Deloitte’s TMT Predictions 2014 explores the technology, media and telecommunication (TMT) trends that will impact the Canadian marketplace over the next 12 to18 months. The annual report is based on global research — including in-depth interviews with clients, industry analysts, global industry leaders and more than 8,000 Deloitte member-firm TMT practitioners. TMT Predictions reveals the future developments of all three industry segments and the business implications associated with them. Whether you are a manufacturer, bank or work in the public sector, these insights will help you capitalize on the trends that affect your business.

1. TMT Prediction 1
The converged living room:
a plateau approaches
2014: #Deloittepredicts combined global sales of
smartphones, tablets, PCs, TV sets and gaming consoles will
exceed $750 billion, up $50 billion from 2013 and almost
50% from 2010 numbers.

2. The boom times of record revenues
are so yesterday…
Outside of celebrity culture, nothing expands at an accelerating rate forever.
So prepare for the massive 10-year run-up in sales of smartphones, tablets,
PCs, TVs and gaming consoles to plateau. The market will continue
expanding, but more slowly, and it won’t crack the $800 billion annual
ceiling. Demand for premium products may support average selling price for
some categories. But market penetration, price sensitivity and longer product
cycles are all playing a role in slowing growth.

3. …and finding products that
blow customers away is elusive.
The Next Big Thing is not visible yet. 3D printers and
wearable computers will likely be big, but not big
enough to ‘move the needle’ in an $800-billion market.
But there may be good news for service providers
which will likely focus on upping data packages in lieu
of pushing a new phone every six months. Content
providers will retain ample audiences for programming
that may shift hardware dollars to content.

4. TMT Prediction 2
Wearables: the eyes have it
2014: #Deloittepredicts consumers will be wearing
more than $3 billion worth of newly purchased
computer equipment.

5. Tech-wear: 20/20 2.0
and more…
Tony Stark is closer than you think. Okay, flying Iron Man
suits may not be in stores yet. But sci-fi style wearable
computers are here, along with the digital information
and quasi-bionic abilities they provide. So-called smart
glasses will sell millions of units at around $500 each,
totalling about $2 billion in 2014. Sales for the rest of the
wearables market – watches, wristbands, clothing and
the like – will amount to about half of head-mounted
gear, in dollar terms.

6. …. but there will be regulations.
How to get from geek to chic will likely be the easiest problem to
solve for companies producing these wearable wonders. Early
adopters may lead to a user base in the tens of millions by 2016
as the technology improves, prices decline and prescription lenses
go smart. But safety and privacy concerns are perhaps not so
easily solved. Governments will set limits while manufacturers and
app designers work to give these items “must have” ubiquity.

7. TMT Prediction 3
The eDoctor is in
2014: #Deloittepredicts eVisits are going
mainstream with a 25% share of the potential market
in North America and could save the healthcare
system $5 billion compared to in-person doctor visits.

8. Healthy, wealthy and patient-driven…
What’s up, Doc? Diagnosing everything from pimples to allergies and
strep throat is increasingly being done through virtual physician consults,
questionnaires and photos. eVisits are part of the booming global
telehealth market, which will reach an estimated $25 billion in 2015.
Annual eVisits in Canada are growing by 50% a year, reducing wait
times by up to eight months for some procedures. Accessibility issues,
physician shortages, the focus on prevention and budget imperatives
all provide tailwinds for eVisits.

9. …it’s a digital apple a day.
The eVisit revolution will largely play out through
digital data collection. Laws will evolve to allow
public insurance providers to bill governments
for eConsults while governments will move to
force private payers to sign on. North America
leads the trend, but both the UK and Denmark
provide some services. Kenya, with a serious
physician shortage and accessibility issues, has
started an eVisit pilot. Over time, billions in cost
savings in North America may be trumped by
millions of lives saved in the developing world.

