Discover the future
2020 predictions for UK Technology, Media and Telecommunications
What does the future hold for technology, media, and telecommunications?
Every year, Deloitte researches and reviews the latest developments in technology, media, and telecommunications and here we present our 2020 TMT Predictions ‒ looking around the corner to help you see what’s coming, expect the unexpected, and keep your business moving forward.
If there are any common themes through our six predictions, these might be mobility, connectivity and media.
Cycling offers a solution to many urban and environmental issues caused by car usage. In particular, better batteries are making electric bikes more popular, except in the UK, and we examine why. Robots too are getting more mobile, and we look at how these could change business, particularly in the UK, where they’ve historically been scarce. Robots are just one advance made possible by the introduction of industrial-grade 5G networks, and we consider the wide-ranging changes that become possible when wireless networks get as good as wired ones.
Smartphone adoption has now matured to the point of reaching a plateau, but that’s just the start of their further rise as a platform: advertising, apps and accessories on/for smartphones are set to match the market value of global phone sales themselves. And although podcasting might be a less lucrative application in the UK than globally, we consider how to realise its wider potential. Lastly, we find out how TV advertisers might reconnect with younger viewers, through video on demand funded by advertising.
Click on the TMT Predictions below to discover more and join the conversation #DeloittePredicts #TMTPredictions
2020 Predictions
-
- Deloitte predicts that 5G could overtake wired networks in industrial environments over the next two decades.
- It will allow factories, logistics centres and ports to go wireless, enabling the reinvention of processes and business models.
- 5G will create a swathe of new business possibilities, changing how entire industries operate, as well as bringing commercial opportunities for suppliers.
UK consumers now have 5G, and business users are going to benefit soon. The next release of the 5G standard (formally titled ‘3GPP Release 16’) is due in June 2020, and will offer the performance of wired ethernet with the flexibility of wireless ‒ even in challenging industrial environments.
Whether it replaces or complements wired networks, 5G is set to become the connectivity technology of choice in the next decade or two ‒ especially in greenfield factories, ports or campuses.
The benefits for business will vary, but could include improved network performance, better control or new ways of working. Just as 4G and Wi-Fi set human workers free from their desks, so 5G will allow industrial machinery to become untethered and more flexibly deployed, thanks to its low latency, high reliability, greater connection density and faster speeds.
Why go wireless?
5G can match wired networks for performance, and may cost much less to install. Existing sites, or older architecture, can be networked without needing building work, and new sites can be designed and built for flexibility, while also saving time, space and money.
Assembly-line cameras, feeding into computer vision and AI software, can monitor and give instant feedback on the accuracy of each worker’s activity. Motion sensors on machinery can collect and transmit precise usage data, to optimise calibration and maintenance routines.
But 5G also brings new ways of working: fast and reliable remote control makes it possible to operate machinery from a safe or comfortable place. Whether it’s tractors or drones on farms, diggers on remote or hazardous construction sites, cranes and vehicles in ports, or inspection cameras along huge power- or pipelines, 5G means you can stay in control of your machinery, wherever it may roam.
Beyond making existing processes better, though, 5G lets you reinvent them, to transform your product and service offerings. Instead of a fixed production line that lowers costs through high volume and low variety, a flexible line with mobile machinery makes customised products a commercial reality. Hospitals can focus more on patients than resources, by putting the instruments and data wherever needed.
I want to break free…
Although it’ll still be possible to access 5G through a mobile operator’s service, fully private or virtual private networks also become possible, either through combining in-house infrastructure with mobile operator support, or by building and running a wholly private network. While completely private 5G networks allow highly-managed performance and security, this may be expensive, and smaller businesses have many options around how to lease a dedicated or virtual slice of mobile operators’ network.
As with previous new technologies, 5G will again create new business possibilities. It can change how industries operate, as well as bringing commercial opportunities for 5G suppliers.
Mobile operators can maintain private 5G networks on behalf of customers and also sub-lease their spectrum. The adoption of private cellular could double the number of cellular base station sites, creating a swathe of new business for equipment vendors.
How has COVID-19 changed this prediction?
Original prediction: By end 2020, more than 100 companies worldwide will be testing 5G deployments, collectively investing a few hundred million dollars in labour and equipment. In subsequent years, spend on industrial 5G installations will climb sharply.
Revision: No change due to COVID-19, but our original prediction was low. The number of companies testing private 5G deployments is on pace to be well over 1,000 at the end of the year.
Why? According to Deloitte’s tracking of tests, the number of companies testing private 5G networks was far ahead of our forecast already in Q1, and tests don’t cost much.
