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Streaming services predicted to add advertising to keep subscription fees down

Streaming services that used to be advertising free will one way or the other add ads just as Netflix introduced a budget subscription alternative with ads included. By 2030, most online video service subscriptions will be partially or wholly ad funded, consultancy Deloitte predicts in its forecast for the Technology, Media & Telecommunications markets.

Major streaming services that used to be ad free could opt for advertising video on demand (AVOD) next year, consultancy Deloitte predicts.  

“By the end of 2023, major subscription video-on-demand services in developed markets may have launched an ad-funded tier to complement ad-free options which aren’t going away. But by the end of 2024, half of these providers will also have launched a free ad-supported streaming TV service (FAST). And by 2030, most online video service subscriptions will be partially or wholly ad funded.”

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 “As price-conscious viewers become more willing to watch ads in exchange for discounted or free streaming video, we’ll see more subscription video-on-demand (SVOD) service providers adding ad-funded tiers to their offerings. Our research shows that consumers will accept this far more readily than in the past because it gives them flexibility and the ability to control costs”, says Kevin Westcott, Telecommunications, Media and Entertainment leader at Deloitte, Global.

The company predicts that in 2023, streamers could spend more than US$6 billion on major sports rights in the largest global markets. 

Deloitte Global predicts that chips made of high-power semiconducting materials could sell a combined US$3.3 billion in 2023, up almost 40% from 2022. Growth in these types of chips, collectively known as power compound semiconductors, is expected to accelerate to nearly 60% in 2024, possibly generating revenue of more than US$5 billion.

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“With the new materials, these chips have the potential to transform entire industries,” says Christie Simons, Deloitte’s Global Semiconductor Center of Excellence leader. “And with AI-enabled design, chipmakers can increase supply chain security and help mitigate the next chip shortage as well as the current talent challenge.”

The company predicts that more than 5,000 broadband satellites could be in low-Earth orbit (LEO) by the end of 2023 because of growth in commercial data satellite deployments to provide high-speed internet to every corner of the world. They could make up two working constellations providing high-speed internet to nearly a million subscribers on all parts of the planet, no matter how remote.

“If every organization currently planning to build an LEO constellation succeeds, seven to 10 competing networks could be operational by 2030, with a total of 40,000 to 50,000 satellites serving more than 10 million end users.” 

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Additional predictions:

  • Tech’s commitment to faster climate action: Many organizations want to reach net zero and the technology industry is making a strong commitment. Tech companies are working harder and faster to impact climate change and are 13% more likely than non-tech companies to target net zero by 2030.
  • 5G networks to transform enterprise connectivity: The number of mobile network operators (MNOs) investing in 5G standalone networks—with trials, planned deployments, or actual rollouts—will double from more than 100 operators in 2022 to at least 200 by the end of 2023.
  • Virtual production gets real: bringing real-time visual effects onto the set: The market for virtual production tools will grow to US$2.2 billion in 2023—up 20% from an estimated US$1.8 billion in 2022.
  • Gaming M&A is growing on the back of consolidation, portfolio plays, and game tech: In 2023, the number of video game company mergers and acquisitions will continue to increase by around 25%, slightly slower than the estimated 30% quarterly growth of 2022. Video game services, experiences, and business models are innovating, console supply chains are loosening up to meet pent-up demand for next-gen experiences, and many anticipated games that were delayed in 2022 are now set to reach players in the coming year.
  • Virtual reality (VR) market gaining momentum: The VR market will generate US$7 billion in revenue globally in 2023, a 50% increase over 2022’s US$4.7 billion. As VR grows in popularity, 90% of that revenue will likely come from headset kit sales, with 14 million units averaging US$450 each expected to sell in 2023. The remainder should comprise mostly of VR content—principally games, but also some enterprise applications—which could see revenues of just over US$1 billion. Improvements in the underlying technology, including power, screens, and audio should fuel this growth. Next year, headsets should offer higher frame rates, higher-resolution displays, and enhanced spatial audio, enabling a realistic, immersive experience.
  • Shopping goes social, trending past US$1 trillion annually: Spending for goods and services on social media will surpass US$1 trillion globally in 2023, growing 25% annually with more than two billion people shopping this way in the last year. The social commerce market is outgrowing traditional e-commerce. In a Deloitte Global survey, Generation Z and Millennials are more likely than Gen X respondents to say that social media influencers affect their buying decisions.
  • Growth in the emerging enterprise edge computing market: The enterprise market for edge computing will grow at 22% in 2023, compared to 4% growth in spending on enterprise networking equipment and 6% on overall enterprise IT for the same year. Most of this growth will likely come from expenditures on hardware initially but should migrate toward software and services as the market matures. 
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