TMT 2023 Predictions
What is the outlook for technology, media and telecommunications industry?
- Don’t fear the tiers: major formerly ad-free streaming services will offer a cheaper or free option with advertising
- Video streaming has not historically been all about live sports, but streamers are spending money to get in the game
- Chip manufacturers require a helping hand for the future: AI tools could come to their rescue
- Five thousand satellites in orbit means widespread data, but managing space traffic is challenging
We are publishing the results of the Technology, Media & Telecommunications (TMT) 2023 Predictions report, which highlights the biggest trends in TMT and how they could impact businesses and consumers around the globe. The report focuses on the crucial roles artificial intelligence (AI), advertising video on demand (AVOD), 5G, streaming and chips could play in our hyperconnected world.
“Traditionally, at the end of each year, we share with you the TMT predictions. Traditions cannot be broken even during the war, so this year will not be an exception. Moreover, the war showed how urgent our need for technology is and how important it will be to our recovery and growth. Technologies help companies and consumers achieve greater results with less resources, and breakthroughs in technological developments combined with changing consumer habits require business leaders to respond quickly in order to remain competitive and successful in the future,” says Margarita Postupaieva, Director, Deputy Head of TMT Industry Group at Deloitte Ukraine.
Don’t fear the tiers: Global growth in streaming services includes AVOD increase
Deloitte Global predicts that major streaming services that used to be ad free could opt for AVOD (advertising video on demand). Deloitte anticipates that by the end of 2023, major subscription video-on-demand services in developed markets may have launched an ad-funded tier to complement ad-free options which aren’t going away. But by the end of 2024, half of these providers will also have launched a free ad-supported streaming TV service (FAST). And by 2030, Deloitte expects that most online video service subscriptions will be partially or wholly ad funded.
The next arena for the streaming wars: live sports
Streaming providers are spending billions of dollars on live sports. They have purchased rights across the spectrum of sporting events in a bid to attract, retain, and monetize their audiences via this popular content. Deloitte Global predicts that in 2023, streamers could spend more than US$6 billion1 on major sports rights in the largest global markets. To put that in perspective, in 2021 the combined content spend by all streaming providers was about US$50 billion.
Semiconductor companies turn to AI and high-power materials to design future chips
Chip companies are using AI to help design chips faster, cheaper, and more efficiently. Deloitte Global predicts that the world’s leading semiconductor companies could spend US$300 million on internal and third-party AI tools for designing chips in 2023, and that number may grow by 20% annually for the next four years to surpass US$500 million in 2026. AI design tools enable chipmakers to push the boundaries of Moore’s Law, save time and money, and even drag older chip designs into the modern era.
Supercharged semiconductors made of high-power materials are taking chip development to a new level. Replacing silicon, these materials—primarily gallium nitride and silicon carbide—are suited for the higher voltages, power levels, and resilience needed for increasingly common applications such as electric vehicle (EV) batteries, super-efficient consumer electronics chargers, powerful solar panels, advanced military applications, space technology and nuclear energy. Deloitte Global predicts that chips made of high-power semiconducting materials could sell a combined US$3.3 billion in 2023, up almost 40% from 2022. Growth in these types of chips, collectively known as power compound semiconductors, is expected to accelerate to nearly 60% in 2024, possibly generating revenue of more than US$5 billion.
“When the COVID-19 pandemic swept across the world in 2020, all areas of our lives underwent significant digitalization. As a result, the demand for electronics has increased, and thus the demand for chip production. The world's semiconductor factories have not always successfully coped with the load, which has led to a chip shortage around the world. But the use of AI in chip production can be a solution to the problem – it will make the supply chain more sustainable and solve the current talent challenge. In addition, the use of new materials in the production of chips will make them more powerful and stable, which can transform an entire industry,” says Margarita Postupaieva.
Broadband satellites will need to navigate a crowded sky
Deloitte Global predicts that more than 5,000 broadband satellites could be in low-Earth orbit (LEO) by the end of 2023because of growth in commercial data satellite deployments to provide high-speed internet to every corner of the world. They could make up two working constellations providing high-speed internet to nearly a million subscribers on all parts of the planet, no matter how remote.
If every organization currently planning to build an LEO constellation succeeds, seven to 10 competing networks could be operational by 2030, with a total of 40,000 to 50,000 satellites serving more than 10 million end users. This growth would likely require industry collaboration as a much more crowded orbital environment significantly raises the risk of collisions. To keep satellites from colliding with each other as well as being struck by untracked space debris, it would be necessary to know where all those objects are in real time and with great precision. This challenge is driving the creation and growth of new markets.
Additional Deloitte 2023 TMT Predictions:
- Tech’s commitment to faster climate action
Many organizations want to reach net zero and the technology industry is making a strong commitment. According to a Deloitte Global CxO sustainability survey, tech companies are working harder and faster to impact climate change and are 13% more likely than non-tech companies to target net zero by 2030.
- 5G networks to transform enterprise connectivity
By introducing virtualized, cloud-centric capabilities, 5G standalone (SA) networks are poised to drive disruptive change that could make previous advances in wireless technology (2G/3G/4G) appear incremental. Deloitte Global expects the number of mobile network operators (MNOs) investing in 5G standalone networks—with trials, planned deployments, or actual rollouts—to double from more than 100 operators in 2022 to at least 200 by the end of 2023.
- Virtual production gets real: bringing real-time visual effects onto the set
The tools and techniques of virtual production are transforming film and cinema, increasing flexibility, shortening production times, and bringing real-time computer-generated imagery and visual effects out of post-production and onto real-life sets. Deloitte Global predicts that the market for virtual production tools will grow to US$2.2 billion in 2023—up 20% from an estimated US$1.8 billion in 2022.
- Gaming M&A is growing on the back of consolidation, portfolio plays, and game tech
Deloitte Global predicts that in 2023, the number of video game company mergers and acquisitions will continue to increase by around 25%, slightly slower than the estimated 30% quarterly growth of 2022. Video game services, experiences, and business models are innovating, console supply chains are loosening up to meet pent-up demand for next-gen experiences, and many anticipated games that were delayed in 2022 are now set to reach players in the coming year.
- Virtual reality (VR) market gaining momentum
Deloitte Global predicts that the VR market will generate US$7 billion in revenue globally in 2023, a 50% increase over 2022’s US$4.7 billion. As VR grows in popularity, 90% of that revenue will likely come from headset kit sales, with 14 million units averaging US$450 each expected to sell in 2023. The remainder should comprise mostly of VR content—principally games, but also some enterprise applications—which could see revenues of just over US$1 billion. Improvements in the underlying technology, including power, screens, and audio should fuel this growth. Next year, headsets should offer higher frame rates, higher-resolution displays, and enhanced spatial audio, enabling a realistic, immersive experience.
- Shopping goes social, trending past US$1 trillion annually
Deloitte Global predicts spending for goods and services on social media will surpass US$1 trillion globally in 2023, growing 25% annually with more than two billion people shopping this way in the last year. The social commerce market is outgrowing traditional e-commerce. In a Deloitte Global survey, Generation Z and Millennials are more likely than Gen X respondents to say that social media influencers affect their buying decisions.
- Growth in the emerging enterprise edge computing market: Cloud, telco, equipment, and platform companies are vying for a share of enterprise investments in edge services and products that make computing faster, safer, and cheaper. Deloitte Global predicts that the enterprise market for edge computing will grow at 22% in 2023, compared to 4% growth in spending on enterprise networking equipment and 6% on overall enterprise IT for the same year. Most of this growth will likely come from expenditures on hardware initially but should migrate toward software and services as the market matures.
About this report
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