Toronto, February 1, 2006 — The Technology, Media and Telecommunications (TMT) industries in Canada and around the world will face significant changes, challenges and opportunities in 2006 and beyond, according to a new study released today by Deloitte. The 2006 edition of Deloitte’s Technology, Media and Telecommunications Predictions is one of the most comprehensive industry forecasts and is based on input from more than 5,000 TMT practitioners, firm clients and analysts.
“The global technology gap is narrowing rapidly, as evidenced by the plethora of new tech-enabled products and services introduced in Canada, from VoIP telephony to wireless and HDTV to new generation gaming consoles, MP3 players and satellite radio,” said Garry Foster, National Director, TMT, Deloitte. “In 2006, Canadian TMT companies will face tougher competition, greater challenges and have little time to respond to market shifts and new technological inventions. Companies can lead the domestic and global markets but need to take into account these changes and constantly re-evaluate and adjust their business strategies as they look into the future.”
The top 10 trends for Canada identified in the three-part series of Deloitte predictions reports include the following:
“Googlemania” – 2006 marks the turning point for search engines, which are poised to displace email as the most-used digital application, thanks to their rising functionality, ever-expanding volume of searchable data and higher-speed connectivity. With the volume of digital content created by companies and individuals on the rise (some predict up to 20 billion gigabytes in 2006 alone), search engines become increasingly necessary as a means of bringing order to the overwhelming mass of digital data. Thus the scope of search, while still based on text-based key words, will expand to include digital data held on devices such as PCs, mobile phones, digital cameras and personal video recorders (PVR).
“Beam me up, Scotty” – Time travel may not be available in 2006, but advances in key technology areas promise significant improvements to the interface between people and machines. Natural language speech recognition and voice synthesis will likely be combined with basic artificial intelligence offering a wide range of new services. For example, possible applications in the automotive industry include distance monitoring, collision avoidance and voice-controlled driver environment.
Life-changing technologies continue to flourish – Technology’s general impact on everyday life in Canada and worldwide will likely become more pervasive and comprehensive than ever in 2006. Technology-based products and services that have changed people’s behaviour, like MP3 players that enable owners to carry their entire music collection wherever they are, new generation game consoles that have created a new leisure category, and advanced mobile devices and broadband connectivity that have made working at home a reality, will continue to dominate our lives and have a tremendous impact on the bottom line.
Video games for him…and her – The global video-gaming market is expected to continue its upswing in 2006 and beyond with annual global sales of $23 billion. This year is also expected to mark the first major industry attempt to broaden the appeal of gaming beyond young male audiences, the lifeblood of the industry, to the female population with new genres and crossover titles aimed at attracting women. In 2006, the industry is also likely to face a growing anti-gaming backlash from advocate groups of parents and educators. Solutions like onscreen timers and automated console shut-offs may be incorporated to address these groups’ concerns.
Tuning in to Radio 2.0 – With a growing number of radio broadcast formats ranging from analogue radio to satellite radio, podcasts and internet-based free streaming radio, the business model for this media is on the cusp of significant change. Radio listeners – soon to be referred to as customers – will enjoy increasing control over what they listen to, how they listen to it (live or time-shifted playback), and on what device. The days of radio as a single broadcast product are coming to an end in 2006 – welcome to Radio 2.0.
The fruits of fragmentation – Audience fragmentation, long regarded by the media industry as a drawback, is likely to be embraced by media companies in 2006 and beyond as a catalyst to growth. New technologies, formats and platforms enable media organizations not only to reach more specifically-targeted audiences but also to expand advertising channels to these groups through embedded ads in console games, banner ads on mobile phones and audio ads interspersed in podcasts. Overall, the media industry in 2006 is expected to experience something of a renaissance.
Convergence consolidates – Internet-based Video-on-Demand (VoD), IPTV, podcasting and other services along with end-user devices such as home media hubs, portable media players and mobile multimedia phones are all likely to grow throughout the year thanks to the convergence of technologies, platforms and content. But while Deloitte’s study predicts some convergence-based media to prosper (i.e. VoD over broadband networks, IPTV and podcasts), it also recognizes that mobile television, which was recently introduced in Canada, may be the most obvious example of convergence failure in 2006.
Addicted to speed – In the coming year, many telecom operators, both fixed-line and wireless, will compete on the basis of speed. Fixed-line operators are already deploying a variety of new infrastructures such as Fibre to the Home (FTTH) and ADSL 2, to deliver high-speed connectivity. Meanwhile, mobile operators will start challenging fixed-line operators to a speed race that may lead to a frenzied quest for speed at the expense of crucial factors such as real market needs and profitable business models.
Convergence winners and losers – Emerging applications such as VoIP, video security systems, e-commerce and online music will likely continue to rely on broadband connectivity. But, unlike music and e-commerce companies that charge for every download or transaction, telecom companies that provide the bandwidth may not accrue additional revenues as they charge flat fees for connectivity and not for the services used. Thus in 2006, telecom companies may find themselves convergence losers unless they develop new event-based business models that generate additional revenue for each service used on their platform such as a song download, VoIP call, a video stream or an Internet search.
A tale of two VoIPs – 2006 may see two different type of VoIPs take shape, each following a markedly different path. Managed VoIP services offered by specialist VoIP service providers and telecom companies will rapidly gain market share. By contrast, ad-hoc VoIP, which uses the open internet as the service platform, may struggle to gain market and steady revenue stream.
About the study
The 2006 edition of Deloitte’s Technology, Media and Telecommunications (TMT) predictions is based on comprehensive research and input from more than 5,000 Deloitte TMT partners, directors and senior managers as well as discussions with firm clients and leading industry and financial analysts around the world. The study includes 10 predictions for each industry sector respectively as well as Deloitte TMT group’s conclusions, suggestions and outlook for each prediction.
Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services through more than 6,200 people in 50 offices. Deloitte operates in Québec as Samson Bélair/Deloitte & Touche s.e.n.c.r.l. The firm is dedicated to helping its clients and its people excel. Deloitte is the Canadian member firm of Deloitte Touche Tohmatsu.
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