Activate Technology & Media Outlook 2020
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ACTIVATE TECHNOLOGY & MEDIA OUTLOOK 2020 www.activate.com Welcome to Activate Consulting’s Technology and Media Outlook 2020 Each year, as part of the Wall Street Journal’s WSJ TECH LIVE, our team analyzes some of the most important consumer trends, technology innovations, and industry dynamics to predict what’s going to happen next and next after that. 2020 promises to be a pivotal year for everyone in the dynamic tech and media ecosystem. We’ve taken a deep dive into many of the forces that will reshape the industry next year and for years to come: the splintering of social networks, the race for the last mile in eCommerce, the streaming video wars, sports gambling’s explosive growth, the next wave of video gaming, and the changing world of digital marketplaces. There is also an extensive evaluation of music, podcasting, esports, emerging sports, the networked body, and digital consumer financial services. In addition, we analyze the phenomenon of ‘Super Users’ who will be increasingly important to every company in the industry. Finally, we assess the connectivity technologies that will unlock the next wave of technology and media growth. As a firm, our work begins with the most important person in technology and media: The User. Understanding how people use technology and media experiences is the foundation of our thinking. You’ll see extensive analysis of consumers’ time, preferences, habits, and spending based on Activate’s proprietary analysis and large-scale consumer research. We know you’ll find the results both provocative and useful, and look forward to a lively discussion. Let’s see where technology and media are headed in 2020! The Activate Consulting Team www.activate.com 2 CONTENTS PAGE $300 Billion Global Internet and Media Growth Dollars by 2023 4 Consumer Attention: 12:40 Hours of Technology & Media Per Day 9 Super Users: The Imperative for Technology & Media Companies 13 Social Splinter: The Social Media World Expands 27 eCommerce: Shrinking the Divide Between Physical and Digital Shopping 41 Digital Marketplaces: New Inventory, Price, Transparency, Ease of Use 60 Video Gaming: The Next Streaming Battlefront 71 Esports: Sport of the Future 84 Video: Streaming Stacking, Battleground Households 94 Sports Betting: The Next Big Financial Trading Market 117 Sports: More Viewing, Emerging Sports, Better Fan Experiences 129 Music: The Discovery Challenge 138 Podcasting: New Listening Experiences and Explosive Growth 146 The Networked Body: Quantified and Connected Human 159 Digital Consumer Finance: Next Generation Services Go Mainstream 169 Connectivity: Enabling the Next Wave of Technology and Media Growth 182 www.activate.com 3 CONTENTS PAGE $300 Billion Global Internet and Media Growth Dollars by 2023 4 Consumer Attention: 12:40 Hours of Technology & Media Per Day 9 Super Users: The Imperative for Technology & Media Companies 13 Social Splinter: The Social Media World Expands 27 eCommerce: Shrinking the Divide Between Physical and Digital Shopping 41 Digital Marketplaces: New Inventory, Price, Transparency, Ease of Use 60 Video Gaming: The Next Streaming Battlefront 71 Esports: Sport of the Future 84 Video: Streaming Stacking, Battleground Households 94 Sports Betting: The Next Big Financial Trading Market 117 Sports: More Viewing, Emerging Sports, Better Fan Experiences 129 Music: The Discovery Challenge 138 Podcasting: New Listening Experiences and Explosive Growth 146 The Networked Body: Quantified and Connected Human 159 Digital Consumer Finance: Next Generation Services Go Mainstream 169 Connectivity: Enabling the Next Wave of Technology and Media Growth 182 www.activate.com 4 CONSUMER SPEND Significant growth ahead: on a global basis, Internet and Media Businesses will add $300B in growth dollars, growing faster than GDP CONSUMER INTERNET AND MEDIA REVENUE1, GLOBAL, 2019E VS. 2023E, USD ACTIVATE FORECAST $300B GROWTH DOLLARS CAGR: 3.6% $2.3T $2.0T Global GDP CAGR: 3.2% 2019E 2023E 1. “Consumer Internet and Media revenue” includes radio, recorded music, magazine publishing, newspaper publishing, video games, filmed entertainment, book publishing, TV subscription and licensing fees, Internet access, digital advertising, and traditional advertising on these platforms. Sources: Activate analysis, Cowen and Company, eMarketer, GroupM, IBISWorld, International Monetary Fund, Magna Global, Newzoo, Ovum, PricewaterhouseCoopers, Raymond James, Warc, ZenithOptimedia Group 5 CONSUMER SPEND Consumer spend will drive the majority of Internet and Media growth CONSUMER INTERNET AND MEDIA REVENUE BY SEGMENT1, GLOBAL, 2019E VS. 2023E, USD / % TOTAL REVENUE ACTIVATE FORECAST $132B $52B $2.3T $116B $2.0T CAGR: ACCOUNTS FOR 61% OF GROWTH 33% 1.8% Paid content2 36% TOTAL CAGR: CAGR: 224.5% 211.4% 36% 4.4% Internet 199.8% access3 35% 3.6% CAGR: Ad 31% revenue 29% 4.6% 2019E 2023E 1. “Consumer Internet and Media revenue” includes radio, recorded music, magazine publishing, newspaper publishing, video games, filmed entertainment, book publishing, TV subscription and licensing fees, Internet access, digital advertising, and traditional advertising on these platforms. 