NEW YORK, N.Y., US, 29 November 2023— Deloitte today released its Technology, Media & Telecommunications (TMT) 2024 Predictions report, which highlights the biggest trends in TMT and how they may impact businesses and consumers across the globe. The report sheds light on the growing clout of generative artificial intelligence (gen AI), tackles the complexity of integrating sustainability into technology, telecommunications and semiconductor business models, and explores fresh revenue streams catalyzed by satellite-terrestrial network synergies.
“As we move into 2024, the transformational capacity of generative AI, sustainability imperatives, and novel revenue paradigms may indelibly shape the TMT landscape,” said Ariane Bucaille, Global Technology, Media & Telecommunications Industry Leader, Deloitte France. “This coming year is an important moment for the industry; it offers not just growth opportunities but unprecedented challenges that compel us to rethink traditional frameworks and relentlessly innovate. Regulatory landscapes, as well as environmental considerations may also be key, dictating the pace and direction of change. Leaders should be agile, cognizant of these shifts, and ready to act decisively for long-term success.”
Deloitte predicts that gen AI may move from a concept buzzing in enterprise circles to a reality reshaping industry. The report provides an in-depth analysis of the gen AI landscape, covering infrastructure and cloud providers, enterprise productivity software, specialized enterprise tools, and engineering and design tools. However, some enterprise customers may be resistant to paying additional fees for gen AI features.
Gen AI is set to become an integral part of nearly all enterprise software offerings in 2024. Software vendors and IT departments will likely figure out their pricing for gen AI. The report predicts that many enterprise software companies should experience a revenue uplift at a run rate of US$10 billion by the end of 2024—a remarkable milestone for the first year of a new market, but likely short of some expectations as revenues could occur mainly in the back half of the year.
The European Union is set to roll out sweeping regulations on AI which are likely to impact and influence markets around the world. 2024 is likely to see a balance between regulatory compliance and innovation in the gen AI industry. Well-crafted policies can create a conducive environment for investment. Key regulations could encompass consent, bias mitigation, and copyright matters.
Gillian Crossan, Global Technology Sector Leader, Deloitte & Touche LLP said “In 2024, the technology sector is set to cross a new threshold with generative AI taking center stage. Once considered a concept, gen AI is now pivoting from the periphery to becoming a bedrock of enterprise innovation. Our predictions underscore the potential of specialized gen AI chips, a market poised to reach over US$50 billion. However, this progress is not without its challenges; EU regulatory developments could serve either as obstacles or catalysts for change. As we stand at this juncture, it's imperative for industry leaders to navigate these complexities, aligning regulatory compliance with creativity, to fully unlock the transformative power of gen AI."
Sustainability concerns tied to the proliferation of tech are at the forefront. Telecom sectors, despite accounting for only 2% of global emissions, are actively seeking to further reduce their carbon footprint. Initiatives may include transitioning from copper wire networks to energy-efficient fiber optics, decommissioning power-intensive 3G networks, electrifying field service fleets, and employing power-saving technologies in 5G radio gear. Deloitte predicts that telcos worldwide may be able to reduce their carbon footprint by 2%, or 15 million tons of carbon dioxide equivalent (CO2e) in 2024 and do the same again in 2025.
Multiple regions could run short of gallium and possibly germanium in 2024 and may see shortages of rare earth elements (REEs) and more. The impact of the impending shortage of different REEs and other elements could have a negative effect as these elements serve as the backbone for industries with over US$250 billion in annual market value. As trade tensions continue to cause challenges, the tech and chip industry can bolster supply chain resilience by sharpening their focus and increasing investments in e-waste recycling, digital supply networks, stockpiling, new mines and smelters, and sustainable semiconductor manufacturing.
While the absolute use of energy, water, and process gases could rise with expanding semiconductor revenues in 2024, Deloitte predicts a year-over-year decline in average water and energy intensity. This is partly due to the emergence of modern greenfield plants committed to sustainable operations.
Agricultural technology (AgTech) can play a critical role in tackling both food security and environmental sustainability. With a projected global market of US $18 billion in 2024, AgTech is poised to revolutionize farming practices.
Tech companies are increasingly seeking ways to monetize technology. Tech companies are facing the complexities of monetizing advanced technologies, particularly with software integrating gen AI. While chipmakers are capitalizing on a market projected to reach over US$50 billion in 2024, software enterprises face a different landscape. The adoption of gen AI features in software is an evolving consumer behavior, raising questions about customers' willingness to pay additional fees for these enhancements. As nearly all enterprise software companies are predicted to integrate gen AI into some products by the end of 2024, the challenge may lie not in technology adoption but in finding a pricing model that both captures its value and is acceptable to the market.
