Telecommunications Market

Part
01
of three
Part
01

Introduction of 5G

With the introduction of 5G, there will be a number of changes or upgrades in the product or service offerings of the communications industry for consumers. Most services will soon be provided through platforms, as most communications service providers have plans to shift to the platform model to monetize 5G services effectively. The services will be classified into three categories, namely, enhanced mobile broadband, massive machine-type communications, and ultra-reliable and low-latency communications, with these categories spanning enhanced consumer applications relating to improved indoor and outdoor broadband, augmented reality, virtual reality, ultra HD video, Internet of Things (IoT), remote monitoring, smart homes, telehealth, and remote patient monitoring. Consumer proposition launches will start from fixed wireless access and progress to consumer IoT, and mHealth and mPayments will be monetized by telecommunications companies. Finally, there will be a shift of power from content creators to content distributors.

PROVISION OF CONSUMER SERVICES THROUGH PLATFORMS

TM Forum, a global industry association that advances the digital transformation of the communications sector, expects that with the introduction of 5G, consumer services in the communications industry will mostly be provided through platforms. Based on its survey of 61 telecommunications professionals from 52 organizations around the world, most communications service providers and suppliers agree that the trend is to think beyond connectivity and view networks as platforms on which real-world applications can be built. To prepare for the introduction of 5G, communications service providers (e.g., mobile operators, fixed operators, and cable operators) and suppliers (e.g., systems integrators and hardware suppliers) are turning to the flexibility that multi-tenant platforms offer. They believe that these platforms and network slicing will enable the effective management and monetization of 5G services with varying network requirements.

With a platform strategy, communications service providers and suppliers can offer a broad range of 5G consumer services relating to ultra HD video, connected cars, improved mobile broadband coverage, fixed wireless coverage, tactile internet, digital health, and remote control of devices such as drones. According to communications service providers, the 5G consumer applications most suited to the platform business model are ultra HD video (39%), connected cars (27%), improved mobile broadband coverage (27%), fixed wireless coverage (27%), and tactile internet (21%). For suppliers, on the other hand, the most suitable 5G consumer applications are connected cars (65%), ultra HD video (38%), digital health (35%), improved mobile broadband coverage (31%), and fixed wireless coverage (19%). There are several other suitable 5G applications, including smart cities, smart grids, and factory automation, but organizations, not consumers, are often the target of these services.

SDX Central notes that while 5G offers consumers benefits in the form of much faster Internet speeds, it largely serves as an enabler for enterprises in certain industry verticals.

CLASSIFICATION OF CONSUMER SERVICES INTO THREE CATEGORIES

According to the International Telecommunications Union, "the high speeds and low latency promised by 5G will propel societies into a new age of smart cities and the Internet of Things (IoT)." 5G networks have numerous potential use cases, and these use cases can be categorized into enhanced mobile broadband (eMBB), massive machine-type communications (mMTC), and ultra-reliable and low-latency communications (URLLC). Examples of 5G consumer applications in the eMBB category include improved indoor and outdoor broadband, augmented reality, virtual reality, and ultra HD video, while examples of 5G consumer applications in the mMTC category include the IoT, remote monitoring, and smart homes. Examples of 5G consumer applications in the URLLC category, on the other hand, include autonomous vehicles, telehealth, and remote patient monitoring. At the intersection of these categories are voice-assisted technologies.

Gartner's survey reveals that the most common use cases of 5G will likely be IoT communications and video. Fifty-nine percent of the organizations polled expect 5G will be used for IoT communications, while 53% expect 5G will be used for video. Analysys Mason, on the other hand, reports that the introduction of 5G will result in a lift in the consumer service revenue of communications service providers, as revenues from the improved mobile broadband service, consumer IoT, and augmented and virtual reality are likely to grow.

PROGRESSION OF LAUNCHES FROM FIXED WIRELESS ACCESS TO CONSUMER IOT

Based on a report by Ovum Consulting, 5G consumer proposition launches are likely to progress from fixed wireless access in 2019 to consumer IoT in 2021-2022. Pricing for fixed wireless access and mobile hotspots, which are expected to be launched in 2019, will likely involve speed-based tiers similar to current fixed broadband plans for fixed wireless access and mobile-like pricing for mobile hotspots. Meanwhile, pricing for portable devices, personal computers, and tablets, which are expected to be launched in 2019-2020, will likely involve service bundles. Smartphones will likely be launched in 2019-2020, with pricing involving content bundling and subscriptions. Consumer IoT is likely the last to be launched, and the launch may be sometime in 2021-2022.

MONETIZATION OF MHEALTH AND MPAYMENTS BY TELECOMMUNICATIONS PROVIDERS

Deloitte recently reported the likelihood of telecommunications companies monetizing mHealth and mPayments. Operators in the telecommunications industry have the opportunity to take advantage of the rising number of subscribers using health-related wearables by offering services tailored to these subscribers. The operators can also provide integration services for mobile payment methods and customer identity management. One study projected that this mPayments strategy can enable telecommunications providers to grow their mobile payments revenue to four times its current size.

