participation by women, and greater urbanization — are key growth drivers to watch in this space. Notably, however, digital literacy and access can be exclusionary, and tech-driven echo chambers can bifurcate society. Finally, technology’s increased relevance could also lead to new regulations.

Investment implications

• Social networks and dating apps will likely maintain a meaningful presence in future relationship building. This is a winner-takes-most model based on the most effective combination of algorithms and data and should expand to social and professional applications beyond dating.
• Hardware, peripherals, connectivity, and semiconductors could all benefit from these trends, including providers of AR/VR, wearables, Internet of Things tech, sensors, and blockchain.
• Digital advertising and personal brands could see growth through various social networks and digital media platforms.
• Digital assets for virtual avatars may benefit blockchain (for record keeping), the growing gaming trends, and, potentially, developers of digital assets.

Bottom line

Life may look very different for someone like Aisha growing up in India or other EMs in the future. Technology will have massive implications for every aspect of her life, including her education, entertainment choices, and relationship options. From AI offering a curated education to the growth of esports and gamification to the broader personal and career impacts of her digital identity, Aisha’s future will be powered by today’s innovations.