Related
Contact the team to discuss this prediction further, and for the possibility of a tailored briefing
Email the team
- Deloitte predicts that tens of billions of additional bike trips per year will take place globally in 2022 over 2019 levels.
- The technology industry has a big role to play in encouraging greater bicycle use—a goal that can help society address many challenges arising from global urbanisation.
- Between 2020 and 2023, we expect over 130 million electric bikes to be sold worldwide.
Increased participation in cycling over the coming years can only be good news. More cycling means lower car usage and lower emissions, which means reduced congestion, cleaner air and improved public health.
Our cities are currently heaving with traffic; mostly for journeys that are under five miles ‒ under two miles in London ‒ so for short, routine trips, cycling could tick all the boxes. But we still have a way to go: right now, only around 5% of journeys in London are by bike.
But demand is certainly on the up, fuelled by innovative technologies that make cycling safer, faster, more convenient ‒ and easier to track and measure.
Charging forward
The idea of a battery-powered bike has been around since 1895, but it’s the recent developments in lithium ion technology that has made e-bikes more popular.
Battery-powered bikes are speedier, easier to accelerate and far more powerful than their conventional counterparts. Electric cycling involves less physical effort, so it’s an attractive option for the more hesitant. It also means we sweat less, so we can arrive at the office as fragrant as when we left home! Electric bikes can also be safer and more secure, with bright LED lights and mobile apps to lock and track a bike, and of course they’re emission-free.
Between 2020 and 2023, we expect over 130 million electric bikes to be sold worldwide, reaching 40 million units and £16 billion revenue in 2023. This will far outpace electric vehicles, which we expect to grow from 5.1 million in use globally in 2018, to around 12 million likely to be sold in 2025.
Electric bike take-up is patchy, though: in 2018, they accounted for around a quarter of all bikes sold in Germany, and over half of adult bike sales in the Netherlands, but only 2 per cent of UK sales. This shows the cultural differences in cycling: in Germany and the Netherlands, it’s seen simply as a practical way to get around but, in the UK, it’s seen more through a fitness lens.
Beyond the battery
Data can help us understand how people cycle. Cyclists who use consumer apps such as Strava to capture their data can then analyse and optimise their journeys, fitness or carbon savings. This same data can also be anonymised and aggregated for a wider population, so urban planners can base decisions on better information from advanced analytics.
Technology is also making cycling cheaper and more accessible. Google Maps now shows where bikes available for sharing are located, and increased e-bike hire and cycle-to-work schemes should also help boost cycling in 2020 and beyond.
Think global; cycle local
But technology is only part of the story; the real benefits will come from tech and other sectors working together. In public health, for instance, increasing numbers of UK doctors are actively encouraging cycling as a healthier lifestyle choice. This can reduce both short-term prescribing costs and longer-term implications for healthcare.
Cycling can help us tackle the social and environmental challenges of global urbanisation, and the technology industry can be part of making that happen.
How has COVID-19 changed this prediction?
Original prediction: We predict a 1 percentage point rise in the proportion of people who bike to work during the three years from 2019 to 2022.
Revised prediction: No change for 2022, but a significant decrease in bike trips in 2020. However when commuting resumes, cycling may be regarded as a preferred option to maintain social distancing, and to enable better core fitness.
Why? As a result of work from home and lockdowns, all forms of commuting have decreased, including cycling. Interest in cycling has risen as streets are quieter, but streets are likely to become congested again.
Related
Contact the team to discuss this prediction further, and for the possibility of a tailored briefing
Email the team
- Deloitte predicts that the global podcast market will see 30% year-on-year revenue growth to £850 million in 2020.
- Podcasts are increasingly popular in the UK, but rarely lucrative.
- Expect to see their increased use by media outlets to drive loyalty and engagement among users preferring on-demand content.
The global podcast market should surpass £850 million in 2020 ‒ a 30% increase on 2019, but the UK will see only about 2% of this.
Nonetheless, podcasts are getting more popular in the UK. In 2019, nearly twice as many of us listened weekly to podcasts as in 2013, and this is likely to reach around 8.5 million in 2020.
Our podcast habits closely track those for radio: we listen while driving or travelling, working or studying, or while simply lazing about; and we favour entertainment, comedy and talk shows. However, podcasts tend to attract younger listeners, with the vast majority of podcasts being consumed through smartphones.
So far, so unremarkable. And, with its dominance in radio, it’s little surprise that the BBC also dominates in podcasting. Indeed, this prevalence of public service audio production may explain the low commercial value of UK podcasting to date.
