Deloitte Global Technology, Media and Telecommunications 2022 predictions
chip shortage continues; pandemic-fueled digital connectivity to wellness, sports, and enterprise explodes
Published: 16 December 2021
- Wi-Fi 6 devices are quietly outselling 5G devices by a large margin, and likely to continue for next few years
- Chips will remain in short supply next year and some component lead times will stretch into 2023
- Wearable wellness — 320 million consumer health and wellness wearable devices will ship worldwide
- Non-fungible Tokens (NFTs) for sports media to generate more than US$2 billion in transactions
- Games consoles reach 50th anniversary with record revenues, with revenue per console player substantially outstripping mobile and PC gamers
- At least 150 million paid subscriptions to streaming video-on-demand services (SVOD) will be cancelled worldwide, with churn rates of up to 30% per market.
Deloitte Global has released its Technology, Media & Telecommunications (TMT) Predictions 2022 report, which identifies the global TMT trends most likely to impact businesses and consumers in the coming year. The report explores how many of these trends are currently being driven by economic and societal shifts brought on by the global pandemic.
"The COVID crisis continues to accelerate our adoption of technology and increase our levels of connectivity via the digital world,” said Ariane Bucaille, Deloitte Global Technology, Media & Telecommunications Industry leader. “There is enormous demand for chips as more and more products become digitally connected, powering everything from our multiple devices to smart vehicles. And connectivity is only going to expand with such technologies as Wi-Fi 6 and 5G, reinforcing the rapid digital transformation all industries and businesses are currently witnessing.”
Taylor Lam, Deloitte China Vice Chairman and Technology, Media & Telecommunications Industry Leader, said, COVID-19 has greatly accelerated the development of the digital world. With the development of technology such as Wi-Fi 6 and 5G, taking off of semiconductor industry and the development of intelligent devices, our future is not only the connection between people, but also between people and things, and even the connection between things, to realize the real interconnection of all things and create a better life for mankind.
Wi-Fi 6 outselling 5G devices
The last two years saw many countries adopt 5G, but Wi-Fi 6 devices are now quietly outselling 5G devices by a large margin and will likely continue to do so for the next few years. Deloitte Global predicts that more Wi-Fi 6 devices will ship in 2022 than 5G devices, to the tune of at least 2.5 billion Wi-Fi 6 devices versus roughly 1.5 billion 5G devices. The reason for this is that Wi-Fi 6, just as much as 5G, has a significant role to play in the future of wireless connectivity—not just for consumers, but also for the enterprise. Smartphones, tablets, and PCs are some of the most popular Wi-Fi 6-equipped devices, but Wi-Fi 6 is also used in many others, including wireless cameras, smart home devices, game consoles, wearables, and AR/VR headsets.
Taylor said: “Though Wi-Fi 6 and 5G are equal partners in terms of building solutions, our survey shows that enterprise Wi-Fi 6 pilots and deployments are outpacing 5G. One likely reason is cost, as Wi-Fi 6 devices are more affordable and more widely available than 5G devices, and because Wi-Fi 6 uses free, unlicensed spectrum.”
Surge in chip demand but supply crunch continues
The world is hungry for products enhanced by a growing volume of chips, but there will be delays throughout 2022 until supply catches up with rising demand. Deloitte Global predicts that many types of chips will still be in short supply during 2022, but it will be less severe than in most of 2021, and it will not affect all chips. The duration of the chip shortage boils down to a significant surge in demand, driven by digital transformation and accelerated by the pandemic. It is not just the proliferation of consumer devices, it’s the fact that many mechanical products in industry are becoming increasingly digital, and many vertical sectors are becoming more reliant on digitization.
Unsurprisingly VC investment in semiconductors is taking off to fill the demand for new kinds of chips. Deloitte Global predicts that VC firms globally will invest more than US$6 billion in semiconductor startup companies in 2022. That may only be 2% of the US$300 billion-plus of overall VC investment expected for 2022 but more than three times larger than it was every year between 2000 and 2016.
Mark Lian, Deloitte China Technology Sector Leader said, "Much of this investment will likely go toward companies in China, if recent trends are any sign. Investments in Chinese semiconductor companies tripled from 2019 to 2020. And in the first half of 2021 alone, VCs from both inside and outside China invested US$3.85 billion in Chinese chip companies, equal to or larger than the amount of global investment in the entire industry in 19 of the last 20 years."
In addition, RISC-V, an open-source instruction set architecture for chip design, is gaining market traction, and attracting investment. Deloitte Global predicts that the market for RISC-V processing cores will double in 2022 from what it was in 2021.
Strong demand in wearable technology in health care
Advances in sensors and artificial intelligence (AI) are helping millions detect and manage chronic health conditions and mitigate serious illness, and these technologies are now small enough to be worn on a wrist or penny-sized patch and are seeing rapid growth. Deloitte Global predicts that 320 million consumer health and wellness wearable devices will ship worldwide in 2022, and by 2024, that figure could reach 440 million units. This is being driven by new offerings hitting the market and more health care providers becoming comfortable with using them. Their impact will increase even more if doctors trust their utility and people feel their data is secure. Similarly, there is strong growth in mental health apps, and global spending on mobile mental health applications will reach close to US$500 million in 2022. This annual growth is fueled by the fact that nearly 800 million people worldwide, or 11% of the global population, live with a mental health condition. Moreover, the pandemic has exacerbated mental health concerns and triggered declines in well-being, with a dramatic rise in the prevalence of problems such as depression, anxiety, and post-traumatic stress symptoms.
