1. Technology, Media&TelecommunicationsPredictions2013

2. ContentsForeword3Technology5 The PC is not dead: its about usage notunits6 Bring your own computer: a tale oftwointerpretations9 P@$$1234: the end of strong passwordonly security11 Enterprise Social Networks: another tool, but not yet a panacea14 Lets get together: crowdfunding portals bring in the bucks16 The button stays beautiful19Media23 4K kicks off24 Dual video screening readies forprimetime27 Connected TV: hits and misses29 Overthetop may lift legacy broadcasters and distributors more than pure plays31 The reality of cord cutting inNorthAmerica33Telecommunications35 A strong year for LTE adoption36 Smartphones ship a billion but usagebecomes simpler39 Mobile advertising is dead. Longlive tablet and smartphone advertising43Allyoucanapp46 The looming spectrum shortage: worsebefore it gets better49Endnotes52Recent Deloitte thought leadership63Contacts at Deloitte Touche Tohmatsu Limited (DTTL) and its member firms64Technology, Media& Telecommunications Predictions 20131 3. ur aim with Predictions is to O catalyze discussions around significant developments that may require companies or governments to respond. We provide a view on what we think will happen, what will occur as a consequence, and what the implications are for various types of companies. Wedo not however presume that ours is the last word on any given topic: our intent is to stoke the debate.2 4. ForewordWelcome to the 12th edition of Deloittes Predictions for And we believe key non-changes include manythe technology, media & telecommunications (TMT) sector.hundreds of millions of new smartphone ownerscontinuing to use their data capable devices mostly forThis publication presents Deloittes view of keyvoice and text messages; further we expect the PC todevelopments over the next 12-18 months that are likely remain a dominant device, as measured by usage ratherto have significant medium- to long-term impacts forthan just units.companies in TMT and other industries.We hope you and your colleagues find this yearsAs in the previous two years, this years Predictions Predictions for the TMT sector useful. As always, wereport is published as a single report rather than split by welcome your feedback. We remind readers that ourtechnology, media and telecommunications. Deloittesaim with Predictions is to catalyze discussions aroundview is that developments in each sub-sector are nowsignificant developments that may require companiesso inter-linked and interdependent that TMT executivesor governments to respond. We provide a view onneed to be cognizant of key trends across all sectors.what we think will happen, what will likely occur as aconsequence, and what the implications are for variousWe are often asked what differentiates Deloittes TMT types of companies. We do not however presume thatPredictions from other perspectives. It is all aboutours is the last word on any given topic: our intent is tomethodology.stoke the debate.We have a dedicated global research team. In addition to the text version of Predictions in thisreport, a discussion around each Prediction is availableWe undertake extensive primary research which as a video and podcasts.blends thousands of depth discussions every year withonline surveys of tens of thousands of respondents in Whether you are new to this publication, or have beentwenty countries. following our Predictions for years, we thank you foryour interest. And to the many executives who haveWe test our predictions with clients, industry analysts offered their candid input for these reports, we thankand conference attendees in the months leading to you for your time and valuable insights.publication.We look forward to continuing the conversation.We publish only perspectives that we think are new orcounter to existing consensus and which we believeour readers should know about.We predict change and where we disagree with theconsensus view lack of change.Jolyon BarkerWe aim to provide clear Predictions endpoints, so thatManaging Directorour accuracy can be evaluated annually. In 2012 as in Global Technology, Media & Telecommunications2011, we were just over 80 percent accurate.Deloitte Touche Tohmatsu LimitedWe are also asked why we create a Predictions As used in the Predictions, Deloitte refers to thedocument. Our answer is simple. Our view is thatDeloitte Touche Tohmatsu Limited member firmacross every global industry, knowing what is likely (and TMTpractices.unlikely) to come next in TMT trends is a key competitivedifferentiator.For 2013, we expect key changes to include an upsurgein momentum behind Long Term Evolution (LTE)mobile networks, the start of preparations for the nextgeneration of high definition television, known as 4K,the first one billion shipments year for smartphones andincreased challenges for standard passwords. Technology, Media& Telecommunications Predictions 20133 5. 4 6. TechnologyThe PC is not dead: its about usage notunits 6Bring your own computer: a tale oftwointerpretations 9P@$$1234: the end of strong passwordonly security11Enterprise Social Networks: another tool, but not yet a panacea 14Lets get together: crowdfunding portals bring in the bucks 16The button stays beautiful19 Technology, Media& Telecommunications Predictions 20135 7. The PC is not dead: its about usagenotunitsDeloitte predicts that in 2013, more than 80percent of Whether reviewing documents, browsing the webInternet traffic measured in bits will continue to come or watching video, the image offered by a PC screenfrom traditional desktop and laptop personal computers. dwarfs that on a mobile device. Afour inch smartphoneInaddition, more than 70percent of the hours we screen offers a viewing area of just under seven squarespend on computing devices (PCs, smartphones andinches; a seven inch tablet has 21square inches;tablets) will be on a PC. Timeat work accounts for a a9.7inch tablet has 40square inches. Bycomparison,large portion of that, but even in our nonwork lives wea 14inch laptop screen has 84square inches andare likely to use PCs more than 50percent of the time1.a 25inch standalone desktop monitor gives ourFormost people, the PC will continue to be the primary eyes 267square inches to feast on. Thediagonalcomputing device. Weare not in a postPC era. We are measurements used by display makers are deceptive:in the era of PC Plus.for example, a desktop monitor with a diagonalmeasurement six times larger than a smartphone screenStrong sales of tablets and smartphones haveactually has a screen area that is 39timeslarger.prompted some to suggest that the PC is becomingan anachronism. From2010to 2012, combined Preference for larger screens manifests itself in othersales of tablets and smartphones2 have grown from products, such as televisions. Hundredsof millionsover 350million to around 1billion units3a. Thisis far of people bought 40inch TVs in the past five yearsgreater than the volume of PC sales. PC sales also grew through2011, the fastest growing category in 2012over that period, just at a lower rate. PC sales were was 50inch TVs6. In the United States, the average350million in 2010, 353million in 2011and are likely person watches over 30hour per week (of TV) on largeto be about 355million units in 20123b.TV screens, but only minutes per week watching onfour inch mobile screens7. Theconclusion is that sizeSo while not matching the growth of tablets and matters. Billionsof people will when they have thesmartphones, PC sales have remained strong. Also,the option almost always choose to look at the largesttotal installed base of PCs should continue to increase screenavailable.in 2013, albeit at a slower pace than over the pasttwodecades.Further, people sometimes need to create content, notjust view it passively. Andwhile it is fairly straightforwardThere will likely be almost 1.6billion PCs in use in 2013, to review a spreadsheet on a tablet, using the tabletup from 1.4billion in 20104. Theinstalled base of tablets to edit even a single cell of a spreadsheet is muchwill be about a quarter of a billion in 2013, and the more difficult. Whats more, creating a spreadsheet onbase of smartphones whose data capability is used onatablet is almost impossible. Writinga 50word emaila regular basis will be more than 1.5billion5 (Formoreis fine on a smartphone or tablet, but longer writinginformation about smartphone usage in 2013, see demands a full keyboard. Thecutoff appears to be2013Prediction: Smartphones ship a billion but usage about 500words8.becomes simpler). Asreplacement cycles lengthen, flator even moderately declining annual sales figures may Certainly, there are hundreds of millions of peoplenot imply a decline in the number of PCsowned. who almost never need to use a spreadsheet or typehundreds or thousands of