Deloitte has released its predictions for the things that will make an impact this year in the 12th edition of the report that picks the top trends that will have the biggest impact on the technology, media and telecommunications industries over the next 12 to 18 months.
Here’s a rundown of the picks that are set to have the biggest impact on the media industry:
The rebranding of mobile advertising: The study predicts that what is presently known as mobile advertising will be split into two categories: one for tablets and one for smartphones. Grouped together for years, Deloitte says the two will be separated due to the differences in screen size, which drive fundamental differences in usage and monetization. The smartphone sector may generate about $4.9 billion in ad revenues this year, with advertising on tablets bringing in about $3.4 billion globally.
In 2013, Deloitte says advertising revenue will bring in about $2.50 per smartphone and $12.60 per tablet. For example, display revenues such as in-app ads will bring in about $0.60 per smartphone versus $7 per tablet. There is a less marked difference in search revenue, with smartphones bringing in $1.70 per device and tablets about $5.60.
Growth in both categories is expected to be strong in 2014, with smartphone advertising rising to about $6.5 billion and tablet ad revenue jumping to $5.2 billion. Revenues will be bolstered by a forecasted base of about 2.3 billion smartphones in 2014 (up about 20% from 2013).
The PC is not dead: Deloitte says that in 2013, more than 80% of internet traffic measured in bits will come from traditional laptops and personal computers and that more than 70% of time spent on computing devices will be on a PC. The report says that time at work does account for a large part of that laptop/PC use, but people are still likely to use those devices more than 50% of the time outside of their jobs. The reason PCs still remain so heavily used (a predicted 1.6 billion PCs in use this year) are physical in nature, the devices have large screens, full or mid-sized keyboards and mice or trackpads.
How people use TVs stays the same: Though Deloitte predicts a growing range of high-end TVs will incorporate gesture or voice-based controls in 2013, the study also says that while consumers who purchase the new sets will try out the functionality, 99% will revert back to using standard remote controls because of unreliability, impracticality and physical effort. Deloitte says that manufacturers will offer gesture and voice controlled TVs both to differentiate and because it is less expensive to produce sets with the technology thanks to Moore’s Law.
4K kicks off: Deloitte predicts that in 2013 the TV industry will roll out the next generation of HD TV known as 4K, which is four times higher resolution than the current highest standard HD. Though it might take between 18 and 36 months before 4K is technically and commercially broadcast-ready, 2013 will see benchmarks towards it, including about 20 TV set models with the technology hitting the market. While it says many commentators will question the need for a new version of HD, the report says demand for 4K will grow over the medium-term, fuelled by rising expectations for HD across all screens.
Dual video screening on the rise: The study predicts that about 10% of households in developed countries and 3% in developing countries will dual video screen their TV consumption on a monthly basis. This means they will have two or more screens (of varying sizes) showing TV programs at the same time in the same room. Deloitte predicts that by the end of the year, time spent screening dual videos could exceed that spent consuming the combination of a TV show and its app or website. The primary reason behind this dual video viewing, according to Deloitte, is people wanting to spend time together, but not agreeing on what to watch. The study also predicts that the smaller screen will often be used to watch sports. It says the dual screen viewing doesn’t mean people will necessarily be watching more content, though they might view the same event for a longer period of time.
This dual screen viewing will be done primarily through a combination of one TV and one smaller connected device in the first half of the year, but larger TV sets and computer monitors are likely to replace the second screen, being placed adjacent to the main TV set for ease of use.
Connected TV: The study predicts that tens of millions of connected TV sets will be sold this year, and by the end of the decade the majority of new TVs sold in developed countries will incorporate two-way viewing. But, Deloitte says this uptick in sales is partially because it is near impossible to buy a non-connected TV, citing that only 15% of the connected devices are sold based on their interconnectivity. In the majority of cases, price, size, thinness or bezel width are the primary reasons for purchase.
OTT may lift legacy broadcasters and distributors more than pure plays: Deloitte predicts that in 2013, two out of the top three OTT TV and movie services are likely to be provided by existing broadcasters and distributors, versus pure play OTT services like Netflix.
The prediction is in-line with the CRTC last year rejecting the idea that OTT digital platforms like Netflix Canada create competition for the Canadian broadcast system, saying that they’re instead complementary to and encourage viewing of Canadian content.
“The market is shaping up to be dominated by existing players,” Deloitte said in its predictions, noting that while pure play OTT players and OTT divisions of existing companies will grow their market share, that will still account for probably less than 10% of households.
The company said that most viewers are likely to stay loyal to the broadcasters and programs they’ve watched and have been aware of for years, adding that the appeal for consumers is in the brand and content that so-called legacy broadcasters have built. Plus, broadcasters can promote their own OTT services, which are an extension of their brand, on traditional TV.
Further, Deloitte suggested that viewers will use broadcaster OTT services to catch up on missed programming – more fresh content (one day to less than a week old) versus long tail. As they build their consumer base and enter the market, pure play OTTs rely primarily on archive content, Deloitte added.
Cord cutting reality: Deloitte predicts that almost all North American households that pay for TV through multichannel video programming distributors (MVPD) will continue to do so. According to the study, less than 1% of subscribers will discontinue their pay TV subscriptions (known as “cord cutting”). Those that do will be driven by a mix of: macroeconomic conditions, a perceived lack of value of pay TV, growth in OTT video services and changing TV consumption habits. It says a maximum of 10% of North American households would cancel their pay TV and still be able to watch the shows they “really want to watch,” due to content ownership from distributors of the “four pillars” of programming: reality, sports, news and first-run comedy in 2013.
Strong year for LTE: The study predicts that 200 operators in 75 countries will have launched an LTE network by the end of 2013. By year-end LTE subscriptions should exceed 200 million, a 17-fold increase in the past two years. About 300 LTE devices will be available by the end of 2013, including sub-$100 smartphones. However, at the end of 2013, the majority of the 1.9 billion worldwide smartphone owners will still use 3G and 2.5G devices.
Smartphones ship a billion: Deloitte predicts that global shipments of smartphones will top one billion units for the first time. However, there are many who own the devices and aren’t using them to their full capacity, with one in five smartphone owners never or rarely (less than once a week) connecting to the internet through cellular or Wi-Fi in 2013.
With files from Danielle Ng-See-Quan