Deloitte TMT Predictions 2016 event

The cover doesn't exactly scream out "interesting stuff inside"
The cover doesn’t exactly scream out “interesting stuff inside”

The latest Deloitte TMT Predictions 2016 event today was as good as previous years. The author of the report, and Deloitte partner, David Lee, is an excellent presenter (a sense of humour and perspective helps with publishing predictions).

Although the full report is available on Deloitte’s website, I wait until David’s event each year – he highlights the most interesting ones, and only then do I read the report. This year David chose to focus on 6 specific predictions for 2016:

  • Connectivity
  • Communication
  • Commerce & Mobile
  • Virtual Reality
  • Business Models
  • eSports

Connectivity – the Gigabit economy

Currently 1% of Internet connections are gigabit. At the end of 2016 Deloitte predict this will be 10%. What’s the point of having such a fast connection?

  1. Less efficiency required. Programmers used to be able to write games on to 1K of memory, but now that computers have several Gb of memory, they don’t need to worry about the memory utilisation so much. And then same will apply to web and mobile apps. The reason why ad-blockers are becoming so popular is because they slow down web pages – but with gigabit connections, users won’t notice or care about speed.
  2. No single device will need a gigabit connection (that we can think of), but the reason we’ll want this type of connection into our home is to share it with the myriad of connected devices. As a way of perspective, 4K TV needs roughly 35Mb/s download (and remember most gigabit connections won’t actually reach the maximum speed).
  3. Trends show we’ll start installing and streaming 360 degree cameras around our homes – all bandwidth hungry. (As an aside, there will be 2.5 trillion photos uploaded to the cloud this year).
  4. Televisions may stay switched on permanently, like a screen saver, with a fireplace, aquarium, beach, or whatever mankind can think of (and commercialise).

Deloitte also predict than in ten years’ time, the majority of residential customers will have a gigabit connection.

Communication

The days of a smartphone for making calls are numbered
The days of a smartphone for making calls are numbered

By the end of 2016 Deloitte predict that 26% of smartphone users won’t be making voice calls on their phone. (Which makes you wonder if it will still be called a smartphone).

This prediction means that contact centres will need to change their processes to support non-voice customer calls. Just Eat already promote “let your finger talk” as a support option, and Pizza Express offer customers to pay at the table, to increase table turnover, but reduce the customer communication.

Commerce and Mobile

There is a big difference between the cart abandonment rates of PC, tablet and mobile. Mobile is much lower than the other two.

People use their phones at every opportunity, and shopping usage varies by country.

Their research showed that smartphones have several features which are not used by current ecommerce vendors – such as knowing the user’s home location, payment cards and authentication (fingerprint reader). Soon, consumers will expect, and then only use, sites and apps that take advantage of these features that make the checkout process easier than entering payment card info and security questions.

Virtual Reality

Deloitte predict that 2016 will be the first billion-dollar year for virtual reality – with $700m spent on hardware and $300m on software.

2016 will see Facebook (Oculus), HTC, Samsung, Microsoft and Sony (PlayStation) all releasing their own products.

Like many organisations, Deloitte think this will largely be driven by the gaming market, which isn’t a major problem considering how much is spent on gaming per year (more on that soon).

Deloitte introduced Anthony Geffen from Alchemy VR to give a presentation on their broadcast quality VR documentary productions. Anthony described how virtual reality is heading the same route as 3D – loads of manufacturers providing the technology but no one creating the content.

Business Models

2016 will be a turning point for games, with mobile becoming for the largest platform for electronic games.

The average revenue per user per platform looks like this:

$20 Mobile

$50 PC

$145 Console

The average revenue per game is just as interesting:

$4.8m Console

$2.9m PC

$0.04m Mobile

One of the problems is the sheer number of competitors in the mobile space – a new release gets lost in the hundreds of thousands of mobile app uploads each month. Either way, these are difficult times for Console and PC game developers – it’s not clear what business model to adopt next. For mobile game developers the answer is simple – free download and in game purchases.

eSports

It’s difficult for a suit-clad Deloitte partner to credibly describe eSports to a room full of Deloitte customers, but Paul tried his best. Deloitte’s prediction was that revenue from eSports will grow to $500m this year, with an audience of 150m.

Compared to football, or several other mainstream sports this is tiny, but there are dozens of other sports (many of which are in the Olympics) that are probably looking at eSports wondering what the secret is. (My answer – a younger audience and some fresh thinking).

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