How 5G Will Transform the Business of Media and Entertainment
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HOW 5G WILL TRANSFORM THE BUSINESS OF MEDIA & ENTERTAINMENT OCTOBER 2018 SUMMARY The global media industry stands to gain $765bn in cumulative revenues from FIGURE 1: TOTAL GLOBAL MEDIA REVENUES DELIVERED OVER WIRELESS NETWORKS, 3G/4G VS 5G, 2016–2028 ($BN) new services and applications enabled by 5G ($260bn in the US and $167bn 450 in China). Thanks to the new network capabilities brought by 5G, annual mobile media revenues will double in the next 10 years to $420bn in 2028 ($124bn 400 in the US). The transformative impact of 5G will go well beyond just enhanced 350 5G REVENE PLIT mobile media. It will disrupt the industry on many levels, with new business WORTH $765BN models and new immersive interactive experiences to capitalize on. Video, 300 gaming, music, advertising, AR, and VR will all see fundamental changes due to 5G, bringing content and audiences closer. Ultimately, we expect 5G to help bring 250 a new, tactile dimension to entertainment. 200 MEDIA REVENUES ($BN) 150 This study was conducted by Ovum, leveraging in-depth media markets expertise from a large team of analysts and industry contacts in media and telecoms. The forecast followed a rigorous 100 methodology process whereby each 5G use case was put against its own media market context such as market dynamics and business models, and was tested on consumers via a survey. The 50 revenue projections and resulting analysis focus solely on consumer services, although there is also a strong opportunity for 5G in media for enterprises. 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 ○ 3G/4G ○ 5G SOURCE: OVUM How 5G will transform the business of media & entertainment 02 Key findings • 5G will transform media business models. Thanks to the new network • 5G will be a major competitive asset for network providers in media, B2B and capabilities brought by 5G, annual mobile media revenues will double in the B2C. Video will see substantial market transformation from 5G – mobile video next 10 years to $420bn in 2028 ($124bn in the US). Media companies that are revenues over 5G will grow with a CAGR of 85% between 2021 to 2028. 5G first to embrace those new business models will be winners. will bring economies of scale to network providers' TV offerings with a much wider footprint, competing against IPTV, cable, and satellite. On the B2B front, • 5G will enable new ways to interact with media. 5G will unlock augmented and 5G will help operators capitalize on mobile media growth by selling 5G network virtual reality applications that will create more than $140bn in cumulative revenues capabilities to OTT video service providers. between 2021 and 2028 ($32bn in the US), enabling a whole new channel to reach consumers. Augmented reality will create a new way for people to connect • Longer term, 5G will bring new senses to media: touch and feel. Highly with media through virtual items, virtual characters, and augmented contextual responsive haptic suits merged with advanced VR capabilities, such as Ready information. The creation of volumetric 3D content and an ecosystem to manage Player One, will unleash a new sensation dimension to media consumption. that type of content will be important to fully realize this market potential. This type of new VR experience will emerge in 2025 and will generate over $5bn annually by 2028 ($1.5bn in the US). Now is the time to bet on the right • 5G will supercharge the digital advertising market. Mobile display advertising technology that will enable this, including 5G. will present a significant revenue opportunity, with an expected market of $178bn worldwide by 2028 ($66.6bn in the US). 5G will have a fundamental • Gaming will be at the forefront of 5G-led innovation. AR games will make role in transitioning traditional display advertising toward social and media up more than 90% of 5G AR revenues by 2028 ($35.7bn globally). Fast immersive experiences. Scale, delivery, and measurements are key challenges responsiveness and high-resolution, real-time streaming will also help unlock for mobile ad campaigns today, which 5G will help overcome. mobile cloud, gaming. Overall 5G mobile games revenues, including AR and cloud gaming, will exceed $100bn annually in 2028 ($20bn in the US). • 5G will triple mobile media revenues in China to $100bn. Chinese national mobile operators and media companies will see many benefits from aggressive 5G network rollouts. China will be the largest market in the world for VR and AR by 2028 with over $15bn in direct revenues. How 5G will transform the business of media & entertainment 03 THE REVENUE OPPORTUNITY 5G will bring tremendous growth to the media and entertainment industry in the coming years. 5G will grow the global mobile media market from $170bn in 2018 to $420bn in 2028 ($124bn in the US), a CAGR of 9.8% over 10 years. 