2. Includes music, magazine publishing, book publishing, newspapers, video games, television, and filmed entertainment. 3. Includes fixed broadband, wireless, and mobile Internet access. Sources: Activate analysis, Cowen and Company, eMarketer, GroupM, IBISWorld, International Monetary Fund, Magna Global, Newzoo, Ovum, PricewaterhouseCoopers, Raymond James, Warc, ZenithOptimedia Group 6 CONSUMER SPEND Subscriptions will continue to be the key growth driver for consumer spend CONSUMER INTERNET AND MEDIA REVENUE BY MODEL1, GLOBAL, 2019E VS. 2023E, USD / % TOTAL REVENUE ACTIVATE FORECAST $159B $25B $1.6T $1.4T CAGR: 24% 1.7% Single transactions 25% TOTAL CAGR: CAGR: 3.1% 76% 3.6% Subscription revenue 75% 2019E 2023E 1. “Consumer Internet and Media revenue” includes radio, recorded music, magazine publishing, newspaper publishing, video games, filmed entertainment, book publishing, TV subscription and licensing fees, and Internet access (excluding advertising revenue). Sources: Activate analysis, Cowen and Company, eMarketer, GroupM, IBISWorld, International Monetary Fund, Magna Global, Newzoo, Ovum, PricewaterhouseCoopers, Raymond James, Warc, ZenithOptimedia Group 7 CONSUMER SPEND In the U.S., connectivity services (e.g. mobile and broadband) and video make up the largest share of the average household’s media spend AVERAGE ANNUAL HOUSEHOLD INTERNET AND MEDIA SPEND BY SERVICE TYPE1, U.S., 2019E, USD / % TOTAL SPEND Connectivity CATEGORY MEDIA INCLUDED 45% $1,301 Mobile and broadband Connectivity connectivity services Pay TV subscriptions, SVOD, Video TVOD/EST $2,923 Annual Consumer Books and Newspaper and magazine Technology and Media Digital subscriptions (digital and Services Spend Per Subscriptions print), book purchases Household Audio $92 $1,044 VideoVideo Game purchases, in-game Audio Gaming purchases, online gaming 3%3% $187 36% subscriptions Gaming $298 Streaming music Gaming Audio subscriptions, unit sales, 6%6% radio subscriptions Books and Digital Subscriptions 10% 1. Based on total number of U.S. households. Figures do not sum because of rounding. Sources: Activate analysis, Box Office Mojo, BMO Capital Markets, Digital TV Research, Morgan Stanley, Newzoo, Ovum, PricewaterhouseCoopers, Recording Industry Association of America, SNL Kagan, Statista, Strategy Analytics 8 CONTENTS PAGE $300 Billion Global Internet and Media Growth Dollars by 2023 4 Consumer Attention: 12:40 Hours of Technology & Media Per Day 9 Super Users: The Imperative for Technology & Media Companies 13 Social Splinter: The Social Media World Expands 27 eCommerce: Shrinking the Divide Between Physical and Digital Shopping 41 Digital Marketplaces: New Inventory, Price, Transparency, Ease of Use 60 Video Gaming: The Next Streaming Battlefront 71 Esports: Sport of the Future 84 Video: Streaming Stacking, Battleground Households 94 Sports Betting: The Next Big Financial Trading Market 117 Sports: More Viewing, Emerging Sports, Better Fan Experiences 129 Music: The Discovery Challenge 138 Podcasting: New Listening Experiences and Explosive Growth 146 The Networked Body: Quantified and Connected Human 159 Digital Consumer Finance: Next Generation Services Go Mainstream 169 Connectivity: Enabling the Next Wave of Technology and Media Growth 182 www.activate.com 9 CONSUMER ATTENTION Activate’s analysis of consumer Internet and Media activities shows that multitasking leads to a 31-hour day for the average American adult, 12 of which are spent consuming technology and media AVERAGE DAY BY ACTIVITY PER ADULT1, U.S., 2018, HOURS:MINUTES VIDEO 6:27 SLEEP 4:57 12:13 6:27 CONSUMER AUDIO INTERNET AND MEDIA 7:22 2:32 ACTIVITIES OTHER 31:29 NON-WORK Average Day Length 1:31 GAMING ACTIVITIES Per Adult cooking & housework, 1:08 personal & household MESSAGING & care, leisure, fitness, 7:22 SOCIAL MEDIA community & other 2:05 activities, eating & drinking OTHER2 5:27 5:27 WORK & WORK-RELATED 1. Behaviors averaged over 7 days. 2. “Other” includes media activities outside of listed categories, such as browsing websites, reading, cinema, live events, etc. Sources: Activate analysis, CareerBuilder, Comscore, eMarketer, Edison Research, Fitbit, Gallup, Global Web Index, Interactive Advertising Bureau, National Sleep Foundation, Nielsen, Pew Research Center, ResMed, U.S. Bureau of Labor Statistics 10 CONSUMER ATTENTION At 41% on average, video captures the largest share of attention of the daily 12 hours of Internet