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Deloitte Predicts Media Trends for 2016

Virtual reality market to have its first billion-dollar year in 2016

The technology, media and telecommunications (TMT) practice at Deloitte, the business advisory firm, has announced its predictions for the media sector in 2016. The news comes following the launch of Deloitte’s TMT Predictions 2016, now in its sixteenth year.

Virtual reality: a billion dollar niche

Deloitte predicts that the virtual reality (VR) market will have its first billion dollar year in 2016. Revenues will mostly be driven by approximately $700 million in hardware sales globally, and the remainder from software and content. According to Deloitte, this year will see sales of approximately 2.5 million VR headsets and 10 million game copies sold.

Ed Shedd, partner and head of Deloitte’s technology, media and telecommunications practice, comments: “The notion of virtual reality is decades old, but, as with many technologies, its commercial potential has yet to be fully realised.

“Virtual reality is likely to have applications for both consumer and enterprise, but this year we expect the majority of commercial activity to focus on video games. Companies that are considering using VR should be aware of the hardware cost and the slim content that is currently available.”

Mobile games: leading, but less lucrative

According to Deloitte, mobile devices will become the leading games platform in 2016. Smartphone and tablet games will generate $35 billion in software revenue, an increase of 20 per cent from 2015. This compares to $32 billion for PC games and $28 billion for console games, up only five and six percent respectively from the previous year.

Shedd continues: “The mobile games industry as a whole should thrive in 2016, but the outlook for individual mobile games developers is likely to be far more varied. The sheer volume of mobile game titles will likely render many new entrants invisible without substantial marketing spending.

“The mobile games sector now has the same core challenges as most mainstream media: creating compelling content and making people aware of it.”

Mobile ad-blockers: saved by the app?

Deloitte also predicts that by the end of 2016, just 0.3 percent of all mobile device owners (including smartphones and tablets) will use an ad-blocker. As a result, less than $100 million (0.1 percent) of the $70 billion mobile advertising market will be put at risk.

Dan Ison, partner and head of media and entertainment at Deloitte, comments: “While we do not expect the impact of mobile ad-blocking in 2016 to be significant relative to the overall size of the market, its impact is likely to be felt disproportionately.

“Smaller, online-only publishers that rely entirely on advertising revenues and lack other forms of income, such as subscription, may be particularly affected. It may also be the case that the most affected news outlets are those focused on technology and gaming news, whose audience is most aware of ad-blockers and will be most likely to adopt them.”

Other media predictions include:

European football scores $30 billion

The European football market is predicted to generate $30 billion (€27 billion) in revenues in 2016/2017, an $8 billion (€7 billion) increase relative to 2011/2012. Austin Houlihan, a director in Deloitte Sports Business Group, comments: “The universal appeal of Europe’s top leagues, particularly the English Premier League, is driving overall revenue growth in the beautiful game. This is making the Game’s top clubs highly attractive to investors across the globe.”

eSports: bigger and smaller than you think

Deloitte estimates that eSports will generate global revenues of $500 million in 2016, up 25 percent from 2015. It will likely capture an audience of regular and occasional viewers of close to 150 million people worldwide.