Deloitte’s TMT Predictions 2024
Three themes highlight this year’s report: generative AI, sustainability, and monetization.
It’s only been a year since generative AI surged to prominence as the power of AI to create images, videos, code, and text captured both public imagination and the attention of business leaders. We expect 2024 to be a transitional year: Tech companies are upgrading their software and services with generative AI, and companies across industries are trying to benefit from it. Some of the initial generative AI exuberance has faded, and a pressing question remains: What will happen in 2024? We look at generative AI from four key angles in this report: hardware, software, services, and regulation.
It’s likely that 2023 will be the hottest year in recorded history, and some climate scientists are convinced that the rate of warming is accelerating.1 Human reliance on tech devices, services, and connections is accelerating, too. How can tech use fewer resources to produce and operate? How can tech help make other industries more efficient? One answer is improved sustainability. We look at sustainability in three ways: from an industry perspective (its value in semiconductor, telecom, and agricultural technology), a technology perspective (its ability to track sustainability goals), and a self-sufficiency perspective (its ability to deal with key material shortages through recycling e-waste).
We’ve grouped our 19 topics across four categories this year: generative AI; sustainability; media, entertainment, and sports; and telecom and technology.
Across all four sections, we have examples of technologies and content that have gathered user bases and audiences but may be struggling to make profits or even revenues. Streaming providers may need to shift from market share to profitability. Women’s elite sports (with a struggle that may be ending) are on track to surpass a billion dollars in revenues. Software companies embedding AI face the challenge of recouping costs; podcasters seek to increase revenue per user; while device makers and service providers work to determine how to charge for satellite communication features.
It’s an exciting time to be making predictions. It may be a cliché to say that things are changing faster than ever before, but the emergence of multiple trends that could help humans think better and faster, grapple with climate change, and convert billions of users to billions (or tens of billions) of dollars in revenues and profits could make 2024 TMT’s most exhilarating year yet.
Here is an overview of each prediction across each category.
Generative AI
Everyone’s talking about generative AI, but what will companies do with it? And how will they do it? The answers could indicate how big the generative AI market might get.
Generative AI and enterprise software: What’s the revenue uplift potential?
Gen AI is coming to enterprise software, but expect competition between vendors who want to charge per user and IT departments that believe generative AI features should be free.
We predict almost all enterprise software companies will embed generative AI in at least some of their products this year. There will likely be a mix of pricing models: explicit per-user-per-month pricing, consumption-based pricing, a hybrid approach, and implicit pricing or free, at least for now. We predict that the revenue uplift for enterprise software companies will be at a US$10 billion run rate by the end of 2024. That is lower than some estimates, but still notable for the first year of a new market.
Gen AI chip demand fans a semi tailwind…for now
The generative AI chip market is growing fast, and together with other AI-enabling chips could represent half of the value of all semiconductors sold by 2027.
Deloitte predicts that the market for specialized chips optimized for generative AI will be valued at over US$50 billion in 2024, up from close to nothing in 2022. But there are some who fear a generative AI chip bubble, especially if enterprise use cases fail to materialize. Nonetheless, companies will likely need AI chips, including generative AI chips, as they often regard secure and reliable supply chains to be important for innovation, economic success, and national security. Generative AI chip revenue could reach US$400 billion in 2027, and along with other AI-enabling chips, it could represent half of the value of all semiconductors sold, but more supply and new entrants make that unlikely.
Taking control: Generative AI trains on private, enterprise data
More companies, seeking to avoid the risk of models trained on public data, are expected to train generative AI on their own data to enhance productivity, optimize costs, and unlock complex insights.
While generative AI models trained on public data have grabbed the headlines, their capabilities—and challenges—are stoking demand for more customized and constrained models trained on private enterprise data. In 2024, Deloitte predicts that enterprise spending on generative AI will grow by 30%. More companies are expected to develop their own generative AI models to drive greater productivity, optimize costs, and unlock novel insights and innovations.