SHIFT OF POWER FROM CONTENT CREATORS TO CONTENT DISTRIBUTORS

The introduction of 5G will tilt the power back to content distribution, according to an article published by Forbes. Content creators and owners have so far enjoyed favorable profits and margins because of low distribution costs, but now that 5G is being introduced, a power shift is expected to take place. 5G service providers will soon be in the best position to distribute content, and content creators will have to adjust. It is also expected that cable broadband providers will partner with or be acquired by 5G network providers, as these 5G network providers will have "plenty of market power." 5G is projected to bring audiences and content closer through immersive and tactile interactive experiences and through fundamental changes in video, gaming, virtual reality, and augmented reality content.

Part
02
of three
Part
02

Growth - Cable Industry

In 2017, the global wires and cable industry was worth $186.09 billion and projected to grow at a compound annual growth rate (CAGR) of 6.4% in the over the next 5 years. The market is expected to hit $312.51 billion by 2025.

Wires and Cables INDUSTRY GROWTH

According to 2018 market report by Grand View Research, the global wires and cables industry is expected to experience a positive CAGR of 6.4% over the next 5 years. The market, which was valued at $186.09 billion in 2017, is projected to be worth $312.51 billion by 2025. The low voltage segment of the industry is expected experience the fastest growth in the coming years while the overhead installation segment, which generated the highest revenue in the industry in 2017, is expected to expand and grow further during the projected period.

Growth contributions

Expansion of building infrastructure and increasing urbanization have been the major factors fueling the growth of the industry and driving the growth of the wires and cables market. However, impact on the energy and power demand over the projected period is expected to come from increased investments in the upgrading of energy transmissions and power distribution systems as well as investments in smart grids which will further drive the wires and cables market. The Asia Pacific region, which had the largest share of the market in 2017, is expected to experience further growth that will be impacted by government initiatives such as Smart Cities and make in India.
Part
03
of three
Part
03

Growth - Gaming Industry

The gaming industry is expected to grow at a Compound Annual Growth Rate (CAGR) of between 3.30% and 8.85% for the next five years, resulting in an estimated 2023 market size of between $200B and $206.14B. The continued expansion of mobile gaming and steady sales in PC games hardware and online PC games are some drivers that will shape the gaming industry.

RESEARCH STRATEGY

We began by looking through industry publications, reports, and industry news sites to determine the current size of the global gaming industry and growth predictions of the industry over the next 5 years. We found relevant information from publications such as New Zoo and Digi-Capital, industry market research firms that both have paywalled annual reports available in their sites.
However, the two leading industry sources had widely varying predictions for the future size of the gaming industry and even the market size for 2018. We, therefore, utilized both sets of data to triangulate the needed information and create a range of possible future market size.
New Zoo placed the 2018 market size at $134.9 billion and predicted that it would rise to $174 billion by 2021. Using a standard compound annual growth rate (CAGR) formula of (End Value/Start Value)^(1/number of years), we calculated an estimated CAGR rate for the global gaming industry.
CALCULATION: CAGR=(End Value/Start Value)^(1/number of years) = (174 billion /134.9 billion)^⅓ = 8.85%, rounded.
W utilized the same formula to solve for the predicted "End Value" for 2023 (to match the Digi-Capital calculations below)
CALCULATION: CAGR=(End Value/Start Value)^(1/number of years) = (x/134.9 billion)^⅕ = 8.85%, rounded. X (End Value for 2023) = $206.14 billion.
Digi-Capital, on the other hand, estimated that the 2018 market size was between $165 billion to $170 billion, with the industry predicted to grow to $200 billion by the end of 2023. We used the same CAGR formula of (End Value/Start Value)^(1/number of years) to calculate the CAGR for each number for 2018.
CALCULATION: CAGR=(End Value/Start Value)^(1/number of years) = (200 billion /165 billion)^⅕ = 3.92%, rounded.
CALCULATION: CAGR=(End Value/Start Value)^(1/number of years) = (200 billion/170 billion )^⅕ = 3.30%, rounded.
Despite the different market sizes for 2018 and the sharply different CAGR rates, both sources believe that the 2023 market size will be between $200 billion and $206.14 billion.
In determining how the market was likely to grow (via expansions in mobile gaming and steadily increasing sales in online PC games and PC games hardware), we scoured a variety of industry reports and industry news sites like Polygon and Gamesindustry.biz and selected trends that were widely agreed upon by a variety of industry experts. From the same reports, we also retrieved information on the existing and possible innovations that are currently driving growth and those expected to shape the industry in the future.

CAGR OF GAMING INDUSTRY

The gaming industry has in recent years gained much popularity and is one of the fastest growing sectors in the world. In 2018, Digi-Capital predicted between $165 billion — $170 billion in total industry-wide revenue, led by mobile, PC hardware, and online PC games. Digi-Capital’s most recent predictions show a $200 billion industry-wide revenue by the end of 2023. According to NewZoo's predictions, the gaming industry's market size will be $134.9 billion in 2018. New Zoo also predicts that by 2021, the market size will reach $174 billion. The video game hardware and software expected to be within $230 billion — $235 billion by 2022 with software sales expected to make up nearly 75% of this revenue.

