27Apr/160

Connected TV: Accelerating OTT video development

BAJON_Jacques

Jacques Bajon
Director of Media & Digital Content Business Unit, IDATE DigiWorld

The development of connected TV is inextricably bound up with the widespread availability of high-speed Internet access, a shift to more and more individual viewing and the proliferation of smart devices in the home.

 

Together, these three elements are steadily revolutionising how viewers access their TV programmes, and providing them with an array of new functions and features. TV sets can be connected to the Internet in several ways. Using:

  • a smart or connected TV (direct connection, via Ethernet or Wi-Fi),
  • a connected set-top box,
  • a streaming box or stick,a connected game console,
  • or a smart Blu-ray player.

In 2015, almost three-quarters of the televisions being shipped are Smart TVs, even if their owners may not systematically take advantage of the Internet connection. At the same time, the market for streaming devices – whose main purpose is to play online videos – is progressing rapidly. Within this market that is still populated by a great many solutions and services, several trends are taking shape:

  • the way users access and employ connected TV services has become more simple, and shifted from Internet-centric to video-centric;
  • managing connectivity with users’ personal devices has become a key issue, with app systems playing an increasingly central role;
  • OTT services are moving to the TV and making real strides;
  • ...

More information about main trends

Technological progress in a variety of areas is helping to bolster the market’s development, be it the growing ubiquity of broadband and superfast broadband access in the consumer market, major improvements in video optimisation and compression (HEVC), or the advent of innovative features such as casting which allows users to send video content from a personal device to the television. The main stakeholders in the connected TV ecosystem can be broken down into three categories, based on their original sector of activity: consumer electronics (CE) companies, TV market players and the Internet’s leaders.

  • CE industry players are working to improve their software interfaces, either through dedicated developments such as Samsung has done with Tizen, or by acquiring another company, as LG has done with WebOS. The aim is to capture the added-value in the marketplace, whether in the arena of services and/or by selling high-end devices.
  • Players from the TV universe are developing their OTT products, and working to bolster their position on the software side of the equation with more open and hybrid platforms. The connected TV could enable them to renew ties with consumers, and better monetise their plans. Broadcasters and pay-TV providers, especially in the United States, are therefore starting to roll out complete OTT plans which include a live component
  • Lastly, companies such as Google, Amazon, Facebook and Microsoft that dominate the Internet, are very knowledgeable about software, and changing consumer habits. So they are in the best position to deliver a top-notch user experience, whether in terms of smooth and intuitive interfaces, or providing recommendations based on user data. Their increasingly vertical positioning – covering everything from the content to the device – is also bolstering their potential to capture a growing portion of the video entertainment market.

In this way, many scenarios are emerging for Connected TV to 2025, and will determine which industries are likely to increase their control over this environment:

Impact_scenarios_TV_connectee_2025_IDATE_DigiWorld_OTT_VA

The size of the OTT video market will vary considerably under these scenarios, depending on how the environment evolves and so which industries prevail, and The popularity of the different devices will also evolve along the same lines.

Discover the perspectives,  key trends, and scenarios about the TV market for the next decade through our dedicated report and register to DigiWorld Future 2016 

DWF15 video report v3For the publication of the 16th edition of the DigiWorld Yearbook (pre-order now), IDATE is organizing a conference based on the detailed analysis of the current situations and some forecasts by IDATE experts on the major digital sectors, the discussion will deal with the great trends and challenges that will disrupt the digital markets by 2025.

Register

 

 

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27Apr/160

Will blockchains “Uberize” Airbnb?

Gassot-Yves

Yves Gassot
CEO, IDATE DigiWorld

Previously, in the DigiWorld… Over the past 10 years we have witnessed the rise of the GAFA heavyweight platforms within a winner takes all ecosystem then, without apparently making a dent in these veteran titans, new intermediaries began to emerge, shaking up the status quo in several sectors and, in some instances, seen as the harbingers of a new sharing economy (cf. Jeremy Rifkin).

In recent months, it was the financial sector’s turn to be challenged, this time by the FinTech phenomenon that is ushering in aggregators, multiple mobile payment and banking configurations, crowd-funding and -lending platforms, as well as cryptocurrencies such as Bitcoin and, perhaps most significantly, its blockchain infrastructure.

So here we are, at the dawn of the blockchain revolution. Thanks to a distributed database technology, which validates transactions (each a link in the chain) through a large collective of Internet users, we have a virtually tamper-proof way of managing transaction logs, without a central server and without an administrator.

Combined with connected objects, such as a front door, and smart contracts (programmes for automatically executing contracts once certain conditions are met), the belief is that blockchain systems could “Uberize” sites such as Airbnb by removing the need for an intermediary between the two parties. But we’re not quite there yet.

Between libertarian dreams and the highly supervised trials being carried out by banks and other companies, it is still hard to get an accurate picture of how efficient blockchain technology is, technically speaking, and how credible the vision of a world in which trust third parties of last resort have disappeared. But it would also be unwise to think that nothing will come of the technology[1] – or of the multiple start-ups that have embraced it to devise applications for sectors as disparate as banking, retail, energy distribution and music.

Whether at the upcoming DigiWorld Summit in Montpellier, whose central theme will be “The Internet of Trust” (15 – 17 November 2016) or the dossier we are preparing for the forthcoming issue of DigiWorld Economic Journal, devoted to “Digital innovation and transformation in the financial sector,” you will have ample opportunity to explore the ins and outs of these fascinating developments with IDATE DigiWorld teams this year.