So why do podcast producers persist? They’re cheap and easy to make, that’s why ‒ and that opens the door to fresh new voices and content.
It’s not (all) about the money
Even though more of us are listening to podcasts, they’re not making much money. For instance, they bring in under 20% of what commercial radio earns from advertising for each hour of listening.
Product sponsorship and advertising are likely to be the main revenue source in 2020, as podcast listeners seem more accepting of these than consumers of other media. Direct income from subscriptions or donations are other common revenue streams.
However, not all podcasters are in it for the money. The BBC uses podcasts to help increase its reach, by repurposing its existing radio content in on-demand form. Publications such as The New York Times and The Economist offer podcasts to build loyalty around their written publications. And 68% of Fortune 500 companies produce and host their own podcasts for marketing or training purposes.
The winner takes it all
It’s easy to get into podcasting: the barriers to entry are low, so they’re everywhere. In 2019, around 29 million episodes across 750,000 podcast series were available. But, a tiny fraction gets the most hits.
One study suggests that around 99 per cent of podcasts make no money, or not enough to cover their production and hosting costs. The main financial challenge for podcasts in 2020 is how to find that money, which might require new business models, whether freemium, donations or swipe-to-buy.
The sound of the crowd
With so many podcasts available, it’s hard to be heard, and the future may favour quality over quantity. Large producers may wish to focus interest by limiting choice and offering fewer, well-produced podcasts. Smaller producers might adopt the production values of radio or audiobooks, eschewing the somewhat hackneyed format of a general chat or interview – a format that fails to differentiate, and that attracts neither listeners nor advertisers. However, the ease of entry to podcasting makes it an ideal format for covering niche topics, with distinct audiences ‒ and advertisers who want to reach them.
Although podcasts will struggle to gain revenues or present a major threat to mainstream radio, there is a role for them. For a variety of industries ‒ particularly media outlets ‒ podcasts can offer an extra way to engage with customers, on their phones and in their cars.
How has COVID-19 changed this prediction?
Original prediction: We predicted that the global podcasting market will increase by 30 percent to reach US$1.1 billion in 2020.
Revised prediction: Podcasting is now unlikely to surpass the billion-dollar mark.
Why? Podcast listening in the United States is likely to be down about 10%: there are far fewer commuters listening to podcasts in their cars and during transit. Plus, 75 percent of podcast revenues are from ads, and ad spending is down.
Related
Contact the team to discuss this prediction further, and for the possibility of a tailored briefing
Email the team
- Deloitte predicts that UK revenues from advertising video on demand (AVOD) will reach half a billion pounds in 2020.
- AVOD will complement subscription on-demand services, allowing advertisers to reach younger viewers, who have deserted mainstream TV.
- Viewers willing to pay for ad-free TV are already doing so, and there is ample potential in advertising-funded streamed content.
Advertising video on demand (AVOD) is live or recorded video content that’s delivered via the internet and funded mainly or solely by advertising, making it free or cheaper than an ad-free subscription service. Unlike internet video services such as YouTube, AVOD is typically watched on TV sets.
Although the AVOD model has been for many years, but is only now becoming mainstream, and we expect it will represent over tenth of all TV advertising revenues in 2020. AVOD revenues are forecast to grow about three times faster than the entirety of the UK advertising market.
By 2025, we expect AVOD to be most common model: most streamed services will be either wholly or partly funded by advertising. Subscription only on demand services will be in the minority.
Marketing to Gen Z and millennials
AVOD will help advertisers deliver traditional TV ads to a younger audience. While UK viewer are watching less traditional TV (live or catch-up) younger viewers have moved fastest. Younger viewers have moved their eyeballs to subscription video on demand (SVOD) services such as Netflix and Amazon, which show no or little advertising. Brands are used to creating national campaigns targeted at all age groups so, by moving to SVOD, younger viewers are increasingly putting themselves beyond the advertisers’ reach.
AVOD offers advertisers a way to reach younger audiences that other models can’t. For instance, Pluto TV has recently launched in the UK, and reports a much younger skew than mainstream TV services: in the US, half of its 20 million viewers are in the 18–34 age group.
The land of the almost free
Indeed, the UK generally lags the US, where ad-funded TV via the internet has grown rapidly in recent years, led by services such as Hulu, Pluto and Roku.
Hulu offers an ad-funded service which is half the price of the ad-free tier. The former is used by 58 million of its 82 million viewers, generating £1.2 billion of advertising revenue in 2018. AVOD may therefore come to complement subscription services, with some broadcasters offering multiple models.
