Rise of the ‘prosumer’ and the Wi-Fi attack

31 Jan 2011

Deloitte has released its predictions for the technology, media and telecoms industries in 2011, looking at how the tablet will become more than just a toy due to the rise of the ‘prosumer’ and how the demand for data passing through Wi-Fi hotspots is set to outstrip the amount of traffic carried over mobile networks by up to 50pc next year.

The Deloitte Technology, Media & Telecommunications (TMT) industry group also looked at social media advertising, tablets and the workplace and how the public’s appetite for smartphones shows no sign of slowing down.

Also, the report predicts that 2011 will not see the demise of the television advertisement, despite the increasing popularity of digital video recorders.

Harry Goddard, partner in Deloitte’s TMT group, says: “This year’s predictions provide some interesting insight with regards to how technology will be used by both consumers and business alike in addition to how revenue streams are changing across the TMT industry.

“To cite just one example, it examines how the gaming industry will attract higher revenues and profitability. Just recently, PopCap Games, which has its European headquarters in Dublin, announced that it will double its workforce in Ireland to 110 over the next three years. The question must now be where else can Ireland Inc capitalise on the trends identified in this report?”

Gaming and ‘Freemium’ markets

Deloitte predicts that in 2011, the global computer and video games industry will continue growing but from more diverse revenue streams, with the following three major technological drivers transforming the industry: powerful portable devices such as smartphones, ubiquitous network connectivity and social gaming.

It says an increasingly large percentage of games revenue will likely come from monthly subscriptions, peripherals, fees for services and in-game purchases, and advertising in the free-to-play and ‘Freemium’ markets.

By the end of 2012, these relatively new revenue sources could be as much as 16pc of total games revenues, and could eventually make up 50pc of all revenues for the industry, explains Goddard.

The death of the TV commercial?

The pervasiveness of digital video recorders will increase in 2011, says Deloitte. This will mean that most televisions will have the ability to fast forward through advertisements.

It says the end of the television commercial is not nigh, as people would need to record every single piece of viewing that they watch for this to happen.

“Even then, viewers would need to keep their eyes shut when fast forwarding as studies suggest that even commercials viewed at 12 times the normal speed leave an impression on viewers, specifically the last advert before the show restarts. With most television viewers still locked into live broadcast schedules, only 15 to 25pc of programming is skipped by current DVR owners,” explains Goddard.

Advertising on social networks – not yet a perfect science

Despite the fact that social networks look likely to surge through the 1bn user mark in 2011 and will deliver 2trn advertisements, Deloitte predicts that advertising revenue will remain at a US$5bn, or US$4 per member.

It says this represents less than 1pc of the global industry total.

“That’s a slow start for the technology sector’s next big thing which has promised greater rewards. The decade-old phenomenon of search advertising and perhaps the billions of stated ‘likes’ on social networks does not translate into tangible purchases. It is early days for this fast-growing sector which could yet be used as e-commerce spaces or payment platforms while the strong trust element that social networks command amongst users could be harnessed by advertising companies and their clients,” explains Goddard.

Tablets and the ‘prosumer’

Deloitte asserts more than a quarter of tablet computers sold in 2011 will be bought by businesses. It says this trend will be partly driven by the consumerisation of corporate technology, whereby people start to use personal devices for work functions.

By the end of 2011, Deloitte predicts that a significant number of firms may be willing to pay for their employees’ tablets and that millions of ‘prosumers’ will have their tablet data plans at least partially subsidised by their employers; and millions more tablets will be purchased by companies as PC alternatives.

However, Deloitte says this move to tablets also presents a challenge for companies as the devices are not particularly robust and price could also be an issue in the current economic environment.

Says Goddard: “The cost of developing bespoke applications, which ranges from US$5,000 to US$500,000, and securing the devices could also be a hurdle.”

Data on the move

Deloitte says that demand for data passing through Wi-Fi hotspots is set to outstrip the amount of traffic carried over mobile networks by between 25pc and 50pc next year, with the number of public hotspots set to rise by 20pc in 2011.

It suggests that most retailers will carry Wi-Fi facilities in-store, enabling consumers to avail of online promotions and view online advertising while making physical purchases.

4G ready?

LTE networks, which will usher in the era of 4G services, will fall short of expectations next year as the rollout of new infrastructure will be slower than forecast due to a continuing dependence on 3G, according to Deloitte.

“The current generation of 4G, which is being tested by 130 operators around the world, does not yet provide the quantum leap in speeds and features compared to 3G and it would perhaps be more precise to describe them as ‘4G ready,’ ” adds Goddard.

The 2011 series of ‘Predictions’ has drawn on internal and external inputs from conversations with member firm clients, contributions from Deloitte member firms’ 7,000 partners and managers specialising in TMT, and discussions with industry analysts, as well as interviews with leading executives globally.

Carmel Doyle was a long-time reporter with Silicon Republic