words. Howeverthere areWhy has the PC endured and why is it continuing tohundreds of millions who do. Andfor those consumers,endure? Thesimple reason is that although PCs, tablets it would be practically impossible to replace their PCsand smartphones all have processors, memory, storage, with a smartphone ortablet.connectivity and user interfaces, each form factor has aunique mix of these attributes that makes it better suitedLarge screens and keyboards may work in a synergisticto certaintasks. fashion. Arecent survey asked smartphone ownerswhich device smartphone, tablet or PC theyThe most important reasons why more than a billionpreferred to perform 13common tasks. Acrosseverypeople will continue to perform the bulk of their single use case queried, the respondents said theycomputing on traditional PCs in 2013are basic physical preferred to use their PC9.attributes: PCs have larger screens, full or midsizekeyboards andmice or trackpads.6 8. For many users, it does not appear to be a question of There is also a significant difference in usage patternsprocessing power. In2009, the central processing unit between PCs and mobile devices. Smartphoneowners(CPU) in a midrange PC might have had four coresalways have their device with them, and theirrunning at 2.5GHz, while a mobile processor often had interactions tend to be frequent but brief. Onestudya single core running at 0.45GHz. Inearly 2013, most found that owners checked their phones over 30timesPC CPUs will still have the same number of cores (nowa day, typically for less than 30seconds at a time13.at 3GHz) but some highend mobile devices will haveIncontrast, PC sessions tend to be longer, especially inCPUs running up to 2.5GHz with four cores as well10.the workplace, and PC time outside of work is moreNoris it applications; by and large the software that runsthan an hour per day14.on PCs also has versions for tablets andsmartphones. Despite the seeming ubiquity of smartphones, PCsstillAlthough the difference in processing power hasdrive the vast majority of connected device traffic.narrowed between PCs and mobile devices, PCsoffer Ina study published in April 2012, 91.8percent of allthe unique advantage of expansion capability.connected device traffic in the United States was fromTheaverage price of a basic PC is under $80011; PCs, with only 5.2percent from smartphones andhowever, highend computer gamers can spend up to2.5percent from tablets15. Further,that mix is at the highfive times that amount on machines with more memory, end for mobile device use globally: as seen in Figure1,ultrafast processors and thousanddollar graphicsnoncomputer traffic across 10countries ranged from acards. Theinstalled base of these highend machines ishigh of 11.5percent to a low of 1.5percent.estimated at more than 50million in 201212. Thats asmall percentage of the total PC installed base, but noAlthough the share of connected device traffic fromtablet or smartphone can duplicate theexperience. mobile devices is rising, even with very strong mobile and tablet growth their share will be no more than 15percent worldwide by the end of 2013.Figure 1. Noncomputer traffic for selected markets (December 2011) Singapore11.5%UK9.5%United States8.2%Australia 7.7% Japan 7.1% Canada 6.5% Spain 5.2%India5.1%France2.8% Brazil1.5%0%2%4%6%8% 10%12% MobileTablet OtherSource: comScore Device Essentials, December 201116Technology, Media& Telecommunications Predictions 20137 9. Bottom lineAbout two billion people, or one third of the global population, are online17, but that third is skewed toward developed markets andmore affluent people. Ofthe 1.5billion PCs currently in use, many are owned by enterprises and consumers who can afford to buya PC, a smartphone and a tablet18. Thatalmost certainly will not be true for the next billion people who want to access the Internet.Foreconomic reasons many will pick one, or at most two, devices out of the three primary formfactors.It seems likely that in the developing world the PC will be substantially less dominant, and in many cases displaced by the smartphoneor tablet. Thatbeing said, as Figure 1shows, the current percentage of noncomputer traffic is not higher in developing markets.Althoughthe data is only for a sample of 10countries, the two developing markets in the sample show lower noncomputer trafficthan all but one developedmarket.Many people assume that young consumers around the world will gravitate toward cheaper and newer form factors such as tablets,particularly because they tend to have less money than other demographic segments. However,at least one survey shows the exactopposite. Whenasked which device was most important, 68percent of all surveyed users chose a laptop and only 32percent chosea tablet. However,responses varied widely by age: 92percent of 1824year olds said the PC was their preferred device, compared toonly 60percent of those age 667519. Thissuggests that the demographics of PC use are likely to be more complex than firstthought.Website designers are devoting significant resources to creating mobile versions, which is sensible given the rapid growth in thosemarkets. However,the traditional PCbased sites ought not to be neglected: most visits will still come from computers with keyboardsand large monitors, form factors that require different designrules.Although a search of tablets replacing enterprise PCs generates over 24million hits, the actual number of PCs that have beensupplanted by tablets is probably much lower. Backin 2011, Deloittepredicted that tablets would be popular in the enterprisemarket, and so far companies around the world have purchased about 30million of them. However,its likely that only 1015millionof those units are currently being used as PC replacements. Infact, one thing that many of the most publicized examples ofenterprise tablet usage have in common is that they replace paper, not PCs whether it is pilots taking tablets into the cockpit,doctors reviewing medical records in hospitals, restaurants showing wine lists or boards of directors using them as binders. Whiletheenterprise PC installed base is about 500million20, at most 15million enterprise tablets are being used as someones principalcomputing device. Also,fewer than 5million of these are complete PC replacements where employees had PCs taken away and nowrely solely on tablets to do 100percent of their worktasks.8 10. Bring your own computer: a taleoftwointerpretationsDeloitte predicts that in 2013, very few additional The enterprise PC upgrade cycle has lengthened in thecompanies will adopt a bringyourowncomputerlast few years25. Budgetshave been tight, and many(BYOC) policy, and some of those that already haveemployees have home PCs that may be more uptodateone will abandon them. Atthe same time, Deloittealsothan their corporate hardware, and they start asking forpredicts that more than 50percent of Fortune500 BYOC policies. Accordingto research, merely offeringcompanies will allow employees to bring their own them freshly upgraded computers could significantlycomputers. Thereason for the dual prediction is that reduce the volume of BYOC requests26.there are two common (but different) interpretationsofwhat BYOCmeans. Next, there are tax issues. Inmany countries, a PCfunded through stipend or expense reimbursement isThe first arises from the bringyourowndevice (BYOD)a taxable benefit to the employee, and the employertrend, which was one of Deloittes 2010predictions21.will generally not be able to reclaim VAT. Ifthe budgetWithinthe enterprise, employees were choosing to allotted for a traditionally procured PC were $1,500, theuse smartphones that were not enterpriseapproved amount available for employees in the higher income taxmodels. Enoughpeople did this or wanted to do it thatbrackets would be closer to $750. Firmscould increasemany companies moved to allow a more diverse rangethe stipend so that the after tax value was equivalent,of smartphones, across multiple manufacturers and but that would add to the cost of the BYOC program27.operatingsystems.An additional barrier may be technical support. OneofIn the BYOD model, a worker would buy a smartphonethe tradeoffs of offering BYOC is that it may alsothemselves and in many markets, the price theyinvolve BYO IT as well. WhenBYOC is only amongpaid was subsidized by a two or three year contract.the early adopters and/or the technologically able,Theywould then be allowed to connect that device tothen technical support can be selfprovisioned, i.e. theaccess corporate emails, and would have the company person asks around, goes on the web, or via an onlinepay for their monthly data and voice plans, which could community of technically savvy users, possibly throughamount to $1,200or more over twoyears.an enterprise social network. Butthat may work lesswell