KEY DRIVERS OF GROWTH

MOBILE GAMES

According to industry experts, mobile software sub-segment could be as high as $60 billion by the end of 2018, and up to $95 billion by 2022. In 2018, gross mobile gaming sales were $70 billion and are predicted to be up to $100 billion by 2023. The Apple App Store and Google Play Store receive hundreds or sometimes thousands of new additions per day. Mobile and PC will make up 75% of the industry by 2023.

PC GAMES HARDWARE & PC GAMES ONLINE

Industry prospects indicate that PC hardware sales will be $35 billion in 2018 and up to $45 billion in the next five years. In 2018, online PC games were at $25 billion and expected to reach $30 billion by 2022.

INNOVATIONS: VIRTUAL REALITY/AUGMENTED REALITY

Current trends point to increased application of Virtual Reality and Augmented Reality (AR) in gaming. In 2017, $2 billion was invested in the gaming industry in 2017, with the core areas of focus being mobile, AR/VR, and "games core tech." Experts argue that VR/AR e-sports are expected to be "commercially challenging" for larger investors to scale. High growth is expected in VR & AR games, although this is related to having a low starting base. While VR is expected to influence major decisions in the gaming industry in the next five years, it is not expected to become a viable platform until later than the next five years because the equipment is expensive and it doesn't add much to the experience for the player. New types of consoles are anticipated within the next 5 years, but experts have differing opinions on what form they are going to take (possibly standalone goggles/headset?).

POSSIBLE INNOVATIONS

In 2018, $5.7B was invested in the gaming industry. Netflix-style subscription model might become available to players in the gaming industry. Some microtransaction offerings or may be introduced to gaming, or building tools into the game that focuses on specific aspects for individual players. For instance, there may be tools that are programmed to de-emphasize the leader boards if a given player isn't competitive. Aging gamers are likely to change the market. Streamable games that are more fun to watch than to play are expected to continue growing.

ADDITIONAL INSIGHTS

Industry analyses show that web games are not growing and console revenues are expected to "flat-ish" for the next 5 years. Technology has made it easier and cheaper for new people to create games, but there is too much content for all good games to be discovered by players. As of Sept. 2018, there had already been over 6,000 games released on Steam that year, with the majority selling under 500 copies. Popular streamers have become a crucial part of marketing strategies, as they offer creators a way to stand out from the mass of games being produced.

Asia makes up roughly half of the global gaming market, with Europe at 25% and North America at 20%. The US, China, Japan, and South Korea are estimated to make up two-thirds of the global gaming market within the next five years.
Sources
Sources

From Part 01
Quotes
  • "Two other key revenue-generating opportunities for telecom providers will be mHealth and mPayments. In the area of mHealth, operators can monetize services targeted to the growing number of subscribers who have adopted health care–centric wearables to, for example, help them ensure they’re taking the proper dosages of medications. In the world of mPayments, on the other hand, mobile operators can play a different role: as an integrator for devices, applications, methods of mobile payment, and customer identity management. "
Quotes
  • "eMBB is expected to be the primary use case for 5G in its early deployments, according to wireless operators. eMBB will bring high-speed mobile broadband to crowded areas, enable consumers to enjoy high-speed streaming for in-home, screen and mobile devices on demand, and will allow enterprise collaboration services to evolve. Some operators are also considering eMBB as the last-mile solution in those areas lacking copper or fibre connections to homes."
Quotes
  • "Finally, 5G is here. Its fundamentals promise communications service providers (CSPs) new sources of revenue, new opportunities, and new ways to delight their customers: 100× bandwidth, 10× throughput, 10× reduction in latency, 1000× partners. These are normally organized around three core services, known as enhanced mobile broadband (eMBB) and fixed-wireless access (FWA), ultrahigh reliability and low latency (URLLC), and massive (IoT) connectivity (MTC)."
Quotes
  • "IoT communications remains the most popular target use case for 5G, with 59 percent of the organizations surveyed expecting 5G-capable networks to be widely used for this purpose. The next most popular use case is video, which was chosen by 53 percent of the respondents."
Quotes
  • "The majority of survey respondents identified enterprise services as a bigger driver for 5G-related investments into monetisation systems than consumer services. Network-as-a-service, smart cities and enterprise IoT are the leading examples of such services."
Quotes
  • "CSPs’ top priorities for 5G are improved mobile broadband coverage (such as at events or on public transportation) and ultrahigh-definition video. This isn’t surprising given that a main reason for deploying 5G technology is to accommodate the ever-increasing number of mobile users and devices, and their always-on demand for data including video."
Quotes
  • "In the internet era, it is easier and less costly to distribute content, so top content creators and owners have enjoyed a favorable position in the value chain to capture profits and margins. "Content is king," many industry experts claim. But with 5G, the power will tilt back in favor of distribution. 5G providers will own the most fertile land to distribute the best content, and content providers will have to pay the price."