Walking the tightrope: As generative AI meets EU regulation, pragmatism is likely
2024 is likely to see a balance between regulatory compliance and fostering innovation in generative AI; clear regulation enables enterprises and vendors to proceed with certainty.
Well-crafted rules can help unlock the potential of any market. In the case of generative AI, the existence of clear regulatory conditions could give confidence to vendors, enterprise customers, and end-users to invest in the technology. The European Union is expected to set the stage for global regulation of generative AI in 2024, influencing its own markets and serving as a template for other regions. In 2024, two regulations are expected to help shape generative AI: the General Data Protection Regulation (GDPR)2 and the European Union’s upcoming AI Act.3 These regulations concern various issues, including individual consent, rectification, erasure, bias mitigation, and copyright usage.
Sustainability
As more tech devices and faster connections are produced, companies should consider reducing the energy and raw materials required. This requires innovation and commitment. And tech and connectivity can help solve huge problems, like how to feed the growing population with less water and energy.
A raw deal: Will materials shortages, supply chain challenges threaten tech's future?
In the face of rising trade issues and skyrocketing demand, e-waste recycling and digital supply networks and a holistic approach to supply chain sustainability could help in the medium term.
Deloitte predicts that multiple regions will run short of gallium and possibly germanium in 2024 and may start seeing shortages of rare earth elements (REEs) by 2025. The impending shortage across dozens of different REEs at the same time could affect various industries. Enabled in part by these tech raw materials, those industries are estimated to be worth over US$160 billion annually in market value. If trade restrictions between China and the West escalate further, the tech and chip industry could consider bolstering supply chain resilience by sharpening their focus and increasing investments in e-waste recycling, digital supply networks, stockpiling, and sustainable semiconductor manufacturing.
Semiconductor sustainability: Chips take a smaller byte out of resources
Modern, new greenfield plants could help improve the industry scorecard, but manufacturing transformation can help both the greenfield plants and existing brownfield plants do better for energy, water, and process gas use.
Consumption of energy, water, and process gases go up and down in tandem with the rise and fall in chip manufacturing activity and revenue. Although absolute use of energy, water, and process gases are expected to grow as semi revenues grow in 2024, Deloitte predicts year-over-year declines in average water intensity and energy intensity, as well as continued shift in renewable energy mix, across all leading chipmakers. From a sustainability perspective, manufacturing transformation can help both greenfield plants and existing brownfield plants improve the chip industry’s scorecard.
Dialing down the carbon: Telco sustainability surges on the back of four new trends
Telecommunications companies can reduce their carbon footprint by shutting down copper wire and 3G wireless networks, changing their field service fleets to EVs, and switching to 5G radio gear that has a “snooze button.”
Telecom is not the worst carbon culprit, connecting 95% of the planet and being responsible for only 2% of emissions,4 but more could be done. Moving from copper wire networks to fiber optics can cut energy use by 80% or more.5 Older wireless networks like 3G use a lot of power while serving few customers.6 They’re being shut down too. Electrifying field service fleets is accelerating.7 5G radios can use a lot of power, but new technologies let them go to sleep when not in use, saving telcos gigawatt hours of electricity and megatons of CO2 equivalent annually.8
Regulations take effect: ESG reporting software sales are expected to soar in 2024
Pushed by investors, regulators, and employees, many more companies will likely systematize their ESG tracking and reporting with standardized software tools.
Sales of software solutions that help companies track and report on environmental, social, and governance (ESG) metrics will likely surpass US$1 billion this year as EU and US reporting regulations—along with reporting requirements in Asia, Australia, and the United Kingdom—take effect and as more investments require ESG disclosures. Forecasts for ESG-reporting software estimate a compound annual growth rate of 19% to 30% over the next five years. Deloitte predicts the tipping point will be reached in 2024, with growth accelerating to over 30% and revenues climbing from under an estimated US$800 million in 2023 to just over US$1 billion in 2024.
On solid ground: AgTech is driving sustainable farming and is expected to harvest US$18 billion in 2024 revenues
Agriculture technology is designed to let the producers and farmers grow more food using less pesticides, energy, water, and resources, enhancing farm yields.
