Deloitte TMT 2022 Predictions
Chip Shortage Continues; AI Regulation Increases; Industry Pushes for Sustainable Smartphones; More Entertainment Choices Equals More Churn
- Chips will remain in short supply next year, and some component lead times will stretch into 2023.
- There will be ongoing and increasing discussion around regulating artificial intelligence (AI) more systematically, with several proposals being made.
- 320 million consumer health and wearable wellness devices will ship worldwide in 2022.
- 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.
- At least 150 million streaming video-on-demand services (SVOD) paid subscriptions will be cancelled worldwide.
- As games consoles reach their 50th anniversary, the console market will generate a record US$81 billion in 2022, up 10 percent from 2021.
PHNOM PENH, 2 December 2021— Deloitte released its Technology, Media & Telecommunications (TMT) 2022 Predictions report, which highlights how worldwide trends in TMT may affect businesses and consumers worldwide. The report underscores how many of these trends are being driven by the global pandemic’s economic and societal shifts, resulting in an increasingly connected and multi-device world, fueling the world’s need for more chips, growth in connectivity, and entertainment options.
“The pandemic increased the need to maintain connections, improve productivity and experience entertainment, with accelerated adoption from both consumers and businesses alike,” said Kevin Westcott, Vice Chair, Deloitte LLP, U.S. TMT and global Telecommunications, Media and Entertainment (TME) Practice Leader.
“In 2022, we foresee these behaviors continuing to grow, but amid a backdrop of challenges. Supply chain woes, increasing regulatory issues and changing media habits will be at the forefront of business leaders’ minds as these challenges impact their ability to meet market demands.”
Surge in chip demand but supply crunch continues
Deloitte predicts that many types of chips will still be in short supply during 2022, but it will be less severe than it was for most of 2021, and it will not affect all chips. The continuation of the chip shortage and its staying power boils down to a significant surge in demand, driven by digital transformation and accelerated by the pandemic.
Unsurprisingly, venture capital investment in semiconductors is taking off to fill that demand for new kinds of chips. Deloitte predicts that venture capital (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 it’s more than three times larger than it was every year between 2000 and 2016.
Wi-Fi 6 outselling 5G devices
Many countries have adopted 5G over the past two years, 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 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: 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.
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. There is clear evidence the industry is making smartphones more sustainable, by reducing the need for unplanned replacement, offering software support for smartphones for longer and lengthier phone lifetimes, ultimately helping to reduce the environmental impact of smartphones.
AI and managing sensitive data
Deloitte predicts that 2022 will see a great deal of discussion around regulating AI more systematically, with several proposals being made—although enacting them into fully 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. In addition, 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. Already in use by leading technology companies today, the combined market for HE and FL will grow at double-digit rates in 2022 to more than US$250 million, and by 2025, this market is expected to top US$500 million.
“AI has tremendous promise, but we’re likely to see more scrutiny in 2022 as regulators look to better understand the privacy and data security implications of emerging AI applications, and implement strategies to protect consumers,” said Paul Silverglate, Vice Chair, Deloitte LLP and U.S. technology Sector Leader. “Tech companies find themselves at a convergence point where they can no longer leave ethical issues like this to fate. What’s needed is a holistic approach to address ethical responsibility; companies that take this approach, especially in newer areas like AI, can expect greater acceptance, more trust and increased revenue.”
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 accelerating churn. In 2022, Deloitte predicts that at least 150 million streaming video-on-demand services (SVOD) paid subscriptions will be cancelled worldwide, with churn rates of up to 30% per market.
Games consoles, much to celebrate at 50
The gaming console ecosystem celebrates its 50th birthday in 2022 in strong health with record revenues, a full slate of the latest generation devices, and a strong foundation for further growth. Deloitte predicts that the console market will generate US$81 billion in 2022, up 10% from 2021. Revenue per console player, of whom there will be 900 million by the end of the year, is 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 see continued growth, 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.
“One thing we’ve learned during the past year is that consumers want entertainment choices, in content, in cost and in their ability to connect socially through their experiences,” said Jana Arbanas, Vice Chair, Deloitte LLP and U.S. Telecom, Media and Entertainment (TM&E) Sector Leader.
“As more global players enter these already competitive markets around the world, entertainment companies will be challenged to constantly innovate, be nimble in their actions and respond quickly to market changes in order to capture the minds and wallets of increasingly savvy consumers.”
Boys, men and books – oh my
There’s a gender reading gap not only impacting men and boys and their enjoyment of reading, their reading comprehension and ability, but society as a whole. In the coming year and beyond, Deloitte predicts that boys and men in almost every country will continue to spend less time reading books, and read them less frequently, than girls and women.
More insights from Deloitte 2022 TMT Predictions report include:
- Continued focus on 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 continue to lag by 8% and the pandemic has caused increased churn with 57% of women in TMT expecting to change employers within two years and a startling 22% considering leaving the workforce citing workload increases impacting wellbeing.
- Sports NFTs kick sports memorabilia into the digital age: Deloitte predicts that Non-Fungible Tokens (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 to 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 digital art, the top five most valuable sales of which had generated over US$100 million by August 2021.
- Strong demand for wearable wellness technology: Deloitte predicts that 320 million consumer health and wearable wellness devices will ship worldwide in 2022, and by 2024, that figure will reach 440 million units. This is being driven by new offerings hitting the market and more health care providers becoming comfortable using them. Their impact will increase even more if doctors trust their utility and people feel their data is secure. Similarly, an increased focus on mental health and wellbeing will contribute to global spending on mobile mental health applications reaching close to US$500 million in 2022.
- RISC-V rises: Open-source RISC-V, an instruction set architecture for chip design, is gaining market traction, and attracting investment. Deloitte predicts that the market for RISC-V processing cores will double in 2022 from what it was in 2021, since it will allow smaller device manufacturers to build hardware, allow Chinese chipmakers to avoid sanctions, and allow developers and researchers to design and experiment with a proven and freely available instruction set architecture.
- A bright future for floatovoltaics: Floating solar panels which are now commercially viable, known as floatovoltaics have entered the renewable energy mix allowing places without enough land for large solar arrays to build them on lakes and reservoirs instead. Deloitte 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 to 5 billion in spending, mainly in Asia.
Deloitte’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 connect with us on: @DeloitteTMT, @KevinWestcott, @PaulSilverglate, @JanaArbanas, and #DeloittePredicts.
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