The consumer in 2025 - Digital Futures 2025

The consumer in 2025
Rob Gallagher
Director of Research
Media, Entertainment & Consumer
Ovum

Let’s start with a poll…
Q. Which company will be the most influential in the
consumer market in 2025?
Digital Futures: The World in 20252
A. Amazon
B. Apple
C. Facebook
D. Google
E. Microsoft
F. Twitter
G. An unknown start-up
H. Other
© Ovum 2015, Informa Telecoms & Media Ltd

The consumer’s world in 2005
Most influential (Relatively) unknown Non-existent
Digital Futures: The World in 20253 © Ovum 2015, Informa Telecoms & Media Ltd

Disruption will be the main constant –
just ask Google
“You look at Google, Apple, Facebook,
and Amazon and say there’s no way
competitors can beat them. I’m less
certain… in tech, competition isn’t
always like-for-like… our biggest
search competitor is Amazon…. But
more important, someone, somewhere
in a garage is gunning for us. I know,
because not long ago we were in that
garage. Change comes from where
you least expect it.”
Eric Schmidt, CEO, Google, “The New Grundergiest”, Google Europe Blog, 13th October, 2014

Consumers will invest in
experiences they value
Value
Time
Money
RelationshipsStatus
Emotions

Changes that Ovum really does not expect
• Physical media will be dead
• Pay TV will fall off a cliff
• People won’t pay for digital

Digital will attract four out of every ten dollars
spent on consumer media and advertising
53%
40% 32% 26%
35%
36%
36%
33%
12%
24% 32% 41%
0%
20%
40%
60%
80%
100%
2010 2015 2020 2025
Global, share of media & entertainment revenues by sector, 2010-2025
Digital
TV
Traditional
Source: Ovum, PwC

Total revenues will grow by 43% - but traditional
media and TV advertising will feel the squeeze
267
156
304
240
240
420
0
500
1,000
1,500
2010 2015 2020 2025
US$Billions
Global, media & entertainment revenues by type, 2010 -2015
Digital advertising
Paid digital media
TV advertising
Pay TV
Traditional advertising
Paid traditional media
Source: Ovum, PwC

Over half of all revenues from consumer media
& entertainment will be from advertising
0%
50%
100%
2010 2015 2020 2025
Global, share of media & entertainment revenues by type, 2010-2025
Payments
Advertising
Source: Ovum, PwC

Success with digital will require an almost
opposite approach to traditional media…
37%
63%
Traditional
Advertising Payments
44%
56%
TV
64%
36%
Digital
Global, share of media & entertainment revenues by sector and type, 2025
Source: Ovum, PwC

… and a fundamental rethink about advertising
and paid media
• Digital advertising needs a
revolution to fulfil its potential
• Many people will value
experiences over ownership
• Consumer notions of quality
will change
64%
36%
Global, share of digital media revenues by type, 2025
Source: Ovum, PwC

0
200
400
600
800
1,000
1,200
1,400
1,600
2010 2015 2020 2025
US$Billions
Telco revenue by type, 2010-2015
Broadband Trad comms Total
The lost lunch-money mystery:
Where’s the value in consumer comms?
2015 2017
Snapchat 73 132
Apple 124 134
BlackBerry 703 800
WhatsApp 4,143 6,579
Monthly messages (billions), 2015 and 2017
Source: Ovum

Voice and messaging were just for starters:
Social commerce will be the main course
Trad
comms:
$690bn*
CAGR: -4.9% Digital
media:
$153bn*
CAGR: 11.0%
Digital
advertising:
$257bn*
CAGR: 10.1%
P2P mobile
payments:
$271bn**
CAGR: 77.9%
Mobile
commerce:
$683bn**
CAGR: 68.6%
Adjacent opportunities in 2019
Note: *Revenues **Transactions; CAGR refers to growth from 2014-2019Source: Ovum, PwC

A relatively small number of platforms will
drive – and capture – value at scale
• Internet firms will compete
intensely to be the place where
consumers live
• Many network owners will further
retrench to their original roles as
connectivity providers
• A handful will transform into multi-
national “super aggregators” of
media and comms services
AN
Other
Audience
Usage
Monetisation

People care more about the ends (content)
than the means (platforms)
25% 40% 35%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Watching short online videos
Reading magazines
Playing video games
Interacting on social networking sites
Watching sports
Listening to the radio
Watching movies
Reading books
Reading the news
Listening to music
Watching TV shows
Browsing the web
How important are these activities to your life?
Essential Nice to have UnimportantSource: Ovum
N = 16,000 consumers

And no one platform will dominate -
consumers will be everywhere

Competition will shift from delivery to
multi-platform mastery, data and design
Revenue
Investment
Data
AN
Other
Audience
Usage
Monetisation

Disruption will come to “less digital” fields as
IoT connects and maps the real world
The Internet
of things
As long as services pass the consumer-value test

Tomorrow's key
battlegrounds: time and
emotions
Value
Time
Money
RelationshipsStatus
Emotions

Key takeaways: The road to 2025
• No one company’s future is assured
• Consumers will invest in experiences they value
• The value of media and comms will grow and grow
• Competition will shift from delivery to design
• Time and emotions will become increasingly precious

Thank you. Questions?
+44 (0) 7876 791 092 | rob.gallagher@ovum.com
Ovum.com | @OvumTelecoms | @robdgallagher

The consumer in 2025 - Digital Futures 2025

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