10. TMT Prediction 4
MOOCs (short term/long term)
2014: #Deloittepredicts enrollment in Massive Open
Online Courses (MOOCs) will be up 100% over 2012 to
more than 10 million courses.

11. Massive, maybe, but not as big as
the media hype
From correspondence courses to online learning, alternatives to in-person
education have been growing for decades. Now, MOOCs are growing in the
face of rising tuition costs, both in North America and developing countries.
New technology, alternative modes of teaching and a need to continuously
update skills are driving the trend, suggesting MOOCs will grow enormously
over the longer term, even if disruption is minimal in 2014.

12. …cheers for a new era.
Competencies will begin to matter more than
credentials. While some bricks and mortar
educational institutions will seek to protect the
revenue streams traditional course models
provide, potential savings will bring governments
and employers onside with MOOCs. Social media
will chip away at the perceived isolation of online
learning while rising student debt will force
millions to find alternatives. Like music and
media companies, educational institutions that
find a way to embrace the new digital world
will lead the way.

13. TMT Prediction 5
Extreme TV
2014: #Deloittepredicts Canadians will watch more
than 55 billion minutes of traditional TV per day.

14. Tune in, turn on…
Increasingly, it’s a tale of extremes, although average traditional TV
viewing hours remain relatively constant. In English Canada, the least
voracious viewers will watch half an hour of TV a day, down from an hour
in 2004. But the top 20% of English and French Canadian couch potatoes
are watching more than eight and nine hours per day, respectively. That’s
up in the last few years, and it accounts for almost half of all the television
hours watched in any language by anyone, anywhere in Canada.

15. …and segment into distinct
demographics.
Canadian TV watching habits vary by language, but also by age.
Research from other countries suggests they also segment on factors
like income, ethnicity and education. Since the bulk of viewing is
concentrated in 20% of the population, it allows for more targeted
messaging. The lightest TV viewers tend to be young and affluent and
they’re not reading or listening to traditional media either. Brands
looking to target them will need to find new channels.

16. TMT Prediction 6
Doubling up on pay TV
2014: #Deloittepredicts that by year-end, 50 million
homes worldwide will be paying for two or more baskets
of TV-like content.

17. Ask not what cords can be cut…
By the end of 2015, households subscribing to three or more content
packages will amount to 20% of consumers in selected markets. That’s
based on pay TV-heavy North America where more than 90% of homes
subscribe to some kind of pay TV. Former DVD rental spend simply
migrated to subscription video-on-demand. The bonus? Without
spending all that time in lines snaking between candy displays and the
“pre-owned” bargain bin, there’s even more time for consumers to watch
what they want, when they want.

18. ...but what cords will be added.
The once hotly contested competition
for the remote control is moving upstream.
Subscription packages are the new
battleground. Broadcasters and platform
owners can expect tech companies and
retailers to join the content fray as they look to
differentiate their offerings. Many additional
subscriptions will be available at lower costs
than legacy platforms. Platform owners who
are also broadband providers will not be left
out. Customers migrating to alternative services
will likely demand (and pay for) higher speed
broadband and larger download allowances.

19. TMT Prediction 7
TV sports score and win
2014: #Deloittepredicts that the global value
of premium sports video rights will increase by
14% led by North American sports leagues
and European soccer.

20. Rights fees are stealing the show...
PVR-proof programming that commands a passionate following is behind
the continuing run-up of broadcast sports rights. Globally, fees paid for
broadcast, live streaming and video-on-demand for “super premium”
brands garnered 14% increases, compared to 5% annual growth in
2009-2013. In Canada, where hockey is king, the $5.2 billion multi-year
agreement between Rogers Communications and the NHL for all of the
league’s broadcast rights showcases that this trend is already taking hold.

21. ...but commissioners and tech
will be running it.
Fans craving access, a finite number of elite events and increasing
competition for content rights mean leagues know the value of their
properties. And because small screens just don’t work for big games, the
fans who consume 90% of video sports minutes via traditional TVs will
also pony up for bigger and better screens.