[1] We have the feeling that smart contracts, which are often lumped in with blockchains, have what it takes to emerge as a solution unto itself and really catch on.

 

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[1] On a ainsi le sentiment que  la notion de smart contract, souvent plus ou moins confondue avec  la blockchain, devrait pouvoir trouver son indépendance en même temps qu’un réel essor.

27Apr/160

The issues of the emergence of a single digital audiovisual market : the French case

CURIEN_SONNAC

Published in DigiWorld Economic Journal DWEJ No. 101

Interview with Nicolas CURIEN & Nathalie SONNAC

Commissioners, Conseil supérieur de l'audiovisuel (CSA) (*)

Conducted by Alexandre JOLIN  



(*) This interview only reflects the views of the contributors, not the CSA's official positions.

 

C&S:  Since the late 70's, the European Commission has aimed to harmonize the regulatory landscape for audio-visual in Europe. The TVWF then the AVMS directives have created a legal framework allowing the circulation of linear TV and on-demand audio-visual media services in Europe. As part of the European Commission's Digital Single Market strategy, a review of the AVMSD has begun in 2015 and legislative proposals are due to be set out in 2016. Being the regulatory body for France, as a member state, how is the CSA involved in those consultations? According to you, which issues are to be primarily resolved?

Nicolas CURIEN & Nathalie SONNAC:  Intending to bring its regulator's viewpoint and its expertise in the practice of regulation, the CSA contributed to the European Commission's consultation about the review of the AVMS directive, entitled: "A framework for the audiovisual media in the 21th century". The CSA also participated in the cross-ministerial preparation of the French Authorities' positions and it provided a contribution to the French answer to the AVMS consultation. Mostly, the CSA plays a very active role in the European Regulators Group for Audiovisual Media Services (ERGA), which was chaired, during its two first years of existence (2014-2015), by Olivier Schrameck, the chairman of the CSA. Created in February 2014, by the European Commission as an advisory body examining issues related to media services, the ERGA stands now as a key institutional innovation, pushing forward European audio-visual policy matters. For us, as national regulators, working together within this structure represents a strong opportunity to carry out an in depth future analysis of the audio-visual sector and to stimulate the emergence of common initiatives. The ERGA is in charge of assisting the Commission in the revision of its legislative instruments, as it is now the case for the AVMS directive.

The audiovisual services drastically changed since the adoption of the previous directive in 2007. The present situation, resulting from the dynamics of "convergence", was not anticipated in the first place and it calls for several substantial adjustments in order to take into account the development of on demand non linear services, of interactivity, as well as usage of associated data. Moreover, the irruption into the French and European audio-visual markets of large and worldwide OTT players, such as Netflix or Google, raises a new kind of issues, which must be solved at the European scale. As specifically regards the revision of the AVMS directive, the ERGA produced three reports, published in January 2016, respectively about the independence of national audio-visual regulatory authorities, about the possible extension of the directive to new online players, and about minors' protection. These reports include recommendations which were unanimously approved by the 28 regulators of the European Union's member States. The ERGA thus invites the Commission to incorporate its proposals in the revised directive. An additional report about the territorial competency of regulators will be issued in the course of spring 2016.

One of the proposals on the table is to apply the same obligations placed on TV broadcasters and on-demand TV-like services to online video sharing platforms as well. Is this a realistic solution to complete the existing film and audio-visual financing system?

This issue goes well beyond the particular case of video sharing platforms, as it also includes all digital intermediaries which are commonly designated under the generic term of "platforms", such as content distributors, content aggregators, providers of applications, sharing platforms or suppliers of devices; that is, all players which hold a position between content and usage, making them gatekeepers of the access to content. All actors who develop a strategy around content and/or are involved in the exposition and the promotion of content, especially through algorithms are concerned. Since these new operators do orient consumers and deliver prescriptions to them, they doubtless play an editorial role which is similar, up to a certain extent, to that played by traditional audio-visual editors. Then, it seems both sensible and in line with the driving principles of audio-visual regulatory policy to set up for new players an adapted regime of obligations. However, such a regime should not of course ignore the necessity of sustaining the pace of innovation: when contemplating a new deal and a new toolkit for audio-visual regulation, one must not at the same time slow down the growth of innovative services which largely contribute to widen the exposition of works and do constitute a major source of creativity in the audio-visual sector.

One size does not fit all and all platforms should not be subject to the same degree of regulation: namely, a small platform should not be treated as YouTube. Proportionality should thus be set as a guideline and the regulator should focus in priority on platforms which bear a significant impact onto the market. Moreover, as it would clearly prove inefficient to set local obligations to global players, a common harmonized framework has to be defined within the European Union. Achieving proportionality, within a renewed regulatory scheme designed for digital intermediaries, also requires that rules existing for traditional editors be adapted in order to reach a satisfactory matching between obligations and the specific characteristics of the new actors. More generally, traditional regulation should not be transposed unchanged onto the digital world, a world in which the speed of evolution is very high, in which some players are active at an international scale and in which the business models greatly differ from classical ones. Accordingly, an effective regulation should be based on a triptych associating public policy, users and operators and could mainly rely upon co-regulation and self regulation. Such a perspective is precisely consistent with ERGA's present undertakings, which consist in identifying audio-visual centric platforms, rather than all platforms, with the objective to align their behaviour with the traditional goals of audio-visual public policy, although under a proportionate regulatory approach. Indeed, the public policy goals, which underlie the existing obligations set for traditional actors, such as minors' protection, copyright enforcement, investment in creation, or fair competition, do still prevail for digital platforms. In the Digiworld, goals remain the same; modalities may differ!

