Deloitte 2014 TMT Predictions

Moscow, 17 February 2014 — The top global technology, media, and telecom trends for 2014 include the 10 million unit year for wearable technologies; 50 million homes doubling up on pay-television (TV); the global value of premium sports video rights increasing 14 percent led by North American sports leagues and European football (soccer); and a potential upsurge of eVisits according to Deloitte Touche Tohmatsu Limited’s (DTTL) 13th edition of the Global TMT Predictions. In addition, the report predicts that phablets — an oversized smartphone that’s part cell phone, part tablet — will outsell tablets by $25 billon and the total global sales of smartphones, tablets, PCs, TV sets, and gaming consoles will exceed $750 billion in 2014 and then plateau as consumer usage will continue to converge.

“Our report details many watched and often contended trends in the industry. While there has been much uncertainty around wearables, we predict that consumer interest will lead to a lucrative market with $3 billion in sales in glasses, watches, and fitness bands. We also anticipate a doubling up on Pay TV, which is counter to historical expectations of ‘cord cutting,” said Jolyon Barker, Managing Director, Global TMT Industry, DTTL. “Additionally, smartphones, the largest component in the converged living room group ($375 billion revenue in 2014), are nearing saturation among most age groups except the 55+ demographic, which will experience a steep rise in usage this year.”

In 2014, mobile instant messaging services (IMS) will generate about 70 percent of all messages sent from mobile phones, but only about three percent of the value. Every day, 70 billion messages will be sent via mobile, of which only 21 billion will be via short messaging service (SMS), but text message revenues are projected at about $100 billion this year, compared to just $2 billion for mobile IM services. Globally volumes of mobile IMS and text messages will grow, even though some developed markets may see falling SMS volumes.

This year’s Predictions also tackles eVisits and predicts the practice to go mainstream. “We will see an inflection point in 2014 in their adoption, partially due to pressure to reduce medical costs and improve care, but mostly due to changes in technology and telecommunications infrastructure,” Barker added
The report also looks well beyond 2014 and predicts a “perfect storm” of conditions that could make Massive Open Online Courses (MOOCs) a major factor by 2020, representing over 10 percent of all courses taken in tertiary and enterprise continuing education. New technology, alternative modes of teaching and a need to continuously update quickly obsolete skills are driving the trend, suggesting MOOCs will grow enormously over the longer term, even if disruption is minimal in 2014.
“We believe that an understanding of development trends in TMT industries is an important competitive factor in all key sectors of the economy. We hope that many of the trends included in this forecast will be relevant to Russian companies and will continue to play a significant role in changing the conventional lifestyle in our country,” resumes Olga Tabakova, Partner, Deloitte CIS Leader of Technology, Media and Telecommunications practice.

Additional highlights and details of this year’s TMT predictions to impact the marketplace in 2014 include:

Technology

• Wearables: the eyes have it — Smart glasses, fitness bands and watches, should sell about 10 million units in 2014, generating $3 billion. Of these wearable computer form factors, smart glasses should generate the most revenues, from sales of about four million units at an average selling price (ASP) of $500. Smart fitness bands should sell four million units, at an ASP of $140; smart watches should sell about two million units at an ASP of $200
• The $750 billion converged living room: a plateau approaches — Global sales of smartphones, tablets, PCs, TV sets and videogame consoles will exceed $750 billion in 2014, up $50 billion from 2013 and almost double the 2007 total. However a plateau appears likely: sales are expected to continue growing, but at a slower rate than over the past 10 years, with an estimated ceiling of about $800 billion per year
• Massive Open Online Courses (MOOCs): not a disruption zone yet, but the future is bright - Student registrations in MOOCs will be up 100 percent compared to 2012 to over 10 million courses, but the low completion rates mean that less than 0.2 percent of all courses completed in 2014 will be MOOCs. The growing awareness of online education will force educational institutions to increase investment in this area, drive more acceptance of online education as it becomes accredited, and increase adoption by corporate training groups
• eVisits: the 21st century housecall — There will be 100 million eVisits globally, potentially saving over $5 billion when compared to the cost of in-person doctor visits;and representing growth of 400 percent from 2012 levels
• One became many: the tablet market stratifies — The installed base of compact tablets (with screens smaller than 9 inches) will surpass the base of classic tablets (9 inches and larger) for the first time. By end the first Quarter, we expect the base of compact tablets to be 165 million units, slightly ahead of the classic tablet base, with 160 million.

Media and Entertainment

• Doubling up on pay-TV — By the end 2014 up to 50 million homes around the world will have two or more separate pay-television subscriptions, with the additional subscriptions generating about $5 billion in revenues. A further 10 million homes will receive premium programming as part of their subscription to another service, such as broadband
• Broadcast sports rights: premium plus — The value of premium sports broadcast rights will increase to $24.2 billion, a 14 percent rise on 2013, equivalent to an additional $2.9 billion. This increase in rights fees will be driven by new agreements with certain top tier European domestic football (soccer) leagues and major North American sports leagues
• Television measurement: for better and worse — Measurement of viewing of domestic television programs should become more accurate for tens of millions of viewers, thanks to the introduction of hybrid measurement, which enables the inclusion of viewing taking place on PCs, tablets and smartphones into overall viewing numbers, and also includes other data sets, such as set-top box channel selections and video-on-demand server logs
• Performance rights lift recorded music revenues — Revenues from performance rights, a license payable for the right to play music to the public, should exceed one billion dollars for the first time. For the $16 billion recorded music industry, this is a significant figure.

Telecom

• Phablets are not a phad — Shipments of phablets, smartphones with 5.0-6.9 inch screens, will represent a quarter of smartphones sold, or 300 million units. That is double the 2013 volume, and 10 times 2012 sales. But after initial rapid consumer success, 2014 may mark a ‘peak phablet’ year, as only a (sizeable) minority of smartphones users will want to handle such a large device.
• The smartphone generation gap: over-55? There’s no app for that — Over-55s will be the age group experiencing the fastest year-on-year rises in smartphone penetration across developed markets. Ownership should rise to between 45 to 50 percent by year-end, lower than the approximately 70 percent penetration rate for 18-54 year olds, but a 25 percent increase from 2013.
• Short messaging services versus instant messaging: value versus volume — Instant messaging services on mobile phones (MIM) will carry more than twice the volume (50 billion versus 21 billion per day) of messages sent via a short messaging service (SMS).
• ‘Ruggedized’ data devices at $250: reinventing the business case for mobile field force — The entry price for a ruggedized, connected data device that can be used by some field force workers, and used to undertake tasks such as car rental check-in inspections, inspecting highways or delivering packages, will fall to $250.

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