for mainstream workers, e.g. a sales team. InsomeBut PCs dont usually come with data plans or subsidies;companies the recommended solution has been thatinstead the biggest cost is the upfront purchase pricepeople buying their own computer also take out afor hardware and software. Soone version of BYOD contract with a third party provider of technical support.for the PC has meant that the company, instead of So as well as buying the computer, they also have toproviding the employee with a standard PC, will givebuy a support contract which might cost $200. Thismaythe employee a set allowance (a voucher, or an expensework in some cases, but may not be as rapid a responsereimbursement) with which they can go out and fundas traditional IT support, is unlikely to provide a loanertheir own laptop22. Theemployee is then permitted to PC from a pool and allowing remote access to the PCconnect that device to the corporate network and work for the third party help desk may well violate the firmsin the same way as on a traditionally procured PC.securitypolicies.There are companies that have tried and are trying this On the other hand, there is an entirely different kind ofversion of BYOC. Butnot many, and it doesnt seemBYOC that will be much more widely adopted in 2013.to be as successful as hoped. Oneanalysis found that Inthis version, the enterprise continues to procureonly about five percent of firms have this kind of BYOC PCs for some percentage of its employees in the usualpolicy23. Thisflavor of BYOC appears higher amongmanner. Butany employee who does not wish to usetechnology companies, where some firms have offered the employer provided PC may use their own personalthis for years, and the benefits touted include lower computer for all workrelated tasks. Theemployer payscosts, higher productivity and happier employees. no stipend, and offers no support for themachine.Oneenterprise that has had BYOC since 2008has seenless than a quarter of employees enroll in the program24. In the United States, over 84percent of householdswhose members are employed own a computer28. ItisIf this form of procurement worked so well with mobileestimated that in some markets, a third of the workingdevices, why not with PCs?population does at least some contract work29.Some 54percent of US businesses expect more thanhalf their workers to work remotely by 201730. Technology, Media& Telecommunications Predictions 20139 11. Andanother subset of employees may have very strongThe services made accessible by the enterprise attachments to specific versions of computer hardware,will almost always include email access, but will operating systems orsoftware.usually be much more than that. Itmay support the communications services, like conference calls and Almost every firm will have some portion of their webinars. Theywill also usually support access to the employees falling into one or more of the above enterprise social network, HR functions like, onboarding, categories, and for those workers, a BYOC policy that training videos, online learning, expense submissions, allows them to keep using their personallyownedpayroll and timelogging. machine for work purposes is a winwin situation: they get what they want, and the company doesnt have to buy, maintain, support or upgrade a device that may cost thousands of dollars per year31.Bottom LineSince the basis of this Prediction is that the stipend-based version of BYOC is unlikely to be widelyadopted, the bottom line focuses exclusively on the model under which employees use their own devicesfor workpurposes.Allowing employees to bring their own computers, even when the enterprise pays nothing for the PCor the software on it, is not without costs. Someenterprise software may need to be available in webversions, and reengineering those can cost hundreds of thousands or millions ofdollars.Users may also need to access certain enterprise functionality through a virtual desktop. Thereare anumber of solutions, and they tend to cost in the hundreds of dollars per employee, although theyprovide relatively high levels of security: under this structure, at no point does the employee owneddevice ever connect directly to the corporate IT network. However,Virtual Private Network (VPN)solutions tend to require more bandwidth, and occasionally may work less well for access through cellularor homenetworks.Security is a crucial aspect of allowing employee-owned PCs to connect to the network. Itis necessary toestablish policies around what kind of connection is allowed, and over which networks. Forexample, asecure PC connecting to a secure corporate network, but over an unprotected WiFi home network isntsecure any more. Accessshould be automated so that the appropriate level of security is always enforced,and not left to the employees discretion32.One of the most challenging issues around BYOC involves privacy. Employeesmay be willing, or evenpleased to be able to use their own PCs for work. Andthey may be willing to comply with varioussecurity policies. Butthey are unlikely to be ok with their employer having full access to their PC,including personal files. Thiscreates a challenge if a PC is lost or stolen, or the employee is terminated.Employershave the right and obligation to protect corporate data, but various privacy laws usually preventthem from (as an example) remote wiping all drives on a stolen employee PC. Thereare various technologysolutions that allow for corporate data to be kept in its own sandbox, but employers should also consultprivacy experts to ensure compliance with various laws, which vary by country, or even state orprovince.Finally, firms must create and enforce policies that make clear to employees using BYOC they haveresponsibilities and liabilities. Thesepolicies should cover maintaining PCs in working order, includingcurrent versions of software is kept up to date, especially around security issues like virusprotection.10 12. P@$$1234: the end of strongpasswordonly securityDeloitte predicts that in 2013more than 90percentFor years a password that was at least eight charactersof usergenerated passwords, even those considered long and included mixedcase letters, at least onestrong by IT departments, will be vulnerable to hacking. number, and one nonalphanumeric symbol wasInadequatepassword protection may result in billionsconsidered relatively strong. Althoughnot perfectlyof dollars of losses, declining confidence in Internet secure, such a password was considered good enoughtransactions and significant damage to the reputations for even relatively highvalue transactions such asof the companies compromised by attacks. Asthe valuebanking and ecommerce.of the information protected by passwords continues togrow, attracting more hack attempts, highvalue sitesHow strong were they? Aneightcharacterwill likely require additional forms ofauthentication.password chosen from all 94characters available on a standard keyboard33 is one of 6.1quadrillion34 (6,095,689,385,410,816) possible combinations. Itwould take about a year for a relatively fast 2011desktop How do passwords get hacked? Theproblemcomputer to try every variation. Evengaining access to a is not that a hacker discovers a username,credit card would not be worth the computingtime. goes to a login page and attempts to guess the password. Thatwouldnt work: most webHowever, a number of factors, related to human sites freeze an account after a limited numberbehavior and changes in technology, have combined of unsuccessful attempts, not nearly enough torender the strong passwordvulnerable. to guess even the weakestpassword. First, humans struggle to remember more than seven Most organizations keep usernames and numbers in our shortterm memory35. Overa longer passwords in a master file. Thatfile istime span, the average person can remember only hashed: a piece of software encrypts both the five. Addingletters, cases, and odd symbols to the username and password together. Nobodyin mix makes remembering multiple characters even the organization can see a password in itsmorechallenging. unencrypted form. Whenthere is an attempt to log in, the web site hashes the login attempt in real time and determines if the hashed result matches the one stored in the database for thatusername. So far, so secure. However,master files are often stolen or leaked. Ahashed file is not immediately useful to a hacker, but various kinds of software and hardware, discussed in this Prediction, can decrypt the master file and at least some of the usernames and passwords. Decryptedfiles are then sold, shared or exploited byhackers.Technology, Media& Telecommunications Predictions 201311 13. As a result, people use a variety of tricks to makeThere have also been advances in the hardware usedrecalling passwords easier. Forexample, users