“The pandemic has been a catalyst for both consumers and medical companies to really push forward self-quantification and health monitoring. Thanks to advances in technology, everything from diagnostics, monitoring, sensors and data sharing has vastly improved. Coupled with the miniaturization of consumer wearables today, we use digital connectivity to manage our health more than ever. The same applies to managing wellness, and today there are more than 20,000 apps focused on helping manage mental health, this upward trend will continue in 2022.” said Mark Lian.
Sports NFTs kick sports memorabilia into the digital age
Non-fungible tokens (NFTs), unique digital identifiers that use blockchain to record ownership of media, are now letting sports fans acquire, not just view, licensed digital media of their favorite sports moments. Encompassing many items from trading cards to digital video, sports NFTs will likely cement non-fungible tokens’ place in the sports content marketplace. Deloitte Global predicts that NFTs for sports media will generate more than US$2 billion in transactions in 2022, about double the figure for 2021. By the end of 2022, we expect that 4–5 million sports fans globally will have purchased or been gifted an NFT sports collectible. Interest in sports NFTs is likely to be spurred by activity in the wider NFT market, including that for digital art, the top five most valuable sales of which had generated more than US$100 million by August 2021.
Games consoles, much to celebrate at 50
The games console ecosystem celebrates its 50th birthday in 2022 in strong health with record revenue, a full slate of latest generation devices, and a strong foundation for further growth. Deloitte Global predicts that the console market will generate US$81 billion in 2022, up 10 percent from 2021. Revenue per console player, of whom there will be 900 million by the end of the year, are expected to average US$92 per person—substantially more than the projected US$23 per PC gamer and US$50 per mobile gamer. Beyond 2022, console software sales are expected to continue growing, reaching close to US$70 billion by 2025. Over this period, digital game purchases, including downloads, subscriptions, game passes, and in-app payments are expected to rise as a share of sales from 65% in 2022 to 84% in 2025.
As the world churns: The streaming wars go global
As leading streaming providers expand globally while national media companies spin up their own domestic streaming services, the amplified competition is creating abundant consumer choice—and churn is accelerating as a result. Deloitte Global predicts that in 2022, at least 150 million paid subscriptions to streaming video-on-demand services (SVOD) will be cancelled worldwide, with churn rates of up to 30% per market.
However, more subscriptions will be added than cancelled, the average number of subscriptions per person will rise, and, in markets with the highest churn, many of those cancelling may resubscribe—often to a service that they had previously cancelled. As SVOD matures in multiple markets, we predict that their growth will be increasingly based on ad-supported models, and that the metric for SVOD success will be less about subscriber count and more about overall revenue from all services and sources.
More insights from Deloitte Global 2022 TMT Predictions report:
AI and managing sensitive data
- Deloitte Global predicts that 2022 will see a great deal of discussion about regulating AI more systematically, with several proposals being made—although enacting them into actual enforced regulations will not likely happen until 2023 or beyond. Some jurisdictions may even try to ban whole subfields of AI, such as facial recognition in public spaces, social scoring, and subliminal techniques, entirely.
- Driven by the increasing urgency of safeguarding data used in AI applications, emerging privacy enhancing technologies such as Homomorphic encryption (HE) and federated learning (FL) will also experience dramatic growth. Used by leading technology companies already today, the combined market for HE and FL will grow at double-digit rates in 2022 to more than US$250 million. By 2025, this market is expected to top US$500 million.
Technology and ESG
- Floatovoltaics - Floating solar panels which are now commercially viable, known as “Floatovoltaics” have entered the renewable energy mix, allowing places that don’t have enough land to build large solar arrays to build them on lakes and reservoirs instead. Deloitte Global predicts that the aggregate installed capacity of floating photovoltaics (FPVs) will reach 5.2 gigawatts peak (GWp) globally by the end of 2022, representing US$4–5 billion in spending, mainly in Asia.
- Smartphones—the world’s most popular consumer electronics device, expected to have an installed base of 4.5 billion in 2022—will generate 146 million tons of CO2 or equivalent emissions (CO2e) in 2022. While this is less than half a percent of the 34 gigatons of total CO2e emitted globally in 2021, it is still worth trying to reduce. The bulk of these emissions (83%) will be from the manufacture, shipping and first year usage of smartphones. Given this, the single biggest factor that could reduce emissions would be to extend expected lifetime. For this to be viable, software and security updates should be available for at least five years. Devices should continue to be designed to be more resilient to falls and water exposure. There should also be incentives for phones to be traded in, and for there to be a thriving refurbished device market.
- Diversity, Equity and Inclusion – although the largest players in the technology industry are closing the gender gap and will reach 33% overall female representation in the workforce in 2022, women in technical roles continues to lag by 8% and the pandemic has caused increased churn with 57% of women in TMT expecting to change employers within 2 years and a startling 22% considering leaving the workforce citing workload increases impacting wellbeing. Deloitte Global predicts that lessons learned from the pandemic, including a remote-work first model could dramatically increase the diverse talent pool leading to better business outcomes.
Deloitte Global’s annual TMT Predictions report provides an outlook on technology, media and telecommunications trends that may disrupt and transform the business and consumer ecosystems worldwide. Visit www.deloitte.com/predictions to learn more and click Download the full report to read our full report.