Deloitte Technology Media and Telecommunications Predictions 2016

Technology, Media and
Telecommunications Predictions
2016

Welcome and Introduction
Mark Casey
Global Managing Director - Media & Entertainment Practice
Arun Babu
National Leader – Telecoms Practice

TMT Predictions 2016
Agenda
Time Agenda Item
09h00 - 09h05 Opening and Welcome: Mark Casey
09h05 - 09h50 Presentation of TMT Predictions 2016: Mark Casey, Arun Babu
09h50 - 10h10 Keynote Address: Lorenzo Gonzales - Strategist EMEA Enterprise Group, Hewlett Packard
Enterprise (HPE)
10h10 - 10h50: Panel Discussion:
Facilitator:
Mark Casey
Panel Members:
• Lorenzo Gonzales - Strategist EMEA Enterprise Group, Hewlett Packard Enterprise (HPE)
• Craig Holmes - Vice President, Cognitive Solutions – MEA, IBM
• Dr. Brian Armstrong - Chief Commercial Officer, Telkom Group
• Tim Bishop - Director, Deloitte Digital
10h50-11h00 Competition time and closing remarks

15 years of TMT Predictions!
© 2016. For information, contact Deloitte Touche Tohmatsu Limited.

Women in IT jobs: it is
about education, but it is
also about more than just
education

Women in IT jobs: it is about education, but it is also about more
than just education
By end-2016 fewer than 25%of IT jobs in developed countries will be held by women.
South Africa ICT sector has
23%women
The gender gap in IT costs
the UK alone about
$4billion annually

US - Computer Science
1985 37%
2013 18%
UK - Computer Science
2012-2013 17.4%
2013-2014 17.1%
Sweden - Computer Science
2000 30%
2010 24%
UK
Learnt Coding at School
2012 17% of girls
33% of boys
Women in Computer Science globally have declined dramatically
over the years
Against global trends South Africa has nearly 40% of post-school Science, Engineering and
Technology (SET) courses, which provides a significant economic opportunity if we can convert this
larger talent pipeline in to increased gender diversity in the ICT sector

Women in IT jobs: it is about education, but it is also about more
than just education
Hope of things to come

Trailing Millennials are the
pro-PC, not the post-PC
generation

Trailing Millennials are the pro-PC, not the post-PC
generation
18-24 year-olds are mobile-centric and fervent PC users and buyers
18-24 year-olds consider smartphones and PCs as
complements, not substitutes
Large tablets are the devices that are actually being ignored.
Laptops are the second-most desired device

It’s not either/or, it’s BOTH

Millennial ownership of PCs remains high…

… as does Purchase intent

Trailing Millennials are the pro-PC, not the post-PC
generation
What are millennials doing on PCs?
PCs still preferred for:
By 2020 or 2025:
Minutes of use of PCs will have likely declined, but PCs will still likely be widely-owned
and valued, required by schools or employers, and used for hours per week.

Touch commerce: The
mobile online checkout gets
an express line

Mobile commerce gets accelerated
Touch commerce enables low friction mobile payments

Many use their phones at every opportunity

Q. How frequently do you use your phone to do any of these: "Browse shopping websites/apps", "Shop for products
online")?
32%
57%
40% 38% 37% 36% 34% 33%
29% 27% 26%
21% 20%
15%
9%
18%
11% 13% 13% 11% 9%
5% 6% 4% 6%
2%
10%
7%
0%
10%
20%
30%
40%
50%
60%
Browse shopping websites/apps (weekly) Make an online purchase of a product (weekly)
Source: Deloitte Global Mobile Consumer Survey, developed countries, May-Jul 2015
Weighted base: Respondents who own or have access to standard phone/smartphone: Australia (1,837), Canada (1,676), Finland (963), France (1,829), Germany (1,821), Italy (1,873), Japan (1,420), Netherlands
(1,886), Norway (925), Singapore (1,903), Spain (1,891), UK (3,682), U.S. (1,828)
Browsing shopping websites is a lot more popular than
shopping online

Graphene: research now,
reap next decade

Graphene: The Wonder Material
Graphene is a two-dimensional structure single atom thick, which is a million times
thinner than a human hair and stronger than steel.