often to crack passwords. Dictionaryand behaviorbasedcreate passwords that reference words and names in our attacks are elegant, but bruteforce attack canlanguage and experience. Userstypically put the upper also succeed. Abruteforce attack simply appliescase symbol at the beginning of the password and place each of the 6.1quadrillion combinations for anthe numbers at the end of the password, repeating theeightcharacter password until one works. Adedicatednumbers or putting them in ascending order. Althougha passwordcracking machine employing readily availablekeyboard has 32different symbols, humans generallyvirtualization software and highpowered graphicsonly use halfadozen of these in passwords becauseprocessing units can crack any eightcharacter passwordthey have trouble distinguishing between many of in 5.5hours. Thecost of such a machine was aboutthem36. Thesetricks and tendencies combine to make$30,000in 2012,40 but hackers dont even needpasswords less random, and thereforeweaker. such powerful machines. Crowdhacking lets hackers distribute the task over thousands of relatively slowIn a recent study of six million actual usergenerated machines, each attacking a different part of the puzzle,passwords, the 10,000most common passwordsto crack a password much faster than any singlewould have accessed 98.1percent of all accounts37.machine41.Nonrandom distribution allows hackers to create afile, or dictionary, of common password words andWith so many threats, we might expect users to bephrases, and symbolic variations, making cracking an adopting longer and stronger passwords. Thathas notaccount thousands or millions of timeseasier. occurred, in part because of the difficulty of entering passwords on mobile devices. Ingeneral, mobileBut nonrandom passwords arent even the biggest passwords tend to be less secure than those used on aproblem. Thebigger problem is password reuse.PC42. Ona standard physical keyboard, all 94possibleTheaverage user has 26passwordprotected accounts, characters are easily entered; on a smartphone with abut only five different passwords across those small physical keyboard, accessing all possible charactersaccounts38. Becauseof password reuse, a security takes a bit longer; on a touchscreenonly device, a userbreach on a lesssecure gaming or social networking site may have to page through multiple screens just to findcan expose the password that protects a bank account.the # symbol. Theaverage user takes 45seconds toThisis exactly what happened in a series of breaches in type a strong tencharacter password on a PC keyboard.2011and 2012, and there are now websites where tens Thatincreases to 710seconds on a smartphone withof millions of actual passwords can be accessed39. a keyboard and 730seconds on touchscreen devices. Aquarter of the people surveyed admitted to using lesssecure passwords on mobile devices to save time43.In a recent study of six million actual usergenerated passwords, the10,000most common passwords would have accessed 98.1percentofall accounts.12 14. Bottom lineThe incentives for obtaining unauthorized access to accounts will remain strong so all organizations that keep passwords shouldfollow authentication best practices. Usernamesand passwords should never be stored in unencrypted form; at a minimumthey should be cryptographically hashed so that hackers are limited to dictionary and bruteforce attacks. Arelatively simpleand inexpensive technique called salting appends a random string of characters to the password each time the user enters it,effectively randomizing the hash and making hacking the code orders of magnitude more difficult44. Itis also important to establisha passwordcreation system that rejects obvious passwords such as password and abc123. For example, one mobile devicemanufacturer has a blacklist of 106commonly used passwords that are not allowed45. Finally,a strong password is useless if thepassword reset clue is too easily found (e.g. mothers maiden name). Choosingless searchable reset clues makes the systemmoresecure46.Longer passwords could make systems more secure. Addingjust one or two characters make bruteforce attacks almost a thousandtimes slower. Atencharacter password has 8,836more possible combinations than an eightcharacter password, and the samepasswordcracking machine cited above would take more than 5years to crack it. Trulyrandom passwords would also decreasethe threat from hackers. Butgiven human nature and users who struggle to remember long passwords, refuse to regularly changepasswords, and frequently reuse passwords across accounts, neither longer nor truly random passwords seem likely to be embraced.Inaddition, adopting longer or random passwords could increase the frequency of password resets, which tend to make the overallsystem less secure47.Passwordkeeper accounts single signon (SSO) accounts that hold several highlysecure passwords or provide access to multipleaccounts can improve adoption of long or random passwords. However,they also create a honey pot problem: hackers will have abigger incentive to target the passwordkeeper account48.What other solutions might work better?Multifactor authentication is a strong candidate. Insteadof requiring only an account name and password to gain access, multipleidentification factors would be required. Examplesof additional factors include: a password sent to a users registered cell phone, adongle that plugs into a USB slot, or a biometric feature such as a fingerprint or iris scan49. Multifactor authentication could also beattached to something most users already carry around, such as a cell phone or credit or bank card. Thisapproach combines factorsthat users already possess (knowledge, behavior, passwords, computers, phones and cards in wallets) with behaviors users alreadyunderstand (tapping a credit card with an embedded NFC chip, entering a short passcode).Each type of additional factor has weaknesses, but the idea is that, while a hacker might know your username and password, theyare unlikely to also know your cell phone number or have a copy of your fingerprint. Whileit is possible to obtain someones cellphone or fingerprint, it makes cracking accounts far more difficult50.A number of technology and telecommunication companies will likely implement some form of multifactor authentication with theirservices, software and/or devices in 201351. Thereis likely to be a direct relationship between the value of the information beingprotected and the complexity of the authentication process: bank accounts would be more demanding than social media networks,which in turn would be more rigorous than a computergame.Password vaults are likely to become more popular for managing multiple accounts and minimizing password reuse, but they willrequire strong multifactorauthentication.Finally, organizations must establish better password security policies. Currentrules regarding password expiration, minimum length,use of the full symbol set, and password resets are vulnerable and need to be strengthened. Inaddition, every organization shouldcontinually monitor its systems for hacking attempts, and be ready torespond. Technology, Media& Telecommunications Predictions 201313 15. Enterprise Social Networks: anothertool, but not yet a panaceaDeloitte predicts that by the end of 2013morethanIt might be expected that ESNs, being relatively new90percent of Fortune 500companies will have partiallytechnologies, would primarily appeal to youngeror fully implemented an Enterprise Social Networkemployees. Infact, the same survey said that 4049year(ESN), a 70percent increase over 2011. ESNsare olds were more than 40percent more likely to haveinternal platforms designed to foster collaboration, registered and more than 100percent more likely tocommunication and knowledgesharing amongpost more than four times per month than 2029yearemployees. Becausethey are social, they are intended to olds. Thismay not surprise those inside the enterprisebe engaging, encouraging adoption and participation. who implement ESN solutions, but might surprise manyHowever,many ESNs struggle to attract users.outsiders who have apreconception about which ageAccordingto a recent survey, if registration is required, groups are most active on socialnetworks.some 2030percent of employees will not sign up.Ofthose who register, only a third will read contentThere were significant variations in rates of registration,once a week or more and just 40percent will make an consumption of content and creation of content byESN post in the average month52. geography. Forexample, the number of users who posted less than once a month ranged from a low ofWhile those numbers might appear low considering 41percent to a high of 72percent58. Regardlessofsome of the more optimistic projections forwhether