With the rise of international OTT services and the ongoing consolidation of the European content industry, how can policymakers best safeguard and promote cultural diversity across Europe?

Reaching a critical size through consolidation is a necessary step to preserve a model of diversified content in Europe. This does not amount to geographic confining, but rather calls for a more extensive and international approach, strongly based upon European cultural specificities. This global strategy should concern production, traditional edition and new digital platforms as well. Europe holds a solid position in terms of local content production and it must derive benefit from it. However, the momentum has to be generated through a coordinated policy, as it cannot result from the separate actions of isolated national players. In this regard, regulators also are at stake and they must rapidly come towards a more inter-institutional approach.

In their efforts to promote the diversity of content, the European editors should use linear TV, which is still by far the dominant mode in consumers' practice, as a kind of "factory" in order to produce pieces of original content promised to become brands of their own and move towards non linear usage on electronic platforms, after a first lifetime spent inside the grids of linear TV in order to get some notoriety. As access through networks is a necessary condition for access to content, synergies between medias and telcos should also be considered in order to extend the scope of content distribution and to reduce its cost. Moreover, promoting diversity heavily depends on the ability of creators to finance their content and make it available to consumers. In this respect, fair access to all distribution channels, especially online platforms, stands as a key enabling factor: hence, the strong attention of regulators to the net neutrality and the content visibility issues

Today, the OTT video industry is mainly driven by non European players such as Netflix, Apple or Liberty Global, which, despite its British implantation, is controlled by a US holding company. According to you, what could be done to ensure the development of a strong European OTT players and ensuring the sustainability of the traditional broadcasting market?

This question relates in part to the issue of rights' territoriality. A right balance has to be found between the two conflicting objectives of maximizing rights' monetization, on the one hand, and extending content's exposition, on the other hand, in a fast moving context where the growth of digital platforms makes territorial enclosure unsustainable against bypass or piracy. Since reaching such a balance likely means substantial change in the present contractual arrangements, a concerted sectorial process is needed gathering together rights holders, editors and distributors.

At least, large national players should contract partnerships and launch together digital Pan-European services, with a strong identity. As already mentioned above, these developments cannot take place at a national scale, while the main international competitors, such as Netflix, do operate worldwide, do offer worldwide content, and are less and less subject to territorial constraints; it is especially the case as regards TV series available in SVOD services, such as House of Cards, exploited under a "free" regime. In this revolutionary context, where the historical category of TV channel might sooner or later be replaced by the upcoming category of brand-content, the sustainability of traditional players is clearly conditioned to their ability and willingness to co-design adaptive and cooperative ways of deriving as much value as possible from their content.

On demand video services are currently regulated in their "country of origin". Some players are denouncing this as a distortion of competition because legal obligations can differ highly from one Member State to another. As was already done for the VAT last year, would it be recommended or possible to apply a "user-centric" approach, setting the focal point on the end-user instead of the service publisher?

The country of origin's principle certainly helped to create a common audio-visual market, as it facilitated the cross-border circulation of services, warranting legal security to broadcasters. In practice, however, this principle proves insufficient to set the conditions of a fair competition across service providers, since the AVMS directive is a framework for coordination, not harmonization, and some member States chose to adopt stricter rules than those prescribed in the directive. This may lead to a particularly critical situation, whenever a service is explicitly directed towards a given State within the Union, although it is established in another one: such as they are today libelled in the directive, the present procedures do not actually allow a member State to apply its possibly stricter rules to a foreign service aiming to reach its citizens. As a consequence, a severe imbalance is potentially created across operators competing in a same local market, some being subject to stronger obligations than others. Then, in order to avoid damageable "regulatory shopping" strategies, a fair and effective competition across all European operators must be guaranteed. In this regard, it is proposed that the European regulation be modified, by introducing an exception to the country of origin's principle, which would allow a given destination country to apply its own rules to those services which specifically address its population. This proposal does not intend to abolish the country of origin's setting, which would remain the general ruling, but just to amend it at the margin, to deal with circumstances where its application would obviously result in a harmful distortion in the marketplace.

The European Commission has also made a legislative proposal to change the copyright framework to allow cross-border portability of online video services, ensuring that consumers can access content they bought when they travelled in other EU countries. Could content portability be a structural threat for national TV industries? What could be the right balance between protecting right holders' revenues and guaranteeing access to consumers?

The European ruling about portability, issued last December, is a most appropriate initiative and it brings very good news to all European citizens, who will have access to their national offers of digital content when they travel abroad within the Union. Yielding such a significant benefit to the travelling and nomadic citizens should nevertheless not threaten the principle of rights' territoriality, which remains a very important piece in the framework in order to preserve a fair remuneration of authors. The application of rights' portability should also not hinder the commercial development of European players. Therefore, the precise conditions of portability now have to be carefully designed, through a clear specification of the criteria, characterizing temporary versus permanent residence. Finally, a realistic time frame should be set, that is not too short a one, in order to ease the operational implementation by operators.