Graphene: research now, reap next decade
The wonder material
Flexible
Very strong
Impermeable
Transparent

Graphene: research now, reap next decade
Graphene
R&D
Hundreds of
millions of $
Graphene materials
market
Tens of millions of $
$1.3 billion
“ The Graphene Flagship”
$353 million
Graphene research center
Investment in developing
understanding of graphene

Cognitive technologies
enhance enterprise
software

Cognitive goes mainstream in business software
Artificial intelligence is quietly enhancing enterprise decision making

Cognitive technologies enhance enterprise software
Growth in cognitive technologies
Mergers &
Acquisitions
Venture
capital
Cloud
computing
Open source
AI

Virtual reality: a billion
dollar niche

Virtual reality is a (small) commercial reality
Technological advance has enabled the launch of VR, which in 2016 will be almost all
about video games.

ARCHITECTS
Creating interactive
visualizations of
construction projects
HEALTHCARE
Training and education of staff
and members of the public
HOSPITALITY
Hotels can provide VR
guides to properties
VR headsets as a virtual
concierge
VR does have a commercial future
Enterprise adoption: a year of experimentation
Teaching via virtual classroom
Digitized tours for prospective
students
EDUCATION
MILITARY
VR will continue to be used in
the military where simulators
have long been commonplace
EMERGENCY SERVICES
Workers have used VR to practice how to
respond to faults with nuclear reactors

Mobile games: leading, but
less lucrative

Mobile is now the largest games category
$32 billion: PC
$28 billion: console

Revenue per gameTitles
$4.8 million per console
game
$2.9 million per PC
game
$0.04million
per mobile
game
Dramatic variation by platform
800k
17k
Platform

Mobile games: Leading, but less lucrative
Size of the installed base
Barriers to entry
The business model
Freemium: free download, additional content charged for.
1.75 billion smartphones and tablets
used to play games
600 million who play
games on PCs
200 million for game
consoles
1
2
PC or Console
games:
$10s millions to produce
$10s millions to market
Years to develop
17,000 titles available
Mobile games: Low barrier to entry
Created in hours
800,000 titles available
3

Mobile ad-blockers: saved
by the app?

Mobile content will be little affected by ad-blockers

Why so few ad-blockers installed?
3400
680
10
1
10
100
1000
10000
All mobile devices Mobile devices with OS content blocking
support
Mobile devices with active ad-blocker
millions
Ad-blockers don’t
work within apps
Few devices have
native ad-
blockers installed
Ad-blockers do
not remove
100% of ads
Consumer
inertia

The award for traditional
media resilience goes to …

Cinema !!
… despite the many competing digital media available

Top 5 2015 with a combined domestic gross of US$2,75bn

2016 ….. great, but not as great

It’s the social experience and what it says about you
The film industry is declining in some markets, but the pace is very moderate compared to other industries
that face threats from digital and the Internet.
Revenues
0.79%
(2002-2015)
Admissions
1.17%
(2002-2015)
Per capita
admissions
1.2%
(annually 2005-2015)
Movie ticket
price
1%
above inflation
$6.1 billion a year is the estimate of
the cost of piracy to the US studios
Concession revenues are about 45%,
with margins of about 85%
Average North American – 4 movies per year (2015)
Average 12-24 year old – 6.3 movies per year (2015)

US TV: erosion, not implosion
The US traditional television market, worth about $170billionin 2016, will see
a slow and steady erosion in at least 6 areas.
The number of pay-
TV subscribers
Pay-TV penetration
Average pay-TV
monthly bill
Consumers
switching to
antennas for
watching TV
Average daily TV
viewing
(overall population)
Average daily TV
viewing
(18-24 year olds)
Television is not growing
the way it used to
Traditional TV is not dying,
disappearing or irrelevant

Cord cutting action = intent
Despite 7% of pay TV-consumers saying that
they were thinking of cancelling subscriptions,
intent was rarely matched by action and the
decline has been much more muted.
8 000
170 000 164 000
1 000 000
-
500 000
1 000 000
1 500 000
2012 2013 2014 2015
Number of pay-TV subscribers cancelling
On a base of
100 million
homes
The number of
pay-TV
subscribers
Pay-TV
penetration
Average pay-
TV monthly bill
Consumers
switching to
antennas for
watching TV
Average daily
TV viewing
(overall
population)
Average daily
TV viewing
(18-24 year
olds)

Resilient subscription rates
90%of channels that are being paid for
are unwatched.
Substituting a traditional TV package with
a lower-cost subscription video on
demand (SVOD) service
Growth of the average bill
for pay-TV
6.1%
CORD SHAVING
The number of
pay-TV
subscribers
Pay-TV
penetration
Average pay-
TV monthly bill
Consumers
switching to
antennas for
watching TV
Average daily
TV viewing
(overall
population)
Average daily
TV viewing
(18-24 year
olds)