ESNs are better or worse at engagingESNs, they reflect the challenges companies have employees than previous technologies, almost allalways faced popularizing internal networkingorganizations are likely to desire higher engagementtechnologies. Enterprisetools for sharing internallevels than they see today. Althoughthe ultimateinformation (Intranets) have been available since themeasure of ESN success ought to be the value theymid1990s53(albeit without the social aspect), but even create, many executives will likely focus on whatwhen every employees homepage is the Intranet,prevents employees from using networks and what canmore than half dont use it on a daily basis54. Inshort,be done to encourage them to doso.employee engagement may be a perennial issue forinternal knowledgesharingplatforms.According to the same survey, a large proportion of employees feel that time restrictions prevent them fromHow do the numbers from the survey correspond to using ESNs regularly, or at all. Manydont have a clearconsumeroriented social networks? Someconsumer-idea of the potential uses and benefits, or may believeoriented social networks have large numbers of they are already overloaded with information andmembers signed up, but in general the proportion ofcant be bothered to keep up with yet another socialactive users is very much in line with this years ESN network59.survey. About58percent read posts once aweek orless and 56percent make less than one post a week55.Aseparate study suggests fivepercent of users create75percent of content56.There may be a natural ceiling on social network usage,with any network eventually comprising a small groupof superusers who contribute most content, a largergroup that reads but doesnt create and a final groupthat doesnt create or consume57.14 16. What can companies do to improve the success rateOrganizations that expect enterprisewide ESN adoptionof ESNs? Thesurvey indicates that users feel theirin the very near term are likely to be disappointed;ESN experience could be improved if the companywhereas those that regard ESNs as simply anotherincorporated the ESN into existing business processes. form of communication that is better than instantInaddition, a how to guide and a list of potential uses messaging(IM) and email for certain groups at certainand success stories would be valuable60. Abouta third oftimes are more likely to be satisfied. Further,the lowthose who use an ESN say it has made a positive impact marginal cost of most ESNs (many are free for theon their work. Thatnumber may generate a positive base version, bundled with other software, or noreturn, based on the investment in the tool; however,more than $5per employee per year) means that evenmany organizations will likely wish to see a higher levelsmall improvements in employee communication andofengagement. knowledge sharing will likely produce a positive return oninvestment.A more positive way of appraising ESNs might be asa relatively lowcost, riskmanaged, complementarymethod of communication and collaboration (internaland perhaps external) that may not be appropriate Bottom linefor every user and every communication, but which Benchmarking previous tools is a useful first step. Executivesshould assessmay be productive for some people in some contexts. what levels of engagement were achieved by previous tools, and how an ESNEmployeesare being offered more and more tools,might be better. Theycan then decide what the goals for an ESN should be:each of which is increasingly specialized. Asthe numberRegistration? Readingposts? Makingposts? Whileit may be possible overof available tools rises, the number of tools not usedtime to achieve 100percent registration, that level of regular consumption oralso rises: an inescapable consequence of proliferating contribution seems unlikely. Whats more, it may not benecessary.choices. Onthe other hand, the current generationof ESN tools is only a few years old. Whenemail andAgerelated assumptions should be challenged. Basedon the survey, ESNcell phones were first introduced into the enterprise,administrators cannot assume that enrolling younger employees will be easy,they likely saw adoption rates similar to where ESNsor that older workers will beresistant.aretoday.Variations by country suggest there are local best practices for encouragingproductive use of ESNs. Firmsmay wish to look to their best performingregions and then apply what they learn to drive engagement across theglobal enterprise.As with any change in the workplace, communication and training arekey. Employeeswill likely need to be encouraged and taught how to makethe best use of the ESN. Showinghow and why appears to be critical.Evenmore important is the need to clearly demonstrate the benefits of usingthe network; for example, showing that responses to information requestsare faster and better quality via ESN thanemail.Most critically, ESN needs to be part of their existing work flow and businessprocesses. Makingthe ESN a part of everyday communicating, collaboratingand creating seems likely to be the tipping point in building engagementandutility. Technology, Media& Telecommunications Predictions 201315 17. Lets get together: crowdfunding portalsbring in the bucksDeloitte predicts that crowdfunding portals will raiseCrowdfundings growth matters to TMT for two$3billion in 2013, double the $1.5billion raised in reasons. First,some crowdfunded projects raise funds2011. for new technological devices and media content suchas computer games. Second,the portals themselves areCrowdfunding portals are websites that enable large likely to become a new type of Internet portal.numbers of individuals to support financially a projector company, with each backer contributing just a smallMedia coverage of crowdfunding tends to focus on itspercentage (generally less than one percent) of the total role as an alternative to traditional venture capital (VC);funding. Atypical crowdfunded project has thousandshowever, there is much more to the concept. Infact,ofbackers. there are four distinct categories of crowdfunding thatvary by type of portal and capitalraised. Categories of crowdfunding portals Consumer lending is the largest category. Financialinstitutions and payday lending companies have for many years lent small amounts of money at relatively high interest rates to consumers with bad credit histories. Now,these services are available online through crowdfunding. Between2008 and 2012, crowdfunding portals likely lent more than $1.5billion. In2013 these loans could exceed $1.4billion, up more than 50percent from 201261. Rewardbased is the second largest category of portal. Individualsgo to a website and support aspecific project in exchange for a reward. Forexample, those assisting with the development of a computer game may get a copy upon completion. Thoseinvesting more may receive a basket of games and a Tshirt. Backersof a new kind of remotecontrolled light bulb might receive a quantity of light bulbs, depending on the level of investment made. Backersof a new play might get tickets to the opening; more generous patrons might be invited to a champagne reception. Thiscategory could raise more than $700million in 201362a. The next biggest category is the donation market. Thisoverlaps with the reward market: many artistic endeavors that use reward crowdfunding also encourage funders to contribute very small amounts of money, typically less than $25, without expectation of a return except for the knowledge of having contributed to a worthy cause. Donorsoften receive a thank you in a program or liner notes. Traditionalcharities usually request donations to support their overall mission, and then decide for themselves how to allocate the funds. Crowdfundingportals can raise funds for individual projects, meaning donors can give to the project of their choice. Thismarket may be worth more than $500million in 2013. Venture capital, which gets the most media attention, is actually the smallest category. Traditionally,early stage startup companies are initially funded from credit cards and savings, and then reach out to friends and family. Thisusually covers the first $250,000. Beyondthat point startups look for money from individuals (angels) or established venture capitalists, with the first seed round raising perhaps $500,000. Expected changes in North American securities regulation could make it possible for companies to raise money via a crowdfunding portal62b, with contributors receiving an equity stake in the company. Thiscategory is the wild card for 2013. Itcould raise more than a billion dollars if the rules change, but less than $100million if they dont.16 18. Crowdfunding generally involves small contributions at Equitybased crowdfunding is often discussed as anthe individual level. Althoughthe