Over the last years, linear TV revenues growth has tended to stagnate in Western Europe while on demand services, mainly SVOD, have been generating increasing traffic with low monetization rate. On the other hand, traditional broadcasters currently face stricter rules than on demand video services in some areas, such as promoting European cultural works. According to you, what would be the right balance between promoting European OTT players and protecting the traditional broadcasting market?

Seeking here for a "right" balance is maybe not fully appropriate, for the consumers do not show a same and unique profile of usage. Consumption practices vary greatly indeed, especially according to age and to social class, which leads to a wide scope of expectations in terms of kind of content, modality of usage and type of viewing device: television, tablet or smartphone. Linear TV and OTT services are likely more complements than substitutes, since they don't address the same audience and are operated under different business models. Therefore, the relevant issue is less that of balancing efforts between online versus traditional supply, than that of designing tailored offers, well fitted to individual contrasted needs, and identifying efficient synergies as regards, for instance, works' circulation and cross-promotion. In this direction, a major difficulty must be overcome: market prices of online services are established at a low level, those of SVOD lying around 10€ per month, in such a way they do not enable a single player to make the substantial investment which is required to produce attractive, competitive and self viable content. Hence, a consolidation of means at the European scale appears as a necessity. Finally, demand must be stimulated as well as supply and, in this respect education to media and to European culture is a key factor of success.

Is there any need for concentration in both service publishing and distribution sectors in order to make European champions emerge? Should this solution be supported by national regulators?

A process of concentration across players located at different links within the audio-visual chain of value, or even between actors present within that chain and outsiders, may already be observed in France, just as it is in other European countries. In France, major recent examples are the fusion of Numericable and SFR, the agreement between Altice and NextRadioTV, the acquisition of Newen by TF1, the integration of Canal+ within Vivendi. Public policy should of course encourage all industrial strategies which favour a cultural rebalancing, enhance the exposition of the French and the European cultural patrimonies and increase their value. Regulators should nevertheless be most attentive in ensuring that major transformations in the audio-visual industry do not bear a threat against fundamental ethical principles, such as liberty of expression, editorial freedom and independence of information.

 

Nicolas CURIEN, a member of Corps des Mines, sits at the board of the French Regulatory Body for Radio and Television (CSA), since 2015. He also is Emeritus professor at Conservatoire National des Arts et Métiers, where he held the chair "Telecommunications Economics and Policy" from 1992 to 2011, before being Commissioner in the French Regulatory Body for Telecommunications and Post from 2005 to 2011. An expert in digital economics, he taught at École Polytechnique from 1985 to 2007 and is a founding member of the French National Academy of Engineering.

Nathalie SONNAC (Doctor of Economics) chaired the Information and Communication Department of Paris 2 from 2009 to 2015 and was in charge of the professional Master 2 "Media & Public". As a media economy expert, culture and digital technology, she is also the author of numerous scientific books and articles in this field. More specifically she analyses the issues of competition and regulation in the digital age, market interaction, new business models, and monetization of digital content. She was appointed Commissioner at the Conseil supérieur de l'audiovisuel by the President of the French National Assembly on January 5, 2015 for a six-year mandate.

More information on DigiWorld Economic Journal No. 101 "Towards a single digital audiovisual market" on our website

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26Apr/160

Smart toys: From the onslaught of gaming companies to the prospects for the toy industry

MICHAUD-Laurent1

Laurent Michaud
Head of Consumer Electronics & Digital Entertainment Practice

By 2020, nearly 660 million smart toys could be sold, generating estimated revenues of 3.8 billion EUR, or 10.8% of the video game market.

 

The 'smart toys' or 'toys-to-life' phenomenon is generating a lot of interest because of its massive and rapid success. Smart toys are creating a new form of entertainment without really breaking with the function of toys or that of video games, and are at least as immersive as the two pastimes in their own right. Smart toys now constitute a new market segment, halfway between the video game and toy industries. Four industry players comprise the bulk of the market:

Smart_toys_growth_market_IDATE

  • Activision Blizzard with its Skylanders series, which has sold nearly 300 million figurines worldwide (8 games published since 2011)
  • Disney Games with Disney Infinity, which brings to life its own characters and the universes of its subsidiaries: Pixar, Marvel, Star Wars
  • Nintendo, which offers 'amiibo' figurines of its most popular characters (more than 10.5 million figurines sold in six months)
  • At the end of 2015, LEGO gatecrashed the market with LEGO Dimensions and, after experimenting with smart toys with an earlier product called LEGO Fusion, its entrance was successful.

Other industry players, toy manufacturers and video game publishers, such as Hasbro and Mattel, are still at the trial phase or performing 'market tests'.

The main lessons learned from events in 2015 reflect the challenges faced and the successes achieved.

  • The 'user experience' is central to the smart toy phenomenon, combining tangible objects — which may or may not be connected — with digital entertainment applications. This has given rise to the term 'phygital' to describe the experience.
  • Business models based on the collection of figurines, dependent on video games to varying extents, continue to evolve and could incorporate Free-to-Play.
  • Development models are primarily based on a so-called 'first party' or 'second party' approach. These operating models still leave little room for new entrants.
  • There is a clear dichotomy between 'mainstream' smart toys, produced by industry giants for fixed and visible platforms on the big screen, and new entrants offering their solutions on mobile platforms, where the barriers to entry are not so high.
  • The success of LEGO shows that convergence between toy manufacturers and video game companies is effective and can lead to AAA toys built around AAA video games.