Average daily TV viewing
In 2020, average daily TV viewing in
the US will likely still be over
240 minutes
340 344
330
320
300
320
340
360
2013 2014 2015 2016
Daily TV minutes
The same as
in 1998
The number of
pay-TV
subscribers
Pay-TV
penetration
Average pay-
TV monthly bill
Consumers
switching to
antennas for
watching TV
Average daily
TV viewing
(overall
population)
Average daily
TV viewing
(18-24 year
olds)

Maybe the Millennials will grow up
11%of 18-24 year-olds have never
had a pay-TV subscription
(cord nevers)
89%
81% 79%
70%
0%
50%
100%
2010 2016 2017 2020
Pay-TV penetration
20%
decline
from 2010
The number of
pay-TV
subscribers
Pay-TV
penetration
Average pay-
TV monthly bill
Consumers
switching to
antennas for
watching TV
Average daily
TV viewing
(overall
population)
Average daily
TV viewing
(18-24 year
olds)

Copyright © 2016 Deloitte Development LLC. All rights reserved.
Millennials now spend more time streaming video
content than watching live TV
14-18 19-25 26-32
Live programming 30% 29% 28%
Streaming 32% 38% 31%
Q. When watching television content, what percent of time are you watching the following methods of programming?

Consumers are watching an average of five episodes in a
single sitting, with the youngest Millennials averaging six
Q. When you binge watch, what is the average number of episodes you watch in a single sitting?
NUMBER OF EPISODES BINGED PER SITTING
5
6 6
5 5
4 4
14–18 19–25 26–32 33–49 50–68 69+Total
2015
Average # of episodes watched

Fewer than one-quarter of multitasking activities are
directly related to the programs that consumers are
watching
24%
27%
34% 33%
23%
18% 19%
Total 2015 14–18 19–25 26–32 33–49 50–68 69+
PERCENTAGE OF MULTITASKING DIRECTLY RELATED TO THE PROGRAM
Q. What percentage of your multitasking activities are directly related to the program you are watching?

European football scores
$30 billion

Premium sport remains a key value generator
European football surpasses $30 billion in 2016/2017; further growth is possible.

European football scores $30 billion
Football is the super premium sport in Europe
Combined revenues of the 20 EPL
clubs are predicted to surpass $6.5
billion in 2016/2017, more than
double that of the next-highest
European league

European football scores $30 billion
Football’s rising revenues, and its universal appeal,
make it highly attractive to investors.
Chinese investors have been building their
football investments within their home country
and abroad (UK, Spain).
A quarter of EPL club owners are from North
America and the EPL has secured a six-year $1
billion broadcast deal with NBC from 2016/2017.

eSports: bigger and smaller
than you think

eSports: bigger and smaller than you think
Watching people playing video games is a commercial activity, but a relatively small one .

eSports revenues are a fraction of traditional sports

The dawn of the Gigabit
Internet age: every bit
counts

The dawn of the Gigabit Internet age: every bit counts The
number of Gigabit per second (Gbit/s) Internet connections will increase to 10 million
2016
10 million
Gbit/s Internet connections
70%
Residential connections
2020
50-100 million
Gbit/s Internet connections
90%
Residential connections
5%-10% of all
broadband
connections
Higher speeds More applications More devices

The dawn of the Gigabit Internet age: every bit counts
Faster connection speeds can enable more “bursty” connections
In 2016 only a limited number of
connectivity technologies are likely to be
capable of Gbit/s service:
FTTH FTTP
FTTB DOCSIS 3.1
The faster and more ubiquitous that fiber
technologies become, the greater the
incentive for cable networks to update
their networks, and vice-versa.

The dawn of the Gigabit Internet age: every bit counts

Used smartphones: the $17
billion market you may
never have heard of

Used smartphones: the $17 billion market you may never
have heard of
In 2016 consumes will sell outright or trade-in approximately 120millionused smartphones, generating
more that $17 billion.
2016
120 million
used smartphones, generating
$17billion
$140
Average value per device
2015
80 million used
smartphones, generating
$11billion
$135
Average value per device
The used smartphone market is forecast to
grow four-five times faster than the overall
smartphone market
Used smartphones market share (total smartphone sales
by units):
2016: 7% 2015: 5% 2014:4%

Used smartphones: the $17 billion market you may never
have heard of
Why would you sell a smartphone?
•Increase of annual sales
•Devices more affordable to customers with smaller budgets
•A likely margin in processing used phones
Direct benefits for smartphone vendors
12% of consumers sold their smartphone (mid-2015)
Traded-in with an operator or
device manufacturer
Sold outright