The telecom industry could see innovative monetization strategies emerge beyond traditional service offerings. While terrestrial networks continue to be the backbone for most users, there's increasing interest in Device-to-Device and satellite capabilities to extend connectivity as a growing ecosystem of satellite and mobile network operators, handset manufacturers and semiconductor companies are looking to connect the unconnected, improve safety and emergency response, and expand Internet of Things (IoT) applications. Basic services for emergency communication, simple text messages, and IoT monitoring have already started. Over 220 million smartphones capable of connecting with satellite services are expected to be sold in 2024, relying on approximately US$2 billion worth of specialized chips.
Gaming is a natural vertical for monetization. The partnership trend between Hollywood studios and gaming companies, aimed at co-monetizing intellectual property (IP) is growing. High-performing IPs are expanding across media formats, capturing broader audiences and thereby potentially increasing their overall franchise value. Given the escalating costs of game development and the pressure on traditional studios to innovate, this cross-platform storytelling strategy is anticipated to gain further traction.
2024 is set to be a watershed year for women's elite sports. Women’s sports are expected to break the billion-dollar revenue barrier for the first time, reaching US$1.3 billion in total forecast revenues. This growth is fueled by commercial revenue, followed by income from broadcast and matchday sources. Leading this ascent are football/soccer and basketball, while cricket, volleyball, and rugby are also showing promising momentum. This increased investment is expected to not only boost revenues but also elevate athletic performance and opportunities for women athletes across levels and ages.
More than a decade into the streaming revolution, the media and entertainment (M&E) sector faces the challenge of balancing growth with profitability. Pay TV subscriptions have been declining, along with billions in lost revenue and lower profits. The streaming video services M&E companies launched to replace pay TV have been mostly successful in attracting large audiences, but unprofitably. Deloitte predicts the landscape could become even more complicated, with leading US streaming video-on-demand providers more than doubling their tier offerings from an average of four options in 2023 to eight or more by 2024.
User-generated content in gaming is expected to be a game-changer. Platforms are projected to pay out almost US$1.5 billion to content developers in 2024. As this space grows, it risks disrupting the dynamics of the gaming industry by making inexpensive 3D content available. The practice could challenge top-tier games and services even as it democratizes content creation, encouraging more favorable economics for both platforms and independent creators.
The audio entertainment market is on the cusp of significant growth. The market is predicted to surpass US$75 billion in 2024, a 7% hike across formats like podcasts, streaming music, radio, and audiobooks. Podcasts offer untapped potential for per-user revenue.
Kevin Westcott, Deloitte Consulting LLP’s Global Telecommunications, Media & Entertainment Sector Leader said, “Next year will mark a pivotal juncture in the media and entertainment sector. As we see women's elite sports crossing the billion-dollar threshold, it's not just a win for athletes but a signal of a more inclusive future in entertainment. On the streaming front, the expansion of subscription tiers is a significant leap toward profitability, moving beyond just subscriber acquisition. This dual focus—on social impact and fiscal responsibility—represents a balanced approach to growth that's imperative for long-term resilience.”
Amid geopolitical tensions and an upsurge in cyber threats, localized cloud solutions are emerging as a strategic imperative. Markets for government clouds and distributed clouds are expected to surpass US$41 billion and US$7 billion respectively.
By 2024, smartphones will be integral to secure authentication, revolutionizing aspects from online log-ins to physical access controls. Biometric technologies may lead this transformation, offering enhanced security against fraudulent access. The two-factor authentication) process will primarily use smartphones for one-time password (OTP) delivery, building on the estimated 1.7 trillion OTP messages sent in 2022 that generated US$26 billion in network traffic.
Enterprises are increasingly opting to train gen AI models on their proprietary data. This trend is aimed at not just maximizing productivity and cost-efficiency but also mitigating the risks associated with public data sets. The share of enterprise AI spending dedicated to gen AI may grow by 30% in 2024.
In a turn of events, Deloitte predicts that the constant demand for increased internet speeds may be reaching its peak. At least 90% of the most-used applications will not demand higher bitrates in 2024 compared to 2023. At least 80% of these applications may see no increase to the vendor-recommended bitrate for the two-year period between 2023 and 2025.
After a harsh 2023 that saw a dip to US$12 billion from a consistent US$30+ billion in venture debt activity, 2024 brings with it a more optimistic forecast of US$14 billion to US$16 billion. In the short term, venture deals are likely to become smaller, but the number of deals could rise in 2024, as cash-rich, mega-cap tech companies may invest in or buy out smaller companies.
With increasing demands from investors and regulators for transparent Environment, Social and Governance (ESG) metrics, sales of standardized ESG reporting software are expected to cross US$1 billion in 2024. Deloitte estimates that the ESG software market will likely grow at a compound annual growth rate (CAGR) of over 30% in the coming years.
About this report
Deloitte's annual TMT Predictions report provides an outlook on technology, media and telecommunications trends that may disrupt and transform the business and consumer ecosystems worldwide.