The success of the smart toys video game segment is based on familiar universes that already have an audience of fans. There are still many fantasy worlds as yet untapped and therefore represent promising avenues for growth.

More information about smart toys market in our dedicated report

 

DWF15 video report v3For the publication of the 16th edition of the DigiWorld Yearbook (pre-order now), IDATE is organizing a conference based on the detailed analysis of the current situations and some forecasts by IDATE experts on the major digital sectors, the discussion will deal with the great trends and challenges that will disrupt the digital markets by 2025.

Register

 

 

Subscribe to our newsletter and keep up to date with events and latest news.

 

22Apr/160

Digital Economy 2025: The future of telecom and Internet ecosystems

PENNINGS_Christoph_NB

Christoph Pennings
Director of Studies, IDATE DigiWorld

A market that could more than double by 2025 to reach €3,000 billion

 

IDATE DigiWorld has released the latest edition of its forward-looking report on the future of Internet and telecom markets. It delivers four development scenarios for the digital economy along with a quantitative forecast up to 2025.

When trying to picture the future of the industry for the purposes of this study, we identified a number of developments with the power to influence various dimensions of the digital economy. The starting point was to divide these trends into two categories: key trends and major uncertainties.

Key trends are developments that have clearly emerged and for which it is possible to assume, with reasonable certainty, how they will play out over the years ahead.

For instance, with respect to technologies, one element that is quite certain is that network technologies will deliver better performance ten years from now than they do today. Even though 4G is still being rolled out and the 5G standard is not yet fully defined, it seems clear that 5G will deliver higher bandwidth, lower latency and better efficiency in terms of energy and spectrum usage than previous standards.

Beyond this, looking at usages, the trend towards mobile will surely last. The adoption of smartphones, tablets, wearables and other connected devices (including cars) will continue to be on the rise and make mobile by far the dominant way to access the Internet.

Business models and regulatory trends are also to some extent predictable. The value chain will continue to evolve with digital products cutting traditional players out of the loop. Regulation is very likely to shift towards more ex-post control and more symmetric obligations between players at the same layer of the value chain, but across layers, as with OTTs and telcos.

The major uncertainties can be categorised in a similarly broad way.

For example, certain technological evolutions or changes in business models might push the industry to develop in one direction or another. The Internet of Things allows connecting any object to the Internet and may unleash enormous innovation potential. Yet, despite the maturity of its technologies, the business model remains largely unclear today.

Consolidation in the telecom sector will continue but the end game is not yet predictable. Will consolidation remain a national phenomenon or will the market be dominated by a few regional, perhaps even global, players and who could they be?

Will consumers continue to prefer paying for ‘free’ Internet services with personal data, or will they ultimately adopt more privacy-conscious paid offers?

In order to bring all these different elements together, four contrasting yet plausible scenarios for the "digital economy" industry in 2025 are developed in this study, identified as Mall, Open, Automated and Trust. They are projected against a two-by-two matrix whose axes are defined so as to capture a very heterogeneous "digital economy" industry, yet sufficiently focused to give discussion some meaningful guidance.

One axis is the intensity with which personal data are being used. The intensity of personal data usage is an indication of the range of services telcos and Internet players will provide.

The other dimension is the presence of enablers in the market. Enablers provide rather specialised solutions, which other companies can leverage to build their own businesses on.

Four development scenarios for the digital economy

Combining these different hypotheses allowed us to establish the four most plausible future scenarios:

“Mall” scenario: Digital economy players adopt a strong focus on retail and customer owner-ship, seeking to be the one-stop user shop for all things digital, including content and devices.

There is full-blown competition between Internet players and the telcos, each of them aggregating and marketing a branded bouquet of digital products and services.

“Open” scenario: This digital economy ecosystem features seamless inter-operability and openness: open access, open innovation and open data. The Internet market is richly innovative and competitive. With token loyalty, users migrate to other innovative applications or services.

Telcos focus on providing retail and whole-sale connectivity, with specialised services.

“Automated” scenario: Sales, service production and customer care become largely softwarised. Customer requests configure service patterns automatically. Sophisticated data analytics are used mainly for internal purposes. Players leverage open standards and generic solutions to implement low-cost production.

“Trust” scenario: Sales, service production and customer care become largely softwarised. Customer requests configure service patterns automatically. Sophisticated data analytics are used mainly for internal purposes. Players leverage open standards and generic solutions to implement low-cost production.

Digital economy 2025: scenario matrix

schema_digital2025_v2

Source: IDATE, The Digital Economy in 2025, January 2016

A market set to double over the next decade

Departing from a global market worth close to €1,500 billion in 2015, each scenario sketches out a very different value generating potential between now and 2025. The most optimistic “Mall” scenario forecasts a market that will double in value, climbing to close to €3,000 billion – which translates into average annual growth of 7% – whereas under the most pessimistic “Automated” scenario the market still grows to €2,200 billion by 2025, or by an average 4.2% a year

The market’s forecast breakdown, between Internet services on the one side and telecom (access) services on the other, also varies substantially, ranging from 49% for telecoms under the “Open” scenario to 60% under the “Trust” scenario. Of course, compared to the more than 75% share in 2015, this corresponds to telecom services steadily losing market share to Internet services.

