Smartphones poised for revolution in media access

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83189b7b-7afe-487c-974d-522d9225379a.imgMost of the world will be using a smartphone to watch videos and access news in five years’ time and almost two in three dollars set to be spent globally on internet services will be for mobile access not fixed line, says research published this week.

More than two-thirds of the world’s population will be using smartphones by 2020, according to a report by Ericsson, the Swedish group. It estimates that smartphone subscriptions will double in the next five years to 6.1bn fuelled by the rapid adoption of mobile internet in emerging markets.

“This immense growth will make today’s big data revolution feel like the arrival of a floppy disk,” says Rima Qureshi, chief strategy officer at Ericsson.

It points to “mass-scale transformation” of the mobile market owing to an increase in applications and falling costs of devices as the key factors driving connected devices. Overall worldwide mobile subscriptions are set to overtake the global population with a rise from 7.1bn in 2014 to 9.2bn by 2020.

The growth will lead to new revenues for device makers and telecoms groups that adjust their businesses to provide services for the expansion of mobile, Ericsson said.

Another report from consultancy PwC predicts equally far reaching effects for the media industry because video streaming will account for the majority of mobile internet traffic.

PwC estimates that more than half the world’s population will be connected to the internet on mobile by 2017 and will help propel total mobile internet access revenue to $431.5bn just two years later.

Almost two in three dollars spent on global internet access in 2019 will fund connections on mobile devices as smartphones become the primary way people consume news and entertainment, according to PwC.

The PwC report estimates the total size of the media and entertainment industry will grow at a compound annual rate of 5.1 per cent to $2.2tn in revenues from 2014 to 2019. Internet access revenues will grow fastest, at 8.8 per cent to $686.3bn, followed by 4.7 per cent growth in advertising to $666.8bn and a 2.9 per cent uptick in consumer spending to $880.3bn.

The proliferation of connected devices is fuelling consumers’ ability to choose how, when and where they access news, films, music and books. The shift has far-reaching consequences for media groups as they struggle to adapt their businesses to changing habits.

“Consumers will pay for content but they’re very discerning about how they pay and when they pay,” said Marcel Fenez, PwC’s global entertainment and media leader.

Smartphone data usage is predicted to increase tenfold by 2020, according to Ericsson, boosted in particular by a 55 per cent growth every year in video streaming traffic in the period. Monthly data traffic per smartphone is expected to grow from about 1 GB in 2014 to 4.9 GB by 2020.

Mobile video will dominant the world’s internet, Ericsson found, accounting for about 60 per cent of all mobile data traffic by the end of 2020. Growth is being driven by video streaming services such as YouTube and the increasing prevalence of video in online news, advertisements and social media.

PwC’s Mr Fenez said that bundles of content, from newspapers to pay-television subscriptions, are facing the same pressure that pushed the music industry in the last decade from album sales to single-track downloads to streaming services.

“That’s bit of a challenge for the [media] industry because at end of the day, you have to hope consumers will pay the same or more” for content that is in new formats, he said.

The TV industry in particular will experience upheaval from the surge in internet connections and an accompanying rise in online video viewing. the change will shift a share of advertising revenues from cable and broadcast channels to digital TV.

While online TV advertising will remain a small slice of the total TV market, it is forecast to double its global share from 2.8 per cent last year to 5.7 per cent by 2019.

“As viewers migrate from traditional networks to digital alternatives, advertisers will follow,” PwC said.

While media companies grapple with disruption and a new crop of digital competitors, for consumers, the picture is much simpler, said Mr Fenez.

“This difference between digital and non-digital is becoming almost irrelevant to consumers,” he said. “There’s more content now than ever there was and for them the key thing is: how do they access it and what do they pay for that?”

The changes have shifted more power to consumers, as media owners, distributors and advertisers push to capture people’s attention no matter what screen they are watching. “The consumer has never been more up for grabs than today,” he said.

The growth in mobile video will mean that North America and Europe will continue to have highest data usage per smartphone, while four in every five new mobile subscriptions between now and 2020 will be taken in Asia, the Middle East, and Africa, according to Ericsson.

Average monthly data usage per smartphone in North America will increase from 2.4 GB today to 14 GB by 2020, for example, with heavy users of mobile internet already typically watching more than an hour a day of online video over their mobile devices.

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