top pledge packages alternative to VC for small to midsize firms. Growthiscan be more than $10,000, on average the individualaccelerating as new platforms are launched, investorcontribution is likely less than a thousand dollars in interest rises and regulatory constraints are reduced.almost every category63. Thefunds raised for a particular Inthe United Kingdom, there are several platformsproject or investment tend to be in the thousands or that provide equitybased financing for startups andtens of thousands of dollars, although on rare occasions growth capital73. Inthe US, a large crowdfundingthey can be in the millions. Forexample, on one of theportal raised $15million in venture capital to pursuebetter known crowdfunded reward sites only 17projects expansion into equity crowdfunding74. InCanada,raised more than a million dollars and only two raised an alternative stock exchange has publicly stated itsmore than $5million64.support for crowdfunding75 and a provincial government is contemplating an exemption to the accreditedStill, across tens of thousands of projects andinvestor rule for crowdfunding sites76, although theinvestments, the total funding can really add up. Inthe provincial regulator has publicly cautioned that wouldpast five years, the 30largest lending portals raised represent a significant change to the current exemptmore than $1.5billion65. Thelargest reward platforms market regulatory regime [and] we may decide notcollected nearly half a billion dollars cumulatively.to introduce a crowdfunding exemption in this or anyDonationsites raised hundreds of millions of dollars. other form77.Venturecapital portals raised just tens of millions ofdollars, but that number is expected to rise dramaticallyEven if VC portals become larger due to beneficialin the near future66. Inaggregate, crowdfunding portals regulatory changes, they may still only capture aare already a multibillion dollar industry, growing atsmall share of the VC market. Startupcompaniesmore than 50percent ayear. value the intangible contributions such as knowledge and networks that an experienced VC provides.That being said, the $3billion that crowdfunding is Also,regulations protecting casual (nonaccredited)expected to raise in 2013remains small compared toinvestors may remain in place for many jurisdictions.comparable funding mechanisms. Traditionalventure Finally,investor enthusiasm may be dampened oncecapital raises about $40billion annually67; charitablecrowd investors experience their first burn.giving was almost $300billion in the United States alonein 201168, and the pay day loan market in the United Crowdfunding will more likely have a role inStates was worth more than $50billion in 200869.complementing traditional VC, generatingIneach category, crowdfunding is growing much fasteradditional capital at the friends and family stagethan traditional sources of funding, but still representsof funding that generally precedes VC involvement.less than one percent of thetotal.Indeed,crowdfunding could benefit the A round market (where startup companies usually first try toGiven crowdfundings impressive growth rate, it is worth access institutional money; typically for one to threelooking at some illustrative examples. Therewardbasedmillion dollars) by helping more startups establish proofmarket is expected to have the greatest impact onof concepts and secure their first paying customers.technology and media developers. InMay 2012a Furtherit could enable VCs to skip the riskier and morecompany sought $100,000via a popular rewardbased laborious early stage investing that many would ratherportal to make 1,000programmable watches, but avoid. Ina recent survey, seed financing from VCs wasended up collecting $10.3million from 68,929people down almost 50percent yearoveryear78, indicating an average of $150per investor70. Mostrewardbased that there may be a funding gap for crowdfunding toprojects have tended to be for consumer products fill. Crowdfundingalso brings the potential for moresuch as watches, smartphone accessories or games.democratic or broader access to capital for startups andInone recent survey, seven of the top ten products fell innovators without personal connections tocapital.into these categories71. Butthere are many exceptions.Somenonconsumer technologies, such as multiplecorechip architectures, also use the platform72. Technology, Media& Telecommunications Predictions 201317 19. The Jumpstart Our Business Startups (JOBS) Act in the United States has added to the excitement surrounding Bottom line equitybased crowdfunding by requiring that the USIf regulations around equity crowdfunding are Securities and Exchange Commission (SEC) consider relaxed, there are likely to be increased risks the creation of new classes of investors who couldand not just for investors. Whilecrowdfunding participate in venturelike financing, in addition to may open the floodgates, capital will largely the existing accredited investor class. TheSEC could flow to inexperienced inventors and project decide to significantly loosen the rules, which would managers. Crowdfundedprojects have a history likely attract billions of dollars. However,there are many of unanticipated delays as inexperienced concerns about investor protection, disclosure and theteams struggle with project deadlines and potential for fraud79. Ifregulators dont alter the rulesmanufacturing details81. Someresearch suggests in a meaningful way, or if they add new barriers, the that crowdfunded opportunities are a bigger equity crowdfunding market is likely to remain small. risk than traditional IPOs, and that the potential Itis unclear at the time of writing what the outcome offor the average investor to misunderstand or the SEC process will be, or even when a decision will bemisinterpret the promises of an earlystage made: it was supposed to be by January 2013, but by startup are higher than for an experienced midDecember, there were media stories suggesting thataccredited investor82. deadline will not bemet80. There are also risks for those who participate in rewardbased projects. Thetime elapsed between contributing money and receiving the reward or product may not be very long, but it is longer than scooping a similar item off the shelf of a retail store, and during those few weeks or months the funded product may become obsolete, as happened for some iPhonerelated projects when Apple switched to a new kind of connector83. In the computer gaming industry, crowdfunding portals could be an important source of funding primarily for smaller titles that need millions of dollars, not hundreds of millions84. Butgiven the uncertain nature of the creative process, many game projects never get finished, take longer than expected or need more money. Crowdfunders are unlikely to be happy with any of those outcomes85.18 20. The button stays beautifulA growing range (tens rather than hundreds) ofhighend TV sets are likely to incorporate gesture The computational challenge of voice andor voice based controls in 2013, Deloittepredicts86.gesture recognitionHowever,while the vast majority of consumersDigital computers are optimized for precisepurchasing a TV set with gesture or voice capability and fast numerical calculations. Numbersandwill try out the functionality, more than 99percent text are easiest for computers to process: theyof those that use it may, in the medium term, revert are 100percent deterministic. Phrasesandto a standard remote control, due to the unreliability,sentences are slightly less so. Nextin theimpracticality or physical effort of using voice or gesturehierarchy of data is sound, including voice.controltechnologies.Imagesare even less deterministic and video is a whole other story, due to motion andManufacturers offer gesture and voice recognition fortime. Gettinga device to understand that atwo main reasons. First,vendors need to differentiate person wants to change the channel whiletheir offerings: the user interface is a key differentiator. someone else in the room wants to petSecond,and related to this, because it is morethe cat, or the cat is chasing a fly, and noteconomically possible: the cost of providing gesture directing the TV to raise the volume is farand voice recognition is constantly falling, thanks to more complex. Itwill most likely happen inMooresLaw. time, but not imminently. Thechallenge is algorithmic. Animalbrains are constructedGesture and voice recognition work on similar principles:as neural networks which are weaker thansensors detect arm movement or a viewers voice, and computers at precise numerical calculations,then translate that into a command to the TV using but specialized at mapping something to justcomputing hardware and software. Thedevices compare like. Thisis largely a consequence