Value growth for Internet and telecom services markets, by scenario, 2014-2025

Digital_Economy_2025_marche_Internet_IDATE_v2

Source: IDATE, The Digital Economy in 2025, January 2016

More information on The future of Telecom and Internet ecosystems in our report "Digital Economy 2025"

Discover the perspectives and key trends that will structure the digital economy for the next decade and participate to DigiWorld Future 2016 

DWF15 video report v3For the publication of the 16th edition of the DigiWorld Yearbook (pre-order now), IDATE is organizing a conference based on the detailed analysis of the current situations and some forecasts by IDATE experts on the major digital sectors, the discussion will deal with the great trends and challenges that will disrupt the digital markets by 2025.

Register

 

19Apr/160

How can policy makers create conditions encouraging investments in the deployment of very high speed connectivity networks?

Gassot-Yves

Yves Gassot
CEO, IDATE DigiWorld

I will be the moderator of an interactive discussion during the Digital Regulation forum 2016 about "the needs for Internet speed and quality beyond 2020" on Wednesday 20 April.

 

Here are several theoretical options to stimulate private investment in fibre network rollouts:

1) Regulatory holidays:

the investor can invest without the threat of having to open its network to the competition. The questions are: when will the holiday end? Is it set in advance or, on the contrary, unknown by the investor?

2) The threat of public or subsidised deployments:

To avoid having to use a third party’s infrastructure, the incumbent takes the initiative of deploying its own fibre network. The question is: is it not a welcome opportunity for the incumbent to let private investors concentrate their deployments in the large cities, and leave it up to the State or local authorities to cover the less profitable areas?

3) Charge higher wholesale prices to telcos using the copper local loop:

Making the transition from ADSL to fibre pricing will be easier. The question is: will this give the incumbent more income from its legacy infrastructure and dampen any incentive to invest in fibre?

4) A mandatory open fibre model that factors in the risks being taken by fibre investors:

The question is: how to define the right price?

5) A laissez faire attitude in light of the prospect of intermodal competition, i.e. between fibre and 5G. The dilemma:

Ultra-high speed mobile access will also need fibre for backhauling in a small cell architecture. Cable DOCSIS systems could provide strong enough competition to push the incumbent to deploy fibre, but only in those areas where there is a cable infrastructure…

6) Make better information available to consumers:

On the differences (speed, latency) between the technologies and the networks, to give telcos room to invest and to fix a premium on fibre access. Question: will it be enough to sustain the momentum?

In fact, the crux of the task before NRAs (National Regulator Authorities) is to strike the right balance and choose the right mix that takes into account the particular features of each national market.

 

More information about the programme

 

7Apr/160

Wearables: new connected devices

ROPERT_Samuel

Samuel Ropert
Director of studies, DigiWorld IDATE

In 2018, the wearables market in value should exceed 22.5 billion EUR. Again, the growth will differ from object to object mainly because of the different price per object.

 

Wearable objects refer to daily consumer objects like wristband, watches, glasses, headsets or activity trackers with embedded sensors and connected mainly indirectly to the internet though a device/hub (through short range technology mainly). Wearable products are used in different applications, even though fitness, wellness and lifestyle are obviously the major segments, in volume notably.  Some opportunities could be seen at the entreprise level which aims to integrate into their premises wearable solutions to improve process and productivity.

The wearable ecosystem is mainly dominated by object manufacturers which are very numerous. Some of them are pure players like Fitbit or Jawbone, others are traditional consumer electronics manufacturers (Sony, Samsung, etc).
Other manufacturers come from the sports world like specialized sport accessory players (Garmin, Suunto or Polar) or sportswear brands with Nike and Adidas chiefly.  On the connectivity side, very few M2M mobile carriers are involved in the wearables market, only AT&T has a real involvement in this segment.  Data-centric players are positioned on the platform business. Most of the pure players like Runtastic, Runkeeper benefit from the product makers allowing them to collect information from their different objects.
The platform is actually the enabler to build services on the top of devices. On the top of the wearable devices, new services should emerge thanks to data exploitation/exchange. In terms of market adoption, surveys show that it is still very limited for now. They illustrate that watches are the most excited wearable devices, but a majority of the consumers seems not to be so enthusiastic to buy one of them. On the market side, according to IDATE, in 2018, 123 million wearable devices should be sold representing a 70% CAGR from the 10 million sold in 2013. Nevertheless, this growth is not homogeneous for each category of wearables. The smart watches will lead the market with 80 million units by 2018 mainly because of the Apple Watch sales starting from 2015. In 2018, the wearables market in value should exceed 22.5 billion EUR. Again, the growth will differ from object to object mainly because of the different price per object.

Wearables_vertical_markets_Samuel_Ropert

Related DigiWorld Research Reports
Internet of Things
Wearables and its verticals
Data Monetization
World Consumer Electronics Markets

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7Apr/160

Internet of Things

ROPERT_Samuel

Samuel Ropert
Senior Consultant, DigiWorld IDATE

A fast-growing market with 42 billion connected objects in 2015 and the promise of +14% annual growth up to 2025

 

IDATE has published its analysis of and forecasts for the global Internet of Things (IoT) market. An opportunity to deliver a synthesis of the Institute’s many reports on the matter (smart cars, M2M, smart grids, smart cities, smart toys…) to examine a market which, although developing rapidly, still raises a host of questions: is it really taking off, and how fast? Which business models seem the most reliable? Which market players and countries are in the best position to benefit from this new stage in the Internet’s evolution?

