The mobile online checkout gets an express lane in 2016: let your finger do the shopping
Deloitte’s Technology, Media and Telecommunications (TMT) Predictions analyze trends for the coming year
(January 13, 2016) Toronto – Buying something with your smartphone or tablet will be easier this year as mobile touch commerce emerges in 2016, this according to Deloitte’s 2016 Canadian Technology, Media & Telecommunications (TMT) Predictions. The number of individuals who use a third party touch-based payment service to buy something on their mobile device (smartphone or tablet) is predicted to increase 150 percent to reach over a million users in Canada.
“Last year mobile payments began to go mainstream,” said Duncan Stewart, Director of TMT Research at Deloitte in Canada. “This year we’re seeing a continuation of that trend, whereby it’s getting easier and easier to use your phone to make secure transactions. The check-out process is made much simpler if all you need is your fingerprint to authenticate and authorize payment in just one or two touches. The days of filling out screen after screen of payment card details and both home and shipping addresses, we predict, are numbered.”
Deloitte’s annual TMT Predictions identify the key trends that are likely to have a significant impact on companies in the technology, media and telecommunications industry and beyond over the next 12 to 18 months.
Deloitte also predicts that in 2016 mobile will become the leading games platform by software revenue, reaching 37 percent of total gaming sales, surpassing both console and PC games. That’s big news for Canada’s gaming industry, which is the third biggest in the world, contributing $2.3 billion to GDP and employing over 20,000 full time equivalents. Far from taking over the gaming industry, mobile is less lucrative than traditional PC or console games, with average revenue of only $40,000 per mobile game compared to $2.9-million per PC game and $4.8-million per console game.
The influence of mobile will not shake-up how trailing millennials (18-24 year olds) use personal computers either. In fact, despite being the smartphone generation, 18-24 year olds are likely to be the most pro-PC of all age groups in 2016. Their ownership, intent to purchase and use of PCs will likely be higher than any other age group and the Canadian population as a whole. Additionally, in the face of digital media, Deloitte predicts stable box-office revenues for the North American movie industry in 2016.
“What we’re seeing in terms of the bigger picture for 2016 is that mobile devices continue to be an important – even vital – part of our daily lives, capturing a significant amount of our time and money, but their influence only extends so far,” said Robert Nardi, Partner and National TMT Leader for Deloitte in Canada. “For the majority of Canadians, our smartphones and tablets complement or enhance rather than replace the traditional products we’re used to or, only slightly alter our behaviours.
TMT Predictions most relevant to Canada in 2016 (all dollar amounts are USD)
Mobile touch commerce emerges
The number of people who use a third party touch-based payment service to make a purchase on their mobile devices will increase 150 percent to reach over a million users in Canada in 2016. Deloitte found that as of mid-2015, 29 percent of Canadians browse shopping websites on a weekly basis, but only 6 percent make a purchase. Touch commerce compacts the time taken between browsing to transaction on a mobile phone or tablet from minutes to mere seconds, simplifying the check-out process. The result is likely to be a decrease in ‘cart abandonment’ in 2016, when consumers start buying something on mobile, but give up before purchasing.
Mobile games: Leading, but less lucrative
Mobile will become the leading games platform by software revenue in 2016, generating 37 percent of sales, up 20 percent from 2015. This compares to 34 percent for PC games and 29 percent for console games, up just five and six percent respectively from 2015. Revenue per game by platform will vary significantly: Deloitte predicts $4.8-million per console game ($145 per console player), $2.9-million per PC game ($50 per PC games player), but just $40,000 per mobile game ($20 per mobile games player).
Mobile ad-blockers: Saved by the app?
Mobile ad-blockers will place less than $100-million of revenue at risk in 2016, or just 0.1 percent of the $70-billion global mobile advertising market. Deloitte expects 0.3 percent of Canadian mobile owners will use an ad-blocker in 2016. Only about 40 percent of Canadian mobile devices are likely to have native ad-blocking capability built-in, and the majority of time spent on mobile devices is app-based and ad-blockers only filter out browser-based content. This means that ad-blocking is only applicable to a minority of devices, for a minority amount of time.
