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Middle East TMT Predictions 2014


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This year’s second Middle East Technology, Media & Telecommunications (TMT) Predictions report reveals the latest trends and emerging issues shaping the TMT industries across the region in the year ahead and beyond.

Deloitte’s TMT predictions are built around hundreds of discussions with industry executives, analysts and commentators, along with tens of thousands of consumer interviews. The predictions are also tested with clients, industry analysts, conference attendees and leverage Deloitte’s international and regional TMT project experience in the months leading up to their release.

As in each year that we have published a set of predictions, the core drivers of disruption in the sector remain the same: processor speed, connectivity and storage.

The Middle East report consists of predictions covering the technology, media and telecommunications industries across the region. This year’s TMT predictions to impact the marketplace in 2014 includes:

Technology

  1. The $750 billion converged living room: a plateau approaches - Global sales of smartphones, tablets, PCs, TV sets and videogame consoles will exceed $750 billion in 2014, up $50 billion from 2013 and almost double the 2007 total. However a plateau appears likely, with an estimated ceiling of $800 billion per year.
  2. Wearables: the eyes have it - Globally, smart glasses, fitness bands and watches should sell about 10 million units in 2014, generating $3 billion in revenues. However, smart glasses’ relatively high price point means affordability and uptake by the wider Middle East consumer base should be more gradual over the longer term, where slowly but surely, Arab eyes will have it.
  3. One became many: the tablet market stratifies - The installed base of compact tablets (with screens smaller than 9 inches) will surpass the base of classic tablets (9 inches and larger) for the first time. The surge in compact tablet sales is accompanying a profound stratification of the tablet base.
  4. Massive Open Online Courses (MOOCs): not disruptive yet but the future looks bright - Over the next few years, the Middle East could see the rise of the Arabian MOOC (AMOOC). New local platforms, in partnership with local professors and universities, may emerge to launch new localized AMOOCs, attended by more Arab users than in 2013.
  5. eVisits: the 21st century house call - The total addressable market for eVisits in the GCC is about $2-3 billion and could increase by as much as $230-310 million this year. Although eVisit usage will likely be greatest in North America; in the Middle East, usage will be more gradual as mHealth will emerge instead as a more disruptive force in the region’s healthcare systems.  
  6. SME adoption of ICT services: catching up but still a long road ahead… - Small-to-medium sized enterprises (SMEs) in the Middle East will increase their expenditure on information and communication technology (ICT) services by over $2 billion to $22 billion, 10 percent over 2013; driven by ongoing expansion in the number of SMEs and their needs in key services, such as web-presence, e-commerce and cloud computing.

Media

  1. Doubling up on pay-TV - By the end of 2014 up to 50 million homes around the world will have two or more separate pay television subscriptions, with the additional subscriptions generating about $5 billion in revenues globally. The fact that viewers in the region, with sizeable online streaming and YouTube penetration levels, have adopted online video in addition to conventional television shows a market potential for subscription video-on-demand (SVOD) as a secondary viewing service.
  2. Television measurement: for better and worse - Measurement of viewing of domestic television programs should become more accurate for tens of millions of viewers, thanks to the introduction of hybrid measurement, which enables the inclusion of viewing taking place on PCs, tablets and smartphones.
  3. Broadcast sports rights: premium plus - The value of premium region-specific sports rights in the Middle East will increase by at least 15-20 percent, exceeding the 14 percent rise of all premium sports rights predicted globally.
  4. Performance rights lift recorded music revenues - Revenues from performance rights, a license payable for the right to play music to the public, should exceed one billion dollars for the first time in 2014. Over time, performance revenues should reach $2 (£1.2) billion, although the timing for this is uncertain.

Telecommunications

  1. Short messaging services versus instant messaging: value versus volume - Instant messaging services on mobile phones (MIM) will carry more than twice the volume of messages sent globally via a short messaging service (SMS). In the Middle East, the adverse impact of MIM on operators’ SMS and MMS revenues will be in the range of 5 to 6 percent in the next five years as higher smartphone penetration makes MIM more ubiquitous in the Middle East than anywhere else in the world.
  2. Phablets are not a phad: Shipments of phablets, smartphones with 5.0-6.9 inch screens, will represent a quarter of smartphones sold, or 300 million units. That is double the 2013 volume, and 10 times 2012 sales.
  3. The smartphone generation gap: over-55? There’s no app for that - The highest year-on-year increases in smartphone penetration in developed countries will be among over-55s. Ownership should rise up to between 45-50 percent by year-end, still significantly lower than the over 70 percent penetration rate for 18-54 year olds, but an approximate 25 percent increase from 2013.
  4. ‘Ruggedized’ data devices at $250: reinventing the business case for mobile field force - The entry price for a ruggedized, connected data device that can be used by some field force workers, and used to undertake tasks such as car rental check-in inspections, inspecting highways or delivering packages, will fall to $250. We expect incremental annual sales of almost 10 million units in 2014, effectively increasing the size of the entire rugged data device market by almost 50 percent to over 30 million units in 2014.
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