Deloitte’s annual global TMT predictions released

14 January 2016

Virtual reality gear to hit record billion-dollar mark in 2016

Deloitte’s annual global TMT predictions released

Deloitte predicts that virtual reality (VR) will have its first billion dollar year in 2016, with about US$700 million in hardware sales, and the remainder from content.

The 15th edition of Technology, Media & Telecommunications (TMT) Predictions – a report by Deloitte Global providing a 12-18 month outlook on key trends in TMT worldwide – estimates sales of about 2.5 million VR headsets and 10 million game copies sold. Additionally, the report expects the majority of spending on VR to be by core users rather than casual gamers. This means that while anyone with a smartphone could try a variant of VR, the majority of VR’s revenues in 2016 will likely be driven by tens of millions of users rather than billions of users.

“While in 2016 virtual reality is expected to reach a major milestone, becoming a one billion dollar market, in the long term VR is likely to struggle to reach the scale or ubiquity of the smartphone, PC or the television set,” says Deloitte New Zealand partner Paul Brabin.

“However, as the technology required to provide a total immersive experience improves, wider global adoption may ensue,” adds Mr Brabin.

“We are also seeing significant growth potential in cognitive technologies, such as computer vision, natural language processing and machine learning. This year 80 of the top 100 enterprise software companies are expected to be using cognitive technologies, unleashing the potential of the Internet of Things; this may even transform computing as we know it over time. While cognitive technologies may get less immediate attention from consumers than new virtual headsets, it is likely to be much more important over the long run for the enterprise and for consumers alike," concludes Mr Brabin.

Other highlights of this year’s TMT predictions to impact the marketplace in 2016 include:

• Touch Commerce: the mobile online checkout gets an express lane – The number of individuals who use a third party touch-based payment service to make a purchase on their mobile devices (smartphones and tablets) is likely to increase by 150 percent to reach 50 million regular users in 2016.

• Women in IT jobs: it is about education, but also about more than just education – By the end of 2016 fewer than 25 percent of information technology (IT) jobs in developed countries are expected to be held by women, (i.e., women working in IT roles). This figure is about the same as 2015, and may even be down.

• Mobile ad-blockers: saved by the app? – Only 0.3 percent of all mobile device owners are expected to use an ad-blocker by end 2016. This is likely to place less than US$100 million (0.1 percent) of the US$70 billion mobile advertising (smartphones and tablets) market at risk.

• Mobile games: leading, but less lucrative – In 2016 mobile (smartphone and tablet) will likely become the leading games platform by software revenue, expected to generate US$35 billion in revenue up 20 percent from 2015. This compares to expected revenues of US$32 billion for PC games and US$28 billion for console games, up only five and six percent respectively from the previous year. However, average revenue per game by platform will likely vary significantly.

• Used smartphones: the US$17 billion market you may never have heard of – In 2016 consumers are expected to sell outright or trade-in approximately 120 million used smartphones, generating more than US$17 billion for their owners. This is a marked increase from the 80 million smartphones traded in 2015 with a value of US$11 billion. Moreover, 10 percent of premium smartphones (US$500 or higher) purchased new in 2016 will likely end up having three or more owners before being retired.

• VoLTE / VoWiFi: capacity, reach and capability – 100 mobile operators worldwide will likely be offering at least one packet-based voice service at the end of 2016, double the amount year-on-year, and six times higher than at the beginning of 2015. The report estimates that approximately 300 million customers will be using Voice over WiFi (VoWiFi) and / or Voice over LTE (VoLTE), double the number at the start of the year and five times higher than at the beginning of 2015.

Full details about the global TMT Predictions are available at www.deloitte.com/tmtpredictions.

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