Deloitte predicts the agricultural technology revenue opportunity—including Internet of Things endpoints and connectivity devices for precision crop farming, livestock management, and agricultural equipment tracking—will be US$18 billion globally in 2024, with a 19% CAGR between 2020 and 2024. While there’s a need to address the looming food crisis and agricultural production-driven climate issues, scaling food production using current methods is resource-intensive, costly, and less efficient. AgTech solutions could help by enabling farmers around the world to grow more food with less environmental impact, enhance crop yields and harvests, and manage livestock better.
Media, entertainment, and sports
People want to stay entertained, especially amid all the uncertainty in the world. But many media companies are dealing with their own uncertainties—especially how to make money as pay TV wanes, streaming gains users (but loses money), and gaming changes the entertainment landscape.
Women’s elite sports: Breaking the billion-dollar barrier
Interest from fans, broadcasters, and commercial partners is driving rapid growth in the revenues of women’s elite sport. How can organizations continue to accelerate growth?
Women’s elite sports are expected to break through the billion-dollar revenue tape for the first time in 2024, propelled by new sponsorship deals, surging TV rights (including streaming rights), and record-breaking audiences. Revenues are expected to be three times higher than in 2021 when we last reviewed this market. Since then, momentum behind women’s sports has continued to grow. The leading sports are likely to be football (soccer) and basketball, with cricket, volleyball, and rugby continuing to grow at an impressive pace. As more investment goes into women’s elite sports, athletic performance and standards will likely improve, creating a virtuous circle to help supercharge revenues.
Driven to tiers: Streaming video services look to up their profitability game with viewers
In 2024, streamers are expected to charge more for premium content, fight churn with longer subscriptions, and satisfy bargain hunters with more pricing tiers.
More than a decade into the streaming video revolution, media and entertainment (M&E) companies seem to be realizing how hard it is to recoup the historic profits of the pay TV business model. In 2024, Deloitte predicts that the combined number of subscription video on demand tiers offered by the top US providers will more than double between 2022 and 2024: from an average of four options to eight. From cheap ad-supported offerings and gated content to premium tiers with instant access, streamers are expected to shift from growth at all costs to making it easier for all their subscribers to get enough value for the price. Viewers may find it harder to wade through the options, but tiering could help them get more of what they want, and less of what they don’t.
Cinematic and interactive universes: Games and studios come together to bring the biggest stories to life
Shifting demographics, innovative technologies, and the desire for high-performing IP are driving the evolution of storytelling.
In 2023, some of the largest and most successful film and TV franchises began as video games, and some of the biggest video games began as film and TV shows. Now, Hollywood is looking to games for new IP that they can expand and monetize, and game companies are eyeing TV and film collaborations to help make their IP work harder and offset soaring game development costs. Whether they originate in games, TV, film, or elsewhere, some of the most compelling stories are expanding across media to engage fans, reach more audiences, and lift the broader value of their franchises.
Shuffle, subscribe, stream: Consumer audio market is expected to amass listeners in 2024, but revenues could remain modest
More consumers globally are tuning in to audio entertainment formats like podcasts, streaming audio services, audiobooks, and radio.
Deloitte predicts that more consumers worldwide will engage with audio entertainment—such as podcasts, streaming music, radio, and audiobooks—in 2024. We also predict that the global audio entertainment market will surpass US$75 billion in revenue in 2024, up 7% across these four formats. There are opportunities for growth across audio formats, especially for podcasts, whose annual revenues per user lag the other three categories. M&E companies have opportunities in audio, including expanding global listenership, increasing ad revenues, and integrating generative AI capabilities.
Will endless low cost content do to gaming what it did to TV and film?
UGC gaming platforms that incentivize user-generated content are expected to make big payouts to creators in 2024. As this practice grows, however, it could put pressure on top-tier games and services.