22. TMT Prediction 8
The decline of the cellular
voice call…but only for some
2014: #Deloittepredicts about 20%
of Canadian cellular customers will
spend only three minutes per day
talking on their phones.

23. Look who’s not talking…
Maybe “Mr. Watson, I wn2 CU” lacks the historical gravitas of Alexander
Graham Bell’s famous first telephone call. But texting – or rather non-voice
communication – is taking over for some cellular customers. While voice
minutes are still rising in Canada, they are falling in the US and UK. And
Americans use three-quarters of their total smartphone time – about one
hour a day – on non-voice apps. Voice calls are also getting shorter,
dropping from just over three minutes in 2006 to about a minute and
45 seconds in 2011.

24. …and how they are talking.
Texting is cheaper – one reason younger generations type before they
talk. The rise of mobile social media is a factor, as are “over-the-top”
mobile voice apps such as Skype, though the total number of voice
minutes over those services is still small. Enticing subscribers gets
harder as low-cost text and talk plans lose their appeal. The voice
seldoms will likely boost phablet sales, and perhaps even spur a new
class of plan where voice is completely à la carte.

25. TMT Prediction 9
Phablets are not a Phad
2014: #Deloittepredicts shipments of phablets –
smartphones with screens 5.0” or greater – will
represent 25% of the global market, or 300 million
units. Canadian sales will likely be lower: 15–20%
of smartphones.

26. Is that a Phablet in your pocket?
With global sales up 100% over 2013 and 1,000% over 2012, this
$125 billion category is strongest in Asia where the number of phablets
sold each quarter is almost exactly the same as the number of tablets
and notebook computers combined. What’s driving sales? It’s easy to
text in Chinese and Korean on a larger screen. Avid gamer populations,
more mobile video watchers and those looking for an all-in-one device
that is at once smartphone, gaming unit, tablet and PC are also
boosting sales.

27. …and size does matter.
About two-thirds of phablet sales in 2014 will just barely meet the
definition at 5.1 inches or less. Only 10% will measure more than 6 inches.
Pants pockets, purses and the need for a constant two-handed telephone
grip limit size. This sets a natural ceiling for the phablet market, though
multi-device ownership and potential marketing to seniors seeking bigger
screens and keypads could offset that ceiling somewhat. Phablets will also
bring big changes to mobile ads, gaming and data usage.

28. TMT Prediction 10
Narrowing the gap: seniors
embrace the smartphone
2014: #Deloittepredicts smartphone adoption will grow
fastest among the 65+ crowd with 50% year-over-year
growth and over 40% market penetration.

29. The next group of Bluetooth users...
It’s mostly a trends and demographics story. In the developed world, the
smartphone market for 18-to-24-year-olds is almost completely saturated,
leaving the 65-plus group as a potential growth market. Because seniors
comprise 20% of the adult population with a disproportionate amount of
income and wealth, tech companies know blue-haired stereotypes of the
past are giving way to Bluetooth and Blu-Ray among media savvy seniors.

30. ...and they are hooked
on free grandchildren minutes.
Carriers will accelerate this trend with pricing packages that should appeal
to this potentially penny-pinching group. Weekends and grandchildren free
minutes anyone? Developers of senior-friendly apps and games have a market,
albeit one where 30% of over-65 smartphone owners have never downloaded
a single app. The growing appeal of phablets should help. The 65-plus crowd
loved tablets almost as much as younger people distanced themselves from
“frailty friendly” phones. Mainstream devices with bigger screens and keypads
could attract the older demographic.

31. Predictions authors
Duncan Stewart
Paul Lee
DTTL Director of Research, TMT
Global Director of TMT Research
Twitter: @dunstewart
LinkedIn
Twitter: @pjvlee
LinkedIn
www.tmtpredictions.ca
© Deloitte LLP and affiliated entities.