Deloitte Global recently released its Technology, Media & Telecommunications (TMT) 2023 Predictions report, identifying artificial intelligence (AI), advertising video on demand (AVOD), 5G, streaming, and semiconductors as the biggest trends in TMT, and discussed the roles they could play in the hyperconnected world.
"The TMT industry continues to move and to change at a dynamic pace," says Ariane Bucaille, Global Industry leader, Technology, Media & Telecommunications. "In 2023, we foresee the rapid advancement and deployment of a range of technologies to help businesses and consumers do more with less. Breakthroughs in technological developments coupled with changing consumer habits are constantly challenging business leaders today and as they look toward future growth."
Semiconductor companies turn to AI and high-power materials to design future chips
Chip companies are using AI to help design chips faster, cheaper, and more efficiently. Deloitte Global predicts that the world's leading semiconductor companies could spend US$300 million on internal and third-party AI tools for designing chips in 2023, and that number may grow by 20% annually for the next four years to surpass US$500 million in 2026. AI design tools enable chipmakers to push the boundaries of Moore's Law, save time and money, and even drag older chip designs into the modern era.
Supercharged semiconductors made of high-power materials are taking chip development to a new level. Replacing silicon, these materials —primarily gallium nitride and silicon carbide — are suited for the higher voltages, power levels, and resilience needed for increasingly common applications such as electric vehicle (EV) batteries, super-efficient consumer electronics chargers, powerful solar panels, advanced military applications, space technology, and nuclear energy. Deloitte Global predicts that chips made of high-power semiconducting materials could sell a combined US$3.3 billion in 2023, up almost 40% from 2022. Growth in these types of chips, collectively known as power compound semiconductors, is expected to accelerate to nearly 60% in 2024, possibly generating revenue of more than US$5 billion.
"With the new materials, these chips have the potential to transform entire industries," says Christie Simons, Deloitte's Global Semiconductor Center of Excellence leader. "And with AI-enabled design, chipmakers can increase supply chain security and help mitigate the next chip shortage as well as the current talent challenge."
Broadband satellites will need to navigate a crowded sky
Deloitte Global predicts that more than 5,000 broadband satellites could be in low-Earth orbit (LEO) by the end of 2023 because of growth in commercial data satellite deployments to provide high-speed internet to every corner of the world. They could make up two working constellations providing high-speed internet to nearly a million subscribers on all parts of the planet, no matter how remote.
If every organization currently planning to build an LEO constellation succeeds, 7 to 10 competing networks could be operational by 2030, with a total of 40,000 to 50,000 satellites serving more than 10 million end users. This growth would likely require industry collaboration as a much more crowded orbital environment significantly raises the risk of collisions. To keep satellites from colliding with each other as well as being struck by untracked space debris, it would be necessary to know where all those objects are in real time and with great precision. This challenge is driving the creation and growth of new markets.
Global growth in streaming services includes AVOD increase
Deloitte Global predicts that major streaming services that used to be ad-free could opt for AVOD (advertising video on demand). Deloitte anticipates that by the end of 2023, major subscription video-on-demand services in developed markets may have launched an ad-funded tier to complement ad-free options which aren't going away. But by the end of 2024, half of these providers will also have launched a free ad-supported streaming TV service (FAST). And by 2030, Deloitte expects that most online video service subscriptions will be partially or wholly ad-funded.
"As price-conscious viewers become more willing to watch ads in exchange for discounted or free streaming video, we'll see more subscription video-on-demand (SVOD) service providers adding ad-funded tiers to their offerings. Our research shows that consumers will accept this far more readily than in the past because it gives them flexibility and the ability to control costs." Kevin Westcott, Consulting Telecommunications, Media and Entertainment (TME) leader, Deloitte, Global.
The next arena for the streaming wars: live sports
Sportstreaming providers are spending billions of dollars on live sports. They have purchased rights across the spectrum of sporting events in a bid to attract, retain, and monetize their audiences via this popular content. Deloitte Global predicts that in 2023, streamers could spend more than US$6 billion on major sports rights in the largest global markets. To put that in perspective, in 2021 the combined content spend by all streaming providers was about US$50 billion.
"The LEO broadband market will not only grow but also drive the expansion of supporting markets, creating a new and dynamic ecosystem," says Gillian Crossan, Global Sector Leader- Technology, Deloitte Global. "However, for this ecosystem to be viable in the long term, all involved should focus their attention and resources on protecting space."
Tech's commitment to faster climate action
Many organizations want to reach net zero and the technology industry is making a strong commitment. According to a Deloitte Global CxO sustainability survey, tech companies are working harder and faster to impact climate change and are 13% more likely than non-tech companies to target net zero by 2030.
5G networks to transform enterprise connectivity
By introducing virtualized, cloud-centric capabilities, 5G standalone (SA) networks are poised to drive disruptive change that could make previous advances in wireless technology (2G/3G/4G) appear incremental. Deloitte Global expects the number of mobile network operators (MNOs) investing in 5G standalone networks—with trials, planned deployments, or actual rollouts—to double from more than 100 operators in 2022 to at least 200 by the end of 2023.
Virtual production gets real: bringing real-time visual effects onto the set
The tools and techniques of virtual production are transforming film and cinema, increasing flexibility, shortening production times, and bringing real-time computer-generated imagery and visual effects out of post-production and onto real-life sets. Deloitte Global predicts that the market for virtual production tools will grow to US$2.2 billion in 2023—up 20% from an estimated US$1.8 billion in 2022.
Gaming M&A is growing on the back of consolidation, portfolio plays, and game tech
Deloitte Global predicts that in 2023, the number of video game company mergers and acquisitions will continue to increase by around 25%, slightly slower than the estimated 30% quarterly growth of 2022. Video game services, experiences, and business models are innovating, console supply chains are loosening up to meet pent-up demand for next-gen experiences, and many anticipated games that were delayed in 2022 are now set to reach players in the coming year.
Virtual reality (VR) market gaining momentum
Deloitte Global predicts that the VR market will generate US$7 billion in revenue globally in 2023, a 50% increase over 2022's US$4.7 billion. As VR grows in popularity, 90% of that revenue will likely come from headset kit sales, with 14 million units averaging US$450 each expected to sell in 2023. The remainder should comprise mostly of VR content—principally games, but also some enterprise applications—which could see revenues of just over US$1 billion. Improvements in the underlying technology, including power, screens, and audio should fuel this growth. Next year, headsets should offer higher frame rates, higher-resolution displays, and enhanced spatial audio, enabling a realistic, immersive experience.
Shopping goes social, trending past US$1 trillion annually
Deloitte Global predicts spending for goods and services on social media will surpass US$1 trillion globally in 2023, growing 25% annually with more than two billion people shopping this way in the last year. The social commerce market is outgrowing traditional e-commerce. In a Deloitte Global survey, Generation Z and Millennials are more likely than Gen X respondents to say that social media influencers affect their buying decisions.
Growth in the emerging enterprise edge computing market
Cloud, telco, equipment, and platform companies are vying for a share of enterprise investments in edge services and products that make computing faster, safer, and cheaper. Deloitte Global predicts that the enterprise market for edge computing will grow at 22% in 2023, compared to a 4% growth in spending on enterprise networking equipment and 6% on overall enterprise IT for the same year. Most of this growth will likely come from expenditures on hardware initially but should migrate toward software and services as the market matures.