5G revenues will overtake 3G/4G revenues by 2025 globally (2023 in the US) and total net new revenues coming from 5G will account for $200bn in 2028 ($67bn in the US). 4G alone cannot deliver that level of transformation, and not moving to 5G fast enough may become a risk to businesses. How 5G will transform the business of media & entertainment 04 5G will start to realize its full transformational potential from 2022 onwards, FIGURE 2: 5G IMPACT ON MEDIA REVENUES, GLOBAL, 2016–28 when we will start to see a significant impact on traditional media usage, mass- 450 scale adoption of AR and VR, and the emergence of new use cases such as 3D holographics, haptic suits, and advanced interactive entertainment. Immersive 400 and new media applications will reach an unprecedented scale by 2028, generating in excess of $67bn annually – this is equivalent to the value of the 350 entire mobile media market (video, music, and games) last year. 300 5G media revenues can be categorized as follows: • Enhanced mobile media (video, music, and games): This corresponds to the use of paid-for 250 and bundled-in traditional media including video, music, and gaming on 5G networks. • Enhanced mobile advertising: This corresponds to mobile display advertising such as videos, 200 banners, in-game placement over 5G, and other visual advertising formats that may appear in VR and AR environments. MEDIA REVENUES ($BN) • Home broadband and TV: This corresponds to the use of 5G as the primary home internet 150 connection bundled with a TV package. This type of connection is also referred to as fixed wireless access (FWA). 100 • Immersive media (AR, VR, and cloud gaming): This corresponds to augmented reality (AR) and virtual reality (VR) content and applications, as well as cloud gaming delivered over 5G. AR, VR, and cloud gaming are not new, but 5G offers the opportunity to unlock their use to mass- 50 market level. • New media: This corresponds to new applications that do not really exist today and that 5G will 0 enable in the future. This includes self-driving car entertainment, 3D holographic displays, and 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 connected haptic suits among others. ○ NE MEDIA ○ IMMERSIVE MEDIA 5G ○ IMMERSIVE MEDIA 3G/4G ○ FWA BROADBAND AND TV 5G ○ FWA BROADBAND AND TV 3G/4G ○ ENHANCED MOBILE ADVERTISING 5G ○ MOBILE ADVERTISING 3G/4G ○ ENHANCED MOBILE MEDIA 5G ○ MOBILE MEDIA 3G/4G SOURCE: OVUM How 5G will transform the business of media & entertainment 05 Enhanced mobile broadband to boost FIGURE 3: MARKET TRANSFORMATION OPPORTUNITY BY MEDIA SEGMENT, GLOBAL, 2019–2028 media usage and revenues 200 +141% (2018-28) 5G will drastically increase media usage. The average monthly traffic per 5G subscriber 180 will grow from 11.7GB in 2019 to 84.4GB per month in 2028, at which point video 160 +95% will account for 90% of all 5G traffic. Figure 3 illustrates 5G̕s ability to transform this (2018-28) increased usage into revenues, from already large established segments such as gaming and advertising, to yet to be unlocked new ones such as AR and VR. 140 5G will grow the global media market over cellular networks from $170bn in 120 2018 to $420bn in 2028 ($124bn in the US), a CAGR of 9.8% over 10 years. Consumer spend for video, music, and games on mobile will nearly double by 100 2028 to reach almost $150bn globally ($29bn in the US). 80 The fundamental drivers that will help realize this multi-$100bn opportunity are: 60 +2,394% • Enhanced mobile broadband will deliver a seamless, high-quality experience (2018-28) TOTAL ANNUAL REVENUES 3G/4G/5G ANNUAL ($BN) TOTAL for media streaming services such as Spotify and Netflix. The global paid-for 40 +43% video, music, and games market delivered over cellular networks will almost (2018-28) +2,626% (2023-28) double in the next 10 years, from $77bn in 2018 to nearly $150bn in 2028. 20 • Lower cost per bit will bring affordable and truly unlimited mobile data 0 packages, better adapted to heavy media usage. MOBILE MEDIA MOBILE DISPLAY IMMERSIVE MEDIA HOME INTERNET NE MEDIA (VIDEO, MUSIC, ADVERTISING (AR, VR, AND AND TV AND GAMES) CLOUD GAMING) • New business models such as bundling and more effective advertising using real- ○ 2018 ○ 2023 ○ 2028 time data analytics will spur the adoption of media services over 5G. 5G bundles will account for 27% ($11bn) of global mobile video and music revenues in 2028. SOURCE: OVUM How 5G will transform the business of media & entertainment 06 New media opportunities will generate $185bn in the next 10 years There are many new opportunities that 5G will enable in the next 10 years besides just growing usage of traditional media on mobile: • Advertising will be the most impacted by 5G in terms of value; 5G will add an • New immersive interactive experiences will be unlocked by 5G.