of avoidingmotions or noises to a database. Thelarger the database predation: humans dont have to see an entirethe quicker and more accurate recognition can be87.lion or bear in a specific pose to know to runProcessorsget steadily faster, and memory gets ever away. Amachine optimized for arithmeticbigger at the same price point. Moores law mattersdoes less well with fuzzy conclusions.particularly for gesture control, because movement isTogive an idea of the scale of the gesturemuch more difficult for a computer to interpret than voice.control challenge, computationally and algorithmically, problems generally scale in complexity much faster than data bandwidth. Ifvideo occupies 50times more bandwidth than voice, significantly more than fifty times additional computing power will be required to process video recognition relative to voicerecognition. Technology, Media& Telecommunications Predictions 201319 21. The appeal to vendors of gesture and voice control It seems probable that in 2013, and most likely for is likely to increase over time, particularly as devices many years to come, the remote control will retain become more complex and the range of functionality majority (and often absolute) control of the television accessible via a television set or home computerrises.set, even if gesture and voice control are used and aresuccessful in other areas of the living room. Thesimple Standard remote controls, when used with the latestbut fundamental reason why very few TV sets, including multiple function TVs, may oblige the viewer to navigate highend models, will be controlled by voice or gesture through multiple screens of electronic programming comes down to three factors: how most TV sets are guides (EPGs) to get to the intended channel, or through likely to be used, accuracy andpracticality. numerous menus to access the desired function. Findinga specific program from a large library is evenIt is easy to predict that at the same price point the more cumbersome with a standard remotecontrol.2013model of a given TV set will boast an enhancedlevel of functionality versus the 2012version. Gesture control could also be used to interface with the Mostmodels of technological devices, from cars to television, for example allowing children to interact with irons, are improved each year through the addition of educational programs, much in the same way as gamesnew features. Thisgenerally helps sell the latest model. console vendors have incorporated motion detectors for Butusage patterns change remarkably little. Deloittes gamesplay.expectation is that in 2013the majority of TV sets sold,or used in living rooms, will be predominantly employed One weakness of the remote control is that it is easilyto watch television programs and movies. Theywill not misplaced, usually to be found under the sofa or behindprimarily be used to browse the Internet, play appbased a cushion. Voiceand gesture, meanwhile, are alwaysgames or listen to music88. athand.Deloittes expectation is that the most commonlyused applications for TV set controls will therefore beto change volume and channel, and that the medianIt seems probable that in 2013, and frequency of usage of the remote control will be dozensof times per hour, with the frequency changing inmost likely for many years to come, proportion to the quantity of ad breaks in the channelthe remote control will retain majority being watched. WhileTV remote controls typically havedozens of buttons, just four of these should be sufficient(andoften absolute) control of the to provide the majority of control required. Astandardremote control, with buttons ergonomically positionedtelevision set, even if gesture and voice to enable easy, accurate control of volume and channel,control are used and are successful indoes the job. Andnot just a reasonable job; it almostnever fails. Amodern, standard remote control isother areas of the living room. 99.999percent accurate89. Ifremote controls were notthat accurate, we would be less inclined to moderatevolume or change channel. Inhouseholds with digitalvideo recorders (DVRs), we would likely pause live TVless often and record lessprograms.20 22. Deloitte estimates that the rate of false positives ornegatives for gesture control on televisions or other Bottom linedevices will be about 10percent in 201390. Thatis Gesture control like audio control is not impossible. Butin 2013it mayroughly four orders of magnitude, or ten thousand be a hard and possibly overly expensive challenge to solve. Inaddition,times greater, than traditional remote controls.some might argue it is a problem that does not require an urgent solution.Mostconsumers would not tolerate this level of Thetelevision set should evolve constantly but in 2013the improvementsinaccuracy for long. Theywould quickly go back to theand innovations that consumers may be most willing to pay for might relatestandard, buttonbased remotecontrol.to other aspects of the TV set, such as size, weight, depth, bezel, picturequality, sound or value formoney.Voice control can be far more accurate as discussedearlier it is a lesser computational task to interpretEvery improvement to a television adds cost. TVset vendors and anyspoken commands where large databases of aother vendor considering incorporating voice or gesture control in itslanguage exist. However,to prevent the incidence ofdevice should carefully cost the impact on a sets bill of materials thatfalse positives, where a fragment of a conversation isadding accurate gesture and voice recognition would add. Accurategesturemistakenly interpreted as a command, the viewer may recognition that works in dimly lit conditions may require additionalfirst need to speak a control phrase, which is a sequence processing capability, new cameras and other sensors in the television.of words that would not occur in normal conversations Thiscould add tens of dollars to the cost of components. Customersmayto alert the TV to listen out for a command. Thiswould prefer to trade off larger screen size in lieu of gesture recognition.work well on an occasional basis, but not dozens of Theincremental cost of the components required for gesture recognitiontime anhour. may mean that only highend sets, the price of which may absorb the cost ofadditional materials, will offer thisfunctionality.Over time gesture control and voice control will becomeincreasingly accurate. Theefficacy of gesture control in Gesture and voice control are excellent technologies, but are only usefuldimly lit rooms should steadily improve and the needwhen in the appropriate context. Voicerecognition to control functionality,for viewers to be a specific distance or angle from the such as calling a single number from a list of hundreds, works well in carsTV set should lessen91. Gestureand voice may becomebecause drivers hands are firmly attached to the wheel or gear shift. Butonthe fastest way to access specialized functionality onthe couch at home viewers hands are typically free and the standard remoteavideoondemand menu. Butif gesture and voice arecontrol does the job justfine.to be dedicated to specialized or rare tasks, the nextchallenge will be to train users to memorize specificcommands or movements for each of the potentiallyhundreds of functions a modern TV set offers.Usersmay find it easier just to scroll through themenu.Technology, Media& Telecommunications Predictions 201321 23. 22 24. Media4K kicks off 24Dual video screening readies forprimetime27Connected TV: hits and misses29Overthetop may lift legacy broadcasters and distributors more than pure plays31The reality of cord cutting inNorthAmerica 33 Technology, Media& Telecommunications Predictions 201323 25. 