Trailing Millennials are the pro-PC, not the post-PC generation
Canadian trailing millennials (18–24 years old) will not abandon personal computers in 2016. While they may be the smartphone generation, their ownership, intent to purchase and use of PCs will likely be higher than any other age group and the Canadian population as a whole. In a 2015 Deloitte survey, 25 percent of Canadians 18-24 hope to get a new laptop in the next 12 months, and Canada was one of the only countries surveyed where trailing millennials were more likely to have access to a laptop than a smartphone: 93 percent vs 91 percent! Trailing millennials consider smartphones and PCs complements, not substitutes.
Virtual reality: A billion dollar niche
Virtual reality headsets will move from the lab to the store for consumer purchase in 2016 with hardware and software sales totaling $1-billion globally, and less than $30-million in Canada. Despite the hype around VR, this is still very much a niche market.
Women in IT jobs: Worse than you thought and not getting better
Deloitte predicts only 22 percent of information technology (IT) jobs in Canada will be held by women, lagging the US which is at 24 percent. This is likely to be almost unchanged from 2015. With gender parity the goal the solution will be complex and take time, decades even. To get there, we need improvements to the education pipeline (only 25 percent of those studying computer science in Canada are women, down from 2009 levels of 27 percent); the recruiting and hiring process; retention rates; pay and the path to promotion are all required.
The Award for stable box office revenues in the face of digital media goes to …
The value of movie theatre admissions in the U.S. and Canada will fall by about three percent in 2016 to about $10.6-billion, with about 1.3 billion tickets sold. Box office success is largely dependent on the slate of movies released, but since 2002 it has never gone down more than six percent or up more than 10 percent. In 2016, Deloitte predicts average annual growth of one percent (plus or minus 10 percent) and the number of tickets sold to decline about one percent.
US TV: Erosion, not implosion
The U.S. traditional television market, a bellwether for the Canadian market, and the world’s largest at about $170-billion in 2016, will see erosion on six fronts: the number of pay TV subscribers; pay TV penetration as a percent of total population; average pay TV monthly bill; consumers switching to antennas for watching TV; and live and time shifted viewing by the overall population, especially millennials 18-24 years old. Despite concern of traditional TV collapsing, Deloitte predicts the decline will be gradual over time. Virtually all of these US trends are also being seen in Canada, although Canadians watch about 240 minutes of live and time shifted TV daily, compared to 320 minutes in the US.
Cognitive technologies enhance enterprise software
By the end of 2016 more than 80 of the world’s 100 largest enterprise software companies (by revenues) will have integrated cognitive technologies in their products, signalling a true coming of age for AI (Artificial Intelligence). This is a 25 percent increase on the year prior. By 2020, Deloitte expects that about 95 percent of the top 100 companies will have incorporated one or more cognitive technologies. Machine learning, natural language processing and speech recognition will be the most important cognitive technologies in the enterprise software market in the year ahead.
Gigabit/s to the home makes its case
The number of gigabit per second (Gbit/s) Internet connections available to Canadians will surge to over four million by the end of 2016. It’s hard to say how many will subscribe in that first year, but we expect at least 100,000 homes by year end, in line with global adoption. Rising demand will be fueled by increasing availability and falling prices. Those hundred thousand subscribers; however, represent less than three percent of Canadian customers on networks capable of Gbit/s connections as of the end of the year.
About Deloitte’s TMT Predictions
Deloitte’s TMT Predictions are based on worldwide research supported by in-depth interviews with clients, industry analysts, global leaders and more than 8,000 Deloitte member firm TMT practitioners. Over the last five years, Deloitte was more than 80 percent accurate with its TMT predictions.
For more information about TMT events happening across Canada contact: TMTpredictions@deloitte.ca
Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private companies limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.