The rise of the data
exclusive

The rise of the data exclusive
In 2016, 26%of smartphone users in developed markets will not make any traditional phone calls in a given
week.
A “data exclusive” – someone that
substitutes voice calls for a combination of
messaging (including SMS), voice and video
services delivered ‘over the top’.
89% 87% 83%
77%
0%
20%
40%
60%
80%
100%
2012 2013 2014 2015
Weekly use of standard voice calling among smartphone owners (2012-2015)

Two contrasting trends with voice
Mobile voice volumes
(in minutes): 20%
increase between
2012 and 2015
Smartphone owners’
usage patterns more
data intensive
VOICE+ -
60%
52% 51% 48%
19% 18%
10% 5%
0%
20%
40%
60%
80%
SMS IM app Emails Social Network VoIP MMS Video calls Other
Communication services used in the last week by ‘data exclusives’ 2015

Data and the future generations
31%of 18-24 year olds reported not making
phone calls on a weekly basis,….
…compared to the average for adults of 22%
This is likely to rise further still, given that upcoming
members of this group are likely very accustomed
to messaging

VoLTE/VoWiFi: capacity,
reach and capability

About 100mobile operators worldwide will be offering at least one packet-based voice service at the end of
2016, double the amount year-on-year, and six times higher than at the beginning of 2015.
For most carriers launching VoLTE or VoWiFi in
2016, the main motivation is likely to be:
• To increase network capacity
• To extend the reach of their voice services
VoLTE/VoWiFi: capacity, reach and capability
VoWiFi vs. VoIP

VoLTE/VoWiFi: capacity, reach and capability
VoWiFi vs. VoIP
Customers’ interest in
enhanced communication
services
A network operator managed and controlled service
•Users: calls less likely to be dropped
•Carriers: more control over the revenue stream
Offers native calling
•No need to open an app to make or receive calls.
The cost of VoWiFi extending reach may be relatively low
•Operators need to deploy an IP multimedia subsystem (IMS)
It can reduce operator costs
•Calls place on a smartphone would be carried over the consumer’s broadband network freeing up some
cellular capacity
•It enables traffic to be off-loaded to another network
Whether an operator launches first one of the two services or it launches both will be influenced by three
factors
Potential cost
savings
Need to improve
indoor coverage

Photo sharing: trillions and
rising

Photo sharing: trillions and rising
In 2016, 2.5 trillionphotos will be shared or stored online, a 15% increase on the prior year. About three-
quarters of this total will likely be shares, and the remainder online backups.
The expected network impact of all this sharing will be about 3.5 exabytes, a 20% increase over the previous year.

Photo sharing: trillions and rising
Factors enabling photo sharing
Increase in quality of smartphone cameras
2.4
3.4 4.1 4.6 5.0
5.9
6.8
7.9
9.0
0.0
2.0
4.0
6.0
8.0
10.0
2007 2008 2009 2010 2011 2012 2013 2014 2015
Average camera resolution (MP) (2007-2015)

Craig Holmes: Vice President –
Cognitive Solutions IBM for Middle East
& Africa
Craig has undertaken a number of MEA
leadership roles to champion the Industry
and Solutions business in MEA. Having built
a SA Telco Industry team in 2011, Craig went
on and built the Africa Telco strategy and a
team of Industry specialists and CTA’s before
accepting the role of GMU Communications
Sector VP. Here he was responsible for
defining the Industry strategies and leading
the overall delivery thereof.
Lorenzo Gonzales: Strategist, Hewlett
Packard Enterprise EMEA
Lorenzo is a Strategist within HP’s EMEA
Enterprise Group, taking the leadership in
strategic initiatives of digital transformation
and innovation. Lorenzo works with
customers and partners across EMEA as a
leader in all aspects of new and emerging
technologies to meet client objectives.
Tim Bishop: Director - Deloitte
Digital Africa & CTO
Tim is a Director and Chief Technology
Officer at Deloitte Digital Africa. He
provides world-class strategy, digital
transformation and ‘Meaningful Mobile'
solutions to leading global brands in the
enterprise and consumer space. Tim is
passionate in 'Mobilising the Masses',
enabling brands and enterprise to take
advantage of the prolific handset usage
and growth across Africa.
Dr. Brian Armstrong: Telkom Group
Chief Commercial Officer
Dr. Brian Armstrong is responsible for
the strategic growth agenda for the
Group, as well as group strategy,
regulatory and transformation office
portfolios. Brian has over 25 years ICT
experience, in ICT research and
development, telecommunications,
technology management, networking
services, and outsourcing.

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Deloitte Technology Media and Telecommunications Predictions 2016

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