Virtual reality (VR) will have its first billion dollar year in 2016, with about $700 million in hardware sales, and the remainder from content, a report said.

Sales of about 2.5 million VR headsets and 10 million game copies are estimated for the year, according to the 15th edition of the report entitled Technology, Media & Telecommunications (TMT) Predictions by Deloitte Touche Tohmatsu Limited (Deloitte Global).

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,” said Emmanuel Durou, Technology, Media and Telecommunications consulting partner at Deloitte Middle East, a leading provider of audit, consulting, financial advisory, risk management, tax and related services.

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

“We are 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."

Millennials may not be the post-PC generation

In addition to the predictions on virtual reality, the report suggests that while millennials are the smartphone generation, trailing millennials (those 18-24 years old) are anticipated to be the most pro-PC of all age groups of 2016. According to research by Deloitte member firms1, an average of over 85 per cent of trailing millennials in 13 developed world countries had access to a laptop in 2015.

Further, laptop access for the trailing millennial demographic was either highest or second highest of the six age groups in the member firms’ surveys in all but two markets, Norway and Finland. This data suggests 18-24 year-olds see smartphones and PCs as complements, not substitutes, which may in part be due to the decreased costs of laptops (there are many devices for less than US$500 available on the market).

Additional findings from Deloitte Global’s 2016 TMT predictions include:

Technology

•    Women in IT jobs: it is about education, but also about more than just education - By the end of 2016 fewer than 25 per cent 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.

•    Cognitive technologies enhance enterprise software - In 2016 more than 80 of the world’s 100 biggest software companies will likely have integrated cognitive technologies such as machine learning, natural language processing, or speech recognition, into their products. This represents a 25 per cent increase from 2015 when 64 of the top 100 had launched products and services, which featured one or more cognitive technologies.

•    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 per cent to reach 50 million regular users in 2016. Touch commerce enables retailers to exploit shoppers’ increasing use of mobile devices to browse retail sites where transactions have remained scarce, due mostly to laborious payment processes.

•    Graphene: research now; reap next decade - While the total value of the graphene materials market in 2016 is likely to be in the low tens of millions of dollars, research and development spending for the year is likely to be in the hundreds of millions of dollars. In the medium-term, graphene may be incorporated into products worth many billions of dollars of value per year– but it could be decades before this material’s potential is fully realized.

Media

•    Mobile ad-blockers: saved by the app? - Only 0.3 per cent of all mobile device owners are expected to use an ad-blocker by end 2016. This is likely to place less than $100 million (0.1 per cent) of the $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 per cent from 2015. This compares to expected revenues of $32 billion for PC games and $28 billion for console games, up only five and six per cent respectively from the previous year. However, average revenue per game by platform will likely vary significantly.

•    eSports: bigger and smaller than you think – eSports will likely generate global revenues of $500 million in 2016, up 25 per cent from about $400 million in 2015, and will likely have an audience of regular and occasional viewers of close to 150 million people. This expected revenue is only a fraction of league revenues in major sports such as European football (soccer), US football, basketball, baseball, or ice hockey, which range from $4 billion up to $30 billion.

•    European football scores $30 billion - The European football market will likely reach US$30 billion for the first time for 2016/2017, an $8 billion increase relative to 2011/2012, and a compound annual growth rate of seven per cent.

•    The award for stable box office revenues in the face of digital media goes to … - In 2016 the value of movie theatre admissions in the US and Canada are expected to fall by about three per cent to about $10.6 billion, with about 1.3 billion tickets sold.

•    US TV: erosion, not implosion - In 2016 the US traditional television market, the world’s largest at what will likely be about $170 billion in 2016, is expected to see erosion on at least five fronts: the number of pay-TV subscribers; pay-TV penetration as a per cent of total population; average pay-TV monthly bill; consumers switching to antennas for watching TV; and live and time-shifted viewing by the overall population, and especially by trailing millennials 18-24 years old.

Telecommunications

•    The dawn of the Gigabit Internet age: every bit counts - The number of Gigabit per second (Gbit/s) Internet connections is expected to surge to ten million by year-end, a tenfold increase of which about 70 per cent will likely be residential connections. Rising demand will likely be fueled by increasing availability and falling prices. It’s anticipated that about 600 million subscribers may be on networks that offer a Gigabit tariff as of 2020, representing the majority of connected homes in the world.

•    Used smartphones: the $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 $11 billion. Moreover, 10 per cent of premium smartphones (US$500 or higher) purchased new in 2016 will likely end up having three or more owners before being retired.

•    Photo sharing: trillions and rising - In 2016, 2.5 trillion photos are expected to be shared or stored online, a 15 per cent increase on the prior year. Over 90 per cent of these photos will likely have been taken over a smartphone; digital SLRs, compact cameras, tablets and laptops are estimated to collectively contribute the remainder. This estimate does not include the trillions of photos that remain on devices’ memory.

•    The rise of the “data exclusive” - About 26 per cent of smartphone users in developed markets are expected to not make any traditional phone calls in a given week in 2016. These individuals, known as ‘data exclusives’, have not stopped communicating, but are rather substituting traditional voice calls for a combination of messaging including SMS, voice and video services delivered ‘over the top’.

•    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. – TradeArabia News Service