TV in the UK has a long history of mixing paid-for and ad-funded services, which has reflected viewers’ willingness or ability to pay. For over a decade, the balance has remained unchanged, and those moving to SVOD have been mainly those who already subscribe to pay-TV services. With overall viewing figures declining and costs rising, the TV industry needs to discover new funding sources: those willing to pay for ad-free TV are already doing so, and the future potential seems to lie with advertising, and viewers who’ll accept it as the cost of free or cheaper content.
An advertising renaissance
AVOD offers the TV industry a new way to monetise their content, whether produced or acquired, while giving advertisers a way to reconnect with increasingly elusive TV audiences ‒ particularly the young. Viewers can broaden their portfolio of TV services at no extra cost, to keep them watching the big screen, and create further markets for the makers of TVs.
How has COVID-19 changed this prediction?
Original prediction: Revenue from ad-supported video at $32bn in 2020, with Asia-Pacific at $15.5bn and N America at $9.7bn.
Revised prediction: Revenue from ad-supported video will be under $30 billion, with Asia-Pacific at less than US$14 billion and N America closer to $8.5 billion.
Why? While viewing and viewers will be up – for all forms of TV, including AVOD, the decline in all forms of ad spending will also hit this emerging sector.
Related
Contact the team to discuss this prediction further, and for the possibility of a tailored briefing
Email the team
- Deloitte predicts that one million robots will be sold for enterprise use in 2020, generating £27 billion in revenue.
- The UK service sector represents a major opportunity for increased automation in the workplace.
- Anticipating use cases and ROI will be an important task for strategists ‒ both for those who make and sell robots, and for those who use them.
Robots are transforming businesses, and the market will not only get bigger, but also change shape. While industrial robots, like those used in factories, will continue to grow in volume, it’s the ones used for service work that will really start to show their mettle.
Around a million robots will be sold to enterprises in 2020 in a market worth £27 billion ‒ up 18 per cent year on year. What’s notable is that more than half of these will be professional service robots: that’s 30 per cent more than in 2019, as compared to a 9 per cent increase in sales of their industrial siblings.
New robots for old
A well-established industrial robot is the mechanical arm, used mainly for repetitive manufacturing tasks such as assembling cars, with the automotive and electronics industries accounting for some 60 per cent of industrial robot sales. They’ve been used since the 1970s, making production cheaper, faster and more reliable and, although they represent a tiny fraction of the overall workforce, they’re on the increase, and will have almost doubled in number in the five years to 2021.
It’s only in the past decade that professional service robots have started making headway. They’re more varied in form and function, and used mainly in logistics, retail, hospitality and healthcare. Most are designed for time-consuming, repetitive or dangerous tasks.
Device offline
Connectivity is a major obstacle for service robots: when they move, it’s hard to keep fast, reliable and sustained data contact. In June 2020, 5G Release 16 is being finalised, which should address this issue, promising nearly 100% reliability. Meanwhile, newer, AI-specific chips will put intensive processing tasks inside the robot itself, rather than in the cloud, while also needing less space and power.
With these developments, the distinction between manufacturing and service robots may diminish. More capable and flexible machines will allow more agile manufacturing decisions, allowing production processes and products to respond better to market conditions and demand.
The UK as customer
Despite global growth in robotics, the UK has been slow on the uptake, ranking 22nd worldwide in terms of robot density. This is mainly because service industries dominate our economy, while robots are currently used mainly in manufacturing. But with the service sector contributing 80% of UK GDP, professional service robots may deliver just what the UK needs.
What’s more, UK labour costs have been low, thanks mostly to Eastern European workers, but recent political developments have made them scarce ‒ especially in agricultural and logistics industries. These are areas where robots could provide a cost-effective alternative, and current figures from the Office for National Statistics suggest that around 1.5 million UK jobs could have some tasks automated, which shows the potential for robots to lend a hand
The UK as provider
Britain is not simply a potential market for robots; it could also become a major player in their design and development. British start-ups currently account for 6% of the global robotics market, and the UK has recently launched a major research programme to develop robots and systems that can provide autonomous, safe and trustworthy care for the elderly.
A new generation of more capable and flexible robots will become increasingly useful in the workplace. Correctly anticipating use cases and ROI will be an important task for strategists ‒ both for those who make and sell robots, and for those who use them.
How has COVID-19 changed this prediction?
Original Prediction: The quantity of professional service robots sold in 2020 will surpass industrial robot arms for the first time, growing 30% over 2019 versus industrial robots’ growth of only 10%.
