Millennials spending big on media content

What will millennials spend on in 2015? Media content, among other things.

The TMT Predictions 2015 study by Deloitte Ltd. found that the millennial generation, which is composed of 18 to 34 year olds, will spend more than $62 billion on media content this year in the United States and Canada, where almost half of millennials’ spending is on pay television and music.

“In Southeast Asia and emerging markets in Asia Pacific, the absolute size of the media industry is much smaller than in a mature market such as the United States,” the Deloitte study on technology, media and telecommunications also found, adding that spending on TV subscriptions and license fees grew by only 4.8 percent from 2011 to 2015 in the Philippines, as against 27.4 percent in Indonesia, 18 percent in Vietnam, 13.7 percent in Thailand and 6.1 percent in Singapore.

“This tells us that overall propensity to spend on media is growing in the region, but with a smaller current base,” Greg Navarro, managing partner and CEO of Navarro Amper & Co., Deloitte’s Philippine member practice, notes in a statement.

Navarro adds that future growth “will continue to face stiff resistance,” owing to a variety of factors unique to the region, whose fragmented market structure, for instance, has no common language.

“[This] creates entry barriers for a large-scale or international play. And we’re still seeing a general lack of respect for intellectual property with widespread piracy in the region,” he adds.

However, Navarro points to the passage of the Cybercrime Prevention Act in the Philippines, as well as the country’s removal from the US’ list of piracy hotspots last year as among the positive developments in the region.

Books are not dead

The same study also boldly predicts that “print is not dead”—at least, where books are concerned.

“In 2015, print will represent more than 80 percent of all book sales in dollars worldwide,” the study says, noting how e-book sales volumes have “hit a plateau or seen decelerating growth” in major markets like the United States, United Kingdom and Canada.

“It seems that the aversion of millennials to physical CDs, DVDs, print newspapers or magazines does not extend to print books, for a number of reasons,” the study says, citing a UK study which found 62 percent of 16-24 year-olds preferring to buy print over e-books because “they like to collect, like the smell of books and want full bookshelves.”

Print book covers have also been found to drive sales.

“When read in public, print books send a message to other people about what you are reading and what kind of person you are, something e-books don’t do,” the study notes.

The study also points out that physical books have also been found to be superior when it comes to information retention, which could also explain why young readers who read for work, school or research purposes prefer print.

One billion smartphones

The same study also predicts that one billion smartphones will be purchased as “upgrades” for the first time in 2015— translating to more than $300 billion in sales.

“This quantity is unparalleled among consumer electronic devices,” says the study, adding that this year, smartphone sales “will be greater in units and revenues than the PC, television, tablet and games console sectors combined.”

In Southeast Asia, the study predicts smartphone penetration to reach an overall 38 percent of mobile subscriptions—equivalent to some 200 million smartphones.

“Globally, the addition of enhanced features, such as larger screens or longer battery life spans, has been one of the key drivers for smartphone upgrades and Southeast Asia is no exception,” the study says, noting that larger screens are more popular in the Philippines, Indonesia and Thailand, where smartphones are the primary means of connecting to the Internet and are mainly used for streaming videos and playing games.

Broadband homes

Meanwhile, the study also predicts the number of broadband homes to grow by two percent to 715 million by the end of the year, while average broadband speed is predicted to increase “by between 15 and 25 percent.”

In Southeast Asia, however, the study notes that “overall broadband penetration continues to be uneven.”

In the Philippines, for instance, fixed-broadband subscriptions are only at 2.6 per 100 inhabitants, while the figure is at 1.3 in Indonesia. In Singapore, this figure was at 25.7 in 2013.

The discrepancy is even more evident when broadband speed is taken into account: Average broadband speed in the Philippines is only at 2.5 Mbps, as against Singapore (12.2 Mbps) and Thailand (6.6 Mbps).

“The good news is that these speeds have increased by almost 57 percent from 2013-2014, a much faster rate than the expected 15-25 percent increase globally,” the study says.

The study also notes the increasing adoption of mobile broadband, which will cause current subscribers to increase their data usage, “despite dissatisfaction with their service providers.”

According to a survey of Southeast Asian consumers, 51 percent of respondents in the Philippines are dissatisfied with their current 2G and 3G speeds—a sentiment shared by 64 percent in Thailand and 41 percent in Indonesia.

Internet of Things

The study also predicts some one billion wireless Internet of Things (IoT) devices to be shipped in 2015.

IoT, also known as the Machine-to-Machine (M2M) market, refers to the network of physical objects that are able to communicate with each other through devices and sensors.

“While the idea of owning home appliances that can be operated remotely seems appealing… [it] usually solves only part of the problem,” the study says, explaining that while the washer could be turned on remotely, a user still has to physically unload it.

The study predicts some 60 percent of all wireless IoT devices will be purchased and used by enterprises and industries.

“Here in Southeast Asia, the IoT market is gaining significant traction. In the Philippines, we can see that in the telecommunications landscape where some of the major operators offer a host of M2M solutions,” says Navarro.

“But for M2M to thrive in the region, it needs to be supported by factors such as the number of connected devices, faster networks and global roaming capabilities,” he says.

He adds that the potential of the Internet of Things to be “the next big thing” hinges on the improvement of broadband speed and Internet penetration in the country.

“Unless the Philippines’ broadband speed improves so that it is at par with the country’s more advanced Asean neighbors, and Internet penetration goes beyond cities to reach the countryside, this is not going to happen in the foreseeable future,” the study adds.

Navarro says it is high time for the government to have a “cabinet-level” focus on information and communications technology issues, if the country intends to be “competitive.”

“The need for the government to create a Department of Information and Communications Technology is now more pronounced than ever. Fortunately, there is apparent agreement among almost all sectors that we need cabinet-level focus on ICT if we are to become competitive and if we are to provide our people with one of this century’s greatest economic equalizers,” Navarro says.