Although the Internet of Things is a powerful concept, it is not necessarily a market in and of itself. IoT encompasses a very disparate array of fields that need to be examined separately, to obtain an accurate understanding of their particular features, and their true growth potential.

IDATE forecasts that the global IoT market will grow from a base of 42 billion objects in 2015 to 155 billion in 2025, which translates into an average annual increase of 14%.
Unsurprisingly, the Internet of Objects (IoO) represents the bulk of the IoT market (80%), thanks to its widespread adoption by a number of sectors, and to the very low cost of tags.
The Connected information devices segment is the second largest in terms of volume, representing 13% of connected things, and set to grow by an average 13% a year up to 2025.
M2M (machine to machine) represents only 6% of connected things today.
And the smallest market in terms of volume is also the newest: Wearables & connected objects with 1% in 2015. But it is also the market that will grow the fastest over the next 10 years: by an average 30% per annum up to 2025.

World Internet of Things market, 2013-2025

schema_Internetofthings

Source: IDATE DigiWorld, “The Internet of Things”, October 2015

Compared to the size of the Internet of Objects and Connected information devices segments, the rest of the market is splintered between a host of vertical markets:
the utilities market is reporting rapid growth, stimulated by regulations and public policies;
the electronic equipment and automotive markets are also among the largest today, while the consumer electronics industry is incorporating connectivity into more and more traditional products, such as cameras.

The different sectors’ contribution to the global Internet of Things market, in 2015

schema_Internetofthings2

Source: IDATE DigiWorld, “The Internet of Things”, October 2015

Is the IoT market changing shape?
To provide a clearer strategic analysis of this disparate set, IDATE has chosen to break down the Internet of Things market into four key areas. A distinction can be drawn between consumer and business products, on the one hand, and between the different types of connectivity, on the other:
silo connectivity: a close loop of dedicated links between objects and servers, using direct connectivity or a hub, e.g. a smart meter or a payment terminal;
interconnected connectivity: different types of communication between the objects themselves, mainly through the same hub, e.g. appliances in the home such as a washing machine that signals the end of the cycle on the TV screen.

The report provides a detailed analysis of the resulting, four key IoT markets:
M2M, which covers production loops and closed loops based on applications;
Wearables and connected objects which, by definition, do not talk to each other;
Industrial Internet, which refers to the smart factory concept, with interactions between multiple applications that need to optimise their internal processes;
The smart home, a concept under which applications can communication with one another without having to go through the Internet.

The Internet of Things market

schema_internetofthings3

Source: IDATE DigiWorld, “The Internet of Things”, October 2015

Connected Things Forum

These many facets of these topics will be explored at the Connected Things Forum on 18 November 2015, as part of the DigiWorld Summit, with:

David d'AMORIM, Director of Innovation, La Poste
Ezio ARMANDO, Managing Director in charge of Emerging Technologies, Accenture
Xavier BOIDEVEZI, Vice President Business Development & Digital, SEB
Bernardo CABRERA, Head of M2M Marketing & Projects Management, Bouygues Telecom
Vincent CHAMPAIN, Operations Director, GE Corporate France
Andreas FIER, Head of Academic Relations, Deutsche Telekom AG
Didier GUILLOT, Innovation and multi-utilities Direction, director, Sagemcom
Thibault KLEINER, Head of the Network technologies unit DG Connect, European Commission
Ludovic LE MOAN, CEO, Sigfox
Soline OLSZANSKI, VP Strategy & Innovation, Hub One
Olivier ROUXEL, in charge of RFID & IOT assignments, DGE
Marcus WELLER, Fonder & CEO, Skully

> Programme for the Connected Things 2015 Forum

For the latest news: www.digiworldsummit.com and www.digiworldweek.com

#DWS15 and on Twitter @DigiWorldIDATE

 

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30Mar/160

Orange-Bouygues…

Gassot-Yves

Yves Gassot
CEO, IDATE DigiWorld

 

...in search of a convergent outcome

 

Proceeding behind closed doors, negotiations between Orange and Bouygues are now at the point where each party – independent of any actual transaction – is anticipating the reasons for and possible pitfalls of such a complex and far from certain merger.

The four players in the French telecommunications market have a shared interest in a scenario that would see the disappearance of one of its operators, not least with a view toward ending the price wars that have ravaged the sector. The French market would join the three-operator configuration that currently exists in Germany and, in the months to come, will emerge in the United Kingdom and Italy as well. This is a singular deal, however, as it involves the top provider of fixed line, mobile and enterprise services. So it can only go through if the new Orange is prepared to jettison many of the assets that it would acquire in the process.

Let us try to imagine what could lie ahead for these players in a situation that would be rich study for any expert of game theory.

Competition authorities – and regulators to a lesser extent – are in a delicate position since, even though they did not instigate it, they cannot fail to see the appeal of a deal that would help the sector get back on its feet: a sector whose revenue has been shrinking since 2008 and on whose massive investments the country is relying to some degree to achieve its digital transition. But the deal must not be approved at the cost of undermining effective competition between operators. Unlike with other mergers and acquisitions we have seen in Europe – between third-ranked or and fourth- and second-ranked operators which, in order to gain approval, have had to agree to certain remedies (such as selling off frequencies and opening their networks to MVNOs) – authorities here will have to prop up and justify a largely revamped structure for France’s telecom services market, through the conditions they impose on the distribution of frequencies, infrastructure, subscribers, stores, staff, etc. One can foresee the risks associated with ‘managed competition’.

