The digital economy: Moderate growth
Increasing by 4.7% in 2017, global DigiWorld markets continue to grow at a steady pace, albeit slower than the economy as a whole. Since taking a hit in 2014, growth has remained sluggish for ICT services.
Internet services: Still a very solid momentum
The Internet services market continues to grow at a steady clip. With average annual growth estimated at 11.5% for the coming years, it is expected to reach 730 billion EUR in 2021 and represent 20% of DigiWorld markets (7% in 2014). A handful of, notably cloud, services make up the bulk of the market. If advertising is still a sure thing, especially on mobile, for-pay services account for the largest share of the Internet market, in addition to being the most dynamic segment.
Telecom operators: The investment challenge
Telcos’ global spending stood in excess of 300 billion EUR in 2017, which marks a more than 5% annual increase over the past five years, so considerably more than the pace at which their revenue has been growing (around 1% a year, on average). In other words, it is becoming increasingly taxing for telcos to maintain their investments amid what are increasingly costly imperatives: superfast rollouts in most parts of the world and the emergence of 5G, to name but two.
The capex-to-revenue ratio has thus soared from 12.5% in 2010 to around 17.5% today, on average, in Europe’s five main markets.
Content services: Back to growth, aboard digital
After some difficult years, especially for the music and video industry, the content industries are generally experiencing renewed growth, except for the press industry.
While financial results still vary between industries, it seems higher dematerialisation rates are leading to a return to growth (e.g. music and video) or considerable growth (e.g. video games). At the other end of the spectrum, the book and press industries, which are both still strongly dependent on physical media revenues, are between stagnation and decline.
Growth is expected to fall off slightly for the three growing industries in the next few years but will remain in growth (between 6.0% and 9.5% per year on average); while the press and book sectors should experience a slight improvement, even though press revenues will decline.
Across the board, digital is driving growth (+11% per year on average until 2022), while physical revenues will drop (-3.1% over the same period), except in the book sector, where physical sales will continue to grow slightly in parallel with digital sales. The abundance of free content, both legal and illegal, and the development of services offering unlimited content consumption is contributing to lowering the unit value of content and making the profitability potential of online distribution platforms more uncertain.
140 million cars will be connected in Europe by 2025
The eCall is the European public service emergency call system, allowing a crashed vehicle to instantly and automatically (via the cellular network) call the emergency services while sending its precise position, and the EU country in which he finds himself.
Although the system was already available on many recent models, eCall has become mandatory on all new homologated vehicles since April 1st.
This European initiative is therefore a real lever for the connected car market, particularly in terms of volume.
Covid-19: will it create opportunities for FTTH?
The Covid-19 pandemic has caused tremendous upheavals in how people work, which in turn has forced operators to adapt and offer effective solutions for dealing with the surge in both connections and cyberattacks. The public health crisis has been, and remains, a source of real challenges for the sector. If fibre can reduce the new digital divide caused by people’s different internet access opportunities, it cannot be deployed nationwide without government support.