Two of the most popular video games have enabled hundreds of millions of players to be 3D creators. A third heavyweight has launched new tools and incentives to stoke the fires of 3D user-generated content (3D UGC) on their own platform.9 Deloitte predicts that these platforms will pay out almost US$1.5 billion to their content developers in 2024, and the number of paid independent developers on 3D UGC gaming platforms will exceed 10 million. Expanding the creator economy for games could drive greater innovation in game experiences and digital goods, stronger engagement for 3D UGC platforms, and more favorable economics for both platforms and creators. But by unleashing endless cheap 3D content, could they disrupt the entire industry?
Telecom and technology
Smartphone authentication: The killer app that can augment the smartphone’s utility
Smartphones can help you securely log in, tap to pay and enter cars, buildings, and airports. As security concerns grow, the need for authentication will likely consolidate the smartphone’s status as the ultimate goldilocks device: the right size, power, connectivity and trust.
In 2024, the smartphone is expected to further consolidate its status as the most successful consumer device, as it’s used increasingly to prove identity, utilizing built-in fast and secure biometric authentication capabilities. Smartphones may be used trillions of times in 2024 to authenticate across an ever-widening range of actions: accessing websites, making payments online and in-store, unlocking cars, and controlling entry to physical buildings. Over the coming years, the volume of transactions authenticated by smartphone may grow to hundreds of trillions of usages per year, with smartphones usurping physical keys and passwords alike.
Signals from space: Direct-to-device satellite phone connectivity boosts coverage
Integrating satellite and terrestrial mobile networks could unlock new revenue for the satellite, semiconductor, and telecom industries.
A growing ecosystem of satellite and mobile network operators, handset manufacturers, and semiconductor companies are racing to provide global coverage for smartphones and IoT devices—without the use of specialized equipment. They are looking to connect the unconnected, improve safety and emergency responses, and expand IoT applications. Basic services for emergency communication, simple text messages, and IoT monitoring have already started. Deloitte predicts that over 200 million smartphones that can connect with satellite services will be sold in 2024. These phones are expected to contain about US$2 billion of special chips. The question is: How will this ecosystem drive adoption?
No bump to bitrates for digital apps in the near term: Is a period of enough fixed broadband connectivity approaching?
In some parts of the world, some consumers may have all the bandwidth they need in 2024. They are still expected to want ever better internet connections, just not necessarily faster ones.
The demand for ever higher internet speeds over fixed networks has been a constant for most of the internet’s history. However, this trend may be coming to an end. Deloitte predicts that, in 2024, over 90% of the most used online applications on fixed broadband networks in developed markets will have the same vendor-recommended bitrate as in 2023. We further predict that at least 80% of these applications may see no increase to advised bitrate for the period between 2023 and 2025. Over time, the bitrate for some of the most popular applications might reduce due to better compression.
Keeping it local: Cloud sovereignty a major focus of the future
More data, increased cybersecurity threats, and geopolitical tensions are expected to increase demand for cloud solutions that can operate locally. Meeting this need can protect a company’s reputation, operations, and bottom line.
Government cloud (designed for stringent compliance requirements) is expected to surpass US$41 billion, and distributed cloud (a solution for data residency) could surpass US$7 billion. Data regulation is a complex global tapestry, and it can change frequently. What’s more, localized cloud often comes with nuances, including cost, complexity, a smaller range of applications, lack of scalability, and vendor lock-ins. Companies should be agile and develop operational resilience to help protect their reputation and bottom line.
Life after debt: Venture debt funding could grow again in 2024
After a rough 2023, tech companies should expect to see a rebound in technology venture debt funding, fueling innovation.
After four years of US$30+ billion in US venture debt activity, followed by a steep plunge in 2023 to US$12 billion, US tech venture debt could see a modest rise to US$14 billion to US$16 billion, and continue growing in the future. In the short term, venture debt deals are likely to become smaller. However, we expect to see strategic venture capital deals rise in 2024, as cash-rich, mega-cap tech companies could invest or buy out smaller companies that can’t raise capital or debt. These developments in the market are likely to encourage early-stage tech companies to build more stable growth over time.