Revised Prediction: Professional service robots may grow closer to 40%, while industrial robots may decline 10% or more.
Why? More than half of professional services robots are for the surging warehouse, logistics and medical verticals, while 60% of industrial robots are for paused automotive and electrical/electronics industries.
Related
Contact the team to discuss this prediction further, and for the possibility of a tailored briefing
Email the team
- Deloitte predicts that the smartphone add-ons will drive £361 billion of revenue globally in 2020.
- Smartphone multipliers span hardware, content and services – essentially everything bar the phones themselves.
- Multipliers offer wide-ranging commercial opportunities now smartphone adoption is plateauing.
Smartphones remain big business. But although dwindling handset sales have dominated the headlines, it’s the multiplier effect that’s the real news story. Our prized mobile devices have created a huge market for peripheral products and services: from selfie sticks to screen protectors; from apps to adverts ‒ the money we lavish on these extras will soon match what we spend buying the phones themselves.
This is the smartphone multiplier – a market we predict to be worth £361 billion globally in 2020. That’s 15% more than this year, and it’s likely to keep growing through 2023. Add that to £381 billion in device sales, and the total market next year could be worth up to £700 billion.
Smartphone multipliers broadly span hardware, content and services, and we expect the three main growth areas to be advertising, apps and accessories. Between them, they’ll generate £291 billion in 2020, or 81% of all multiplier value.
The eyes have it
Mobile advertising is the smartphone multiplier’s top money-maker; and with most of us glued to our phones most of the time, it’s easy to see why. Smartphones are always on and deeply personal to us, and they offer advertisers functionality that trounces traditional broadcast and print media. It’s a market that will reach about £138 billion in 2020, £9 billion of which is generated in the UK (10–15% growth).
And it’ll continue to grow too. The popularity of social media and online video in particular are fuelling a revenue category that’s perfectly geared to exploiting advances in smartphone technology. If you haven’t heard of visual search yet, watch this space.
We’re ‘appy and we know it
Apps are the second-largest earner, with £93 billion revenue forecast in 2020. We expect this to keep growing in the short term, mostly from in-app spending.
First among apps are mobile games, generating £63 billion globally in 2020 (10% up on 2019) while, in the UK, they’re predicted to bring in £1.2 billion in 2019 (20% annual growth). Meanwhile, game subscription services promise additional revenues.
All the bells and whistles
Once we’ve unboxed our shiny new phones, we still want more. We pretty much all start to personalise and embellish them immediately: headphones, power packs, cases. Accessories are the third-largest smartphone multiplier in the UK, with tens of millions of us likely to spend around £100 a year on them ‒ particularly the younger age groups. Worldwide, we expect accessories to generate around £60.2 billion in 2020, including £1.9 billion in the UK, with sound and power likely to show most growth.
More cutting-edge upgrades, such as wireless headphones and charging, are less widespread, with no more than a quarter of UK adults using them in 2019. However, these are likely to see growth in the near future.
The bottom line
So although smartphone adoption is plateauing out, with only 1 per cent recent growth, there’s still plenty of opportunity for those providing ancillary products and services for them. Content producers, financial services providers, retailers, government – all can tap into a burgeoning market that’s right in the palm of our hand.
How has COVID-19 changed this prediction?
Original Prediction: Deloitte predicted that the smartphone multiplier (predominantly mobile advertising, mobile apps, and accessories) would drive $459 billion of revenue in 2020.
Revised Prediction: The smartphone multiplier is likely to be closer to $390 billion.
Why? All forms of advertising, including mobile, will likely decline. Mobile app usage is up, and spend on games should be up. Sales of accessories are tied to smartphone sales, which may well be significantly down.
Related
Contact the team to discuss this prediction further, and for the possibility of a tailored briefing
Email the team
The Predictions Challenge
Challenging Future Industry Leaders
The eagerly anticipated Predictions Schools Challenge is back! The theme for this year is the Smartphone Multiplier Market. Each team has been tasked with creating an innovative service, disruptive content or new hardware product which can be rolled out to the market to enhance their smartphone experiences.
Contact the team
-
Sam Baker
Partner, Deloitte Monitor, Technology, Media & Telecommunications
-
Paul Lee
Partner, Head of Global Research Technology, Media & Telecommunications
-
Cornelia Calugar-Pop
Lead TMT Researcher
-
Selina Newstead
Marketing Lead for Technology, Media & Telecommunications
-
Lizzie Tantam
Public Relations Manager