Bouygues faces the prospect of trading control of its business for cash and a substantial stake in the leading provider, on the basis of favourable valuation. It is essential that it obtain a premium price. The biggest danger for the company lies in not getting that price and, in so doing, of having employees and even customers lose some confidence in the operator’s future.

Orange cannot agree to shoulder all of the risks of such a deal without having an objective other than doing the heavy lifting of a consolidation that is in everybody’s interest, except the shareholders’. If the new group is required to divest itself of the majority of Bouygues Telecom assets, it will need to ensure that the buyers help shoulder the burden of that premium price granted to Bouygues. A certain degree of competition is therefore necessary for that to happen. The company also needs to anticipate what advantages it will lose in yielding assets to competitors, for example those presently helping Orange and Bouygues Telecom enjoy a lead in the 4G market. Lastly, the cash released at the end of the deal must enable Orange either to accelerate its investments in France and other markets to strengthen its positions (while bracing itself for the kickback from regulators!) or give it the means to lead the charge in consolidating the sector in Europe.

SFR and Iliad are certainly interested in building their businesses thanks to the acquisition of assets. Their teams and their bankers must nevertheless determine the maximum they can pay, with an eye on debt ratios, beyond which it would be more cost effective to put their money into marketing and sales to gain subscribers, or to step up their investments in equipment and frequencies to accelerate their superfast fixed and mobile network rollouts. In the process, they also need to avoid finding themselves in competition with one another or with third parties.

And let us not forget one final protagonist: the Government, not as an authority in charge of competition or the sector’s regulator, but in its role of major Orange shareholder: does it have objectives other than those of a careful investor? Is the goal to set up a core of controlling shareholders in order to allow the State to withdraw?

 

Read more about a convergent outcome between Orange and Boyugues in Les Echos (french link) of the 29 January 2016

 

 

 

22Mar/160

Sign up now for the DigiWorld Institute 2016 Collaborative Research Programme!

Gassot-Yves

Yves GASSOT
CEO, IDATE DigiWorld

 

 

 

As in previous years, IDATE DigiWorld has selected four topics for its 2016 Collaborative Research Programme, which will be taking place in Paris, London and Brussels. The aim of the Programme is to give our 50 Member Companies, which support the DigiWorld Institute’s activities throughout the year – and, if space allows, outside private and public sector players as well – an opportunity to engage in frank and meaningful think tanks.

The programme for each think tank includes three workshops hosted by a team of IDATE DigiWorld experts, with contributions from participants and outside experts. Once the workshops are over, the IDATE DigiWorld team will deliver a summary report to all those who participated.

The topics for the 2016 Collaborative Research Programme 2016 are as follows:

Digital single TV market vs. globalisation (Paris)

The European Commission’s Digital Single Market (DSM) project is devoted to fostering the emergence of a single market for digital services, and notably for TV services, by creating a framework for geo-blocking and supporting a European copyright system. How can we create a credible single TV market in Europe in the Netflix era?

The Digital Agenda and broadband targets: Benchmark of national programmes (Brussels)

The aim of this think tank is to obtain a detailed snapshot of superfast network rollouts by discussing the mix of technologies being employed in each market (FTTH/VDSL/vectoring & bonding/G-Fast/DOCSIS…) along with the targets and forecasts for 2020. The main focus, however, will be on exploring current private sector investments and future public sector spending to complete national coverage. How much will governments need to spend? What schemes are being used to manage these public investments? And how are they likely to impact the sector’s industrial organisation over the long term?

5G: outlook for vertical markets (Paris)

In addition to ushering in faster connections, 5G will also be synonymous with addressing potentially multifarious needs, born of the IoT’s development in the different sectors of activity. What can be said about the coexistence of the different LPWA solutions and expected future developments? What case studies can serve to illustrate the multiplicity of requirements that 5G will need to satisfy? What regulatory hurdles will need to be overcome (security, liability, net neutrality)? And what are issues and challenges ahead for telcos?

Verticals and the digital transformation: Revenue streams and beneficiaries (London)

This think tank will take stock of a decade of current and future disruptions (Cloud, Big data, 3D, robotics, IoT, mobility, social networks…) in infrastructure, the production of goods and services and customer relationships. It will draw on case studies to explore new business models (e.g. the servicisation of production), the shifting balance of power in the Internet ecosystem (horizontal platforms vs. new vertical players), regulatory issues and more.

The first workshops will be held in June, so get in touch with us soon to request a more detailed presentation* and, in the meantime, enjoy the Newsletter!

2016 Collaborative Research Programme

Sign up today for one or more of our Collaborative Research Programmes

2015 Programme

  • SVOD: The only way to go? (Paris)
  • Openness and platform strategies (Brussels)
  • Verticals and the digital transition (Paris)
  • Africa and the digital promise (Paris)

 

2016 Programme

  • Digital single TV market vs. globalisation (Paris)
  • The Digital Agenda and broadband targets (Brussels)
  • 5G: outlook for vertical markets (Paris)
  • Verticals and the digital transformation (London)

 

*For more information, please contact Sophie Monjo: s.monjo@idate.org – Tel:+33 (0)4 67 14 44 56

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