Top trends for the technology, media and telecoms industries in 2011
Top trends for the technology, media and telecoms industries in 2011
TV advertising remains strong but Social Media advertising yet to surge
Personal Tablets entering the workplace
Wi-Fi Spots to move beyond the coffee shop
4G falling short of expectation
The Deloitte Technology, Media & Telecommunications (TMT) Industry Group has announced its predictions for the TMT industry in 2011. This year’s predictions cover a range of topics including the appetite of employers for tablets thanks to the rise of the ‘prosumer’; the fact that with the public’s appetite for smartphones showing no sign of slowing down; and that the demand for data passing through wi-fi hotspots is set to outstrip the amount of traffic carried over mobile networks by up to 50 per cent next year.
With regards to the media industry, despite the fact that social networks look likely to surge through the one billion user mark in 2011 and will deliver a breathtaking two trillion advertisements, advertising revenue will remain at a modest $5 billion, a mere $4 per member. Also, the report predicts that 2011 will not see the demise of the television advertisement, despite the increasing popularity of digital video recorders.
Harry Goddard, Partner in Deloitte’s TMT group commented: “This year’s predictions provide some interesting insight with regards to how technology will be used by both consumers and business alike in addition to how revenue streams are changing across the TMT industry.
“However in a broader context, the report also identifies areas of growth over the next year and beyond that should provide Ireland Inc with some food for thought. To cite just one example, the report examines how the gaming industry will attract higher revenues and profitability. Just recently, PopCap Games, who have its European headquarters in Dublin, announced that it will double its workforce in Ireland to 110 over the next three years. The question must now be where else can Ireland Inc capitalise on the trends identified in this report?”
Predictions outlined in the report include:
Games go online and on sale: The audience grows, but at what price?
In 2011, the global computer and video games industry will continue growing but from more diverse revenue streams, with the following three major technological drivers transforming the industry: powerful portable devices such as smartphones, ubiquitous network connectivity, and social gaming. An increasingly large percentage of games revenue will likely come from monthly subscriptions, peripherals, fees for services and in-game purchases, and advertising in the free-to-play and “Freemium” markets. By the end of 2012, these relatively new revenue sources could be as much as 16 percent of total games revenues, and could eventually make up 50 percent of all revenues for the industry. Meanwhile, the existing PC and console games market is confronting various challenges: increased software piracy and the higher costs and longer development times for high-end games. Yet the existing market of core gamers isn’t about to go away, and the gaming industry will likely see smoother revenue streams, higher revenues and profitability, and massive user growth.
DVRs: The 30 Second Spot Won’t Die
The pervasiveness of digital video recorders will increase in 2011 meaning that most televisions have the ability to fast forward through advertisements. So is the decade-old prediction of the death of the television commercial set to come true? Only if those television viewers record every single show they watch, including sport matches, reality show finals and news bulletins, so they can deliberately avoid commercials. Even then, viewers would need to keep their eyes shut when fast forwarding as studies suggest that even commercials viewed at 12 times the normal speed leave an impression on viewers, specifically the last advert before the show restarts. With most television viewers still locked into live broadcast schedules, only 15 to 25 per cent of programming is skipped by current DVR owners. That means the advertising funded model has not been broken by this technology which has perhaps had a more dramatic impact on DVD rentals than live broadcast.
Social Network Advertising A Case of Minor not Major
Social networks look likely to surge through the one billion user mark in 2011 and will deliver a breathtaking two trillion advertisements. Yet advertising revenue will remain at a modest $5 billion, a mere $4 per member, which represents less than one per cent of the global industry total. That’s a slow start for the technology sector’s next big thing which has promised greater rewards. The decade old phenomenon of search advertising and perhaps the billions of stated “likes” on social networks does not translate into tangible purchases. It is early days for this fast growing sector which could yet be used as e-commerce spaces or payment platforms while the strong trust element that social networks command amongst users could be harnessed by advertising companies and their clients. One survey found that 78 per cent of people trust peer recommendations compared to only 14 per cent for advertisements but monetising the rapid rise in users is not yet a perfect science.
Tablets at work: more than just a toy
Tablet computers have taken the consumer world by storm, but according to Deloitte more than a quarter of those sold in 2011 will be bought by businesses. This trend will be partly driven by the consumerisation of corporate technology, whereby people start to use personal devices for work functions.
By the end of 2011 a significant number of firms may be willing to pay for their employees tablets and data plans, millions of ‘prosumers’ will have their tablet data plans at least partially subsidised by their employers; and millions more tablets will be purchased by companies as PC alternatives. Enterprise software providers are rapidly responding to business customer requests for tablet specific software. Large players in ERP, ECM, CRM are combining with desktop virtualisation providers to create secure enterprise-grade apps that can be rapidly and seamlessly deployed into businesses’ IT environments.
However this also presents a challenge for companies as the devices are not particularly robust and price could also be an issue in the current economic environment. The cost of developing bespoke applications, which ranges from $5,000 to $500,000, and securing the devices could also be a hurdle.
Wi-Fi complements cellular broadband for “data on the move”
Although the public’s appetite for smartphones shows no sign of slowing down, demand for data passing through wi-fi hotspots is set to outstrip the amount of traffic carried over mobile networks by between 25 per cent and 50 per cent next year with the number of public hotspots set to rise by 20 per cent in 2011, the two wireless technologies should work together to provide a customer with a seamless experience. Ultimately this should result in most retailers carrying Wi-Fi facilities in-store enabling consumers make informed choices, avail of online promotions and view online advertising whilst making physical purchases.
Getting to 4G cheaply: will many carriers opt for 3.5G instead?
Long Term Evolution, or LTE, networks which will usher in the era of 4G services will fall short of expectations next year as the roll-out of new infrastructure proves slower than forecast due to a continuing dependence on 3G. The current generation of 4G, which is being tested by 130 operators around the world, does not yet provide the quantum leap in speeds and features compared to 3G and it would perhaps be more precise to describe them as ‘4G ready’.
Notes to editors
For a full copy of the report with all of the Deloitte predictions please visit deloitte.com/ie/tmtpredictions.
The 2011 series of Predictions has drawn on internal and external inputs from conversations with member firm clients, contributions from Deloitte member firms’ 7,000 partners and managers specialising in TMT, and discussions with industry analysts as well as interviews with leading executives from around the world.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ie/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
The information contained in this press release is correct at the time of going to press.
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