4K kicks offDeloitte predicts that in 2013the television industryDemand for 4K will likely grow over the mediumterm,will commence the rollout of the next generation fuelled by rising expectations of higher resolutionsof high definition (HD) TV, known as 4K, which will across all screens, as well as larger TV sets and nextoffer four times higher resolution than the current generation games consoles. Agrowing range ofhighest standard HD92. Itmay be 1836months beforesmartphones, tablets and computers offer sufficient4K is technically and commercially broadcastready, resolution for individual pixels not to be discernible 97.but 2013should see several significant landmarks inWitha 40inch 4K television, pixels would be hard to seepreparations: close up, and disappear from about ameter.about 204K TV set models from more than tenThe average size of TV sets will likely become steadilyvendors should be available by yearend93;larger. Asthis happens, the need for more dots to filllarger screens will grow. Standard HD on an 80inchthe first consumers should take delivery of 4K TV sets; screen viewed from about three meters away wouldpresent a pixelatedimage.a range of 4K content will become available, initiallyblockbuster movies; Advances in video games could also drive demand for4K. In2013, powerful PCs with sufficiently fast Graphicsa growing range of professional and semiprofessional Processing Units (GPUs) should be able to work with 4K4K cameras should become available; TV sets. Insubsequent years, new generations of gamesconsoles might ship with 4K support98.new supporting standards should be agreed, includinga new high definition multimedia interface (HDMI) While 4K TVs may be a mediumterm purchasestandard to service 4K data rates; andfor mainstream consumers, wealthy early adoptersshould be able to satisfy their 4K needs in 2013.multiple test broadcasts are likely, with commercialThecommercial range of 4K TV sets should grow fromservices expected 2014/201594.a handful in 2012to about 20models by end201399.Atleast half of these sets may be available for underThe rollout of any new broadcast standard is a major $10,000100. Oversubsequent years, the price of 4K TVstep, so the expected landmarks for 2013should besets is likely to drop steadily and significantly. Witheveryconsideredsignificant. price decline the accessible market should increase101.Withinfive years if not before, smaller (about 50inch)That said, many commentators are likely to question 4K TV sets might be available for under $1,000. Thecostthe need for a new version of HD95. Afterall standardof manufacturing 50inch 4K TV sets is expected to bedefinition (SD) TV remains the most popular resolutionabout a third of the price of making 80inch sets102.globally even for satellite TV customers, who haveaccess to most bandwidth96.While 4K TVs may be a mediumterm purchase for mainstreamconsumers, wealthy early adopters should be able to satisfy their4Kneeds in 2013.24 26. 4K TV set owners will need to rely on prerecorded orIn 2013the first connectors supporting 4K data ratesstreamed content in 2013: no broadcast services areshould be available, based on the HDMI 2.0standard106.planned. Butthere should be a good range of moviesOverthe past decade, the HDMI standard has beenavailable to watch. Manyblockbusters launched regularly enhanced107. Priorto the introduction of anin 2012103 and 2011 were digitally captured in 4K. upgraded connector, cable connecting a source to aAboutfifty films have been screened in 4K and films 4K TV will require four parallel high definition mediashot in 35mm can be scaled to 4K. Mostmajor films interface (HDMI) connections, which may be consideredsince the early 1980s were shot in 35mm. inelegant in a domestic setting108.In 2013, commercially available eightlayer BlurayA key landmark for 4K in 2013should be testdiscs, with 200gigabyte (GB) capacity (sufficient for a broadcasts, following initial trials in 2012109.compressed 4K film) may become available. ThefirstThebroadcasts should prove useful for optimizingeightlayer prototype was announced almost ten years considerations such as frame rate (the number of stillago. Multilayered discs are needed because a single images shown per second to create video effect) byBluray disc, with 25GB of memory, would be too small genre. Broadcasterswill need to balance minimizationto store an entire movie104. of bandwidth requirements while maximizing viewer experience. Forsports, the frame rate may need to beStreaming 4K content may also be challenging: with 120Hz to provide a fluid picture with no blurring: withuncompressed files a user would require a half gigabit higher resolutions image blurring is more visible, makingper second (Gbit/s) connection. Downloadingan 60Hz transmission less viable. Sportis likely to be oneuncompressed 4K movie would take days over a of the genres most likely to be captured in 4K given itsstandard broadband connection105. Butfew consumersstrong commercial appeal, but it may require a higherwould ever download an uncompressed file. Aone hour bitrate110.compressed 4K film is about 160GB and would takeseven and a half hours to download on a 50Mbit/sA relatively small set of broadcasters may experimentbroadbandconnection.with 4K. But,as costs fall involvement and interest should steadily rise, reflecting what has happened in HD111. In2013, a growing range of dedicated 4K cameras may become available, adding to the existing range of 4K cameras, which include digital SLRs112. Asthe supply of cameras rises, prices should fall, making 4K more appealing to a higher number of broadcasters113.Technology, Media& Telecommunications Predictions 201325 27. Bottom line The upgrade to 4K entails significant capital expenditure for broadcasters, producers, television manufacturers, infrastructure owners and consumers. Itis not a move to be takenlightly. The cost for broadcasters of creating a 4K channel, factoring in upgrades to existing equipment and infrastructure, could be $10million to $15million. Infuture years the costs will decline. Currentlyan HD channel costs about $2million; a decade ago it would have cost about $10million. The top estimate of $15million for 4K may seem high, but broadcasters should remember televisions commercial success is predicated on its ability to distribute high production costs across a large audience, resulting in a reasonable cost per viewer. Amajor television event costing $10million to stage and watched by a billion people costs one cent perviewer. Broadcasters evaluating 4K should also note that 4K subscribers would need a new set top box to support the new High Efficiency Video Coding (HEVC) compression standard114. Thesewould need to include larger hard drives to cope with bigger file sizes. Settop boxes might need about four terabytes (TBs) of storage, though by 2015hard disk storage prices may have fallen to about $15per TB. Initialcustomers for 4K services are most likely to be relatively price insensitive to service costs; service providers should be predisposed to upgrading these clients customer premise equipment (CPE) for no or littlecost. One of the major bottlenecks to offering 4K services will be bandwidth. Broadcastersshould consider how much they are likely to need, and must have a handle on likely improvements in 4K compression. In20134K could require up to 40Mbit/s; by end 2014it should require as little as 20Mbit/s, equivalent to the bandwidth requirements for the first standard HD transmissions in 2005, and the first 3D TV transmissions in 2010115. Satellitebased broadcasters should be in a good position to offer 4K. Satellitecapacity is growing steadily116. 4K test transmissions via satellite links are expected in 2013117. Terrestrialbroadcasters may have less bandwidth at their disposal. Theyshould consider whether they need to request more spectrum to enable 4K broadcast. Theyare likely to face strong competition for available spectrum. Companiesoffering IPTV services should consider 4Ks impact on the case for rolling out fiber to the home (FTTH). Program makers need to balance the investment required against potential returns. Oneconsideration is viewing figures. Accordingto one analysis the higher the resolution of the program being watched the less likely the viewer is to change channel118. For TV manufacturers, one attraction of 4K is that it could provide a motivation to upgrade existing sets 119. Somecommentators may question, however, whether 4K provides sufficient incentive to buy a new set. 4Ks unique selling point the intensity of its resolution loses its uniqueness once the viewer is a certain distance from the TV set. Inother words, the visual quality of 4K is most evident when in close proximity to the TV set. Yetfew watch television in very closeproximity. The first owners of 4K TVs in 20132015, shortly after purchasing their set, might hold pixel parties at which friends and family are encouraged to view some 4K footage from close proximity about a meter away. Theymay be asked to try and spot an individual pixel. Thisexperience should individual pixels prove impressively elusive is likely to provoke admiration and envy, and possibly catalyze further sales120. Thereafterthe set will be watched from normal distance, but the memory of the quality of that close encounter will likely linger. Thisritual is likely to resemble when new owners of high resolution tablet computers and smartphones take ownership of their new devices121. TV manufacturers will need to determine what the optimal size of 4K TV sets should be. 4Ks impact may be more evident on larger TV sets, but the larger the set the higher the cost of manufacture, limiting the market for such TVs. Manufacturers should also consider other markets for large, high resolution sets, particularly the commercial market. Initialsales of larger 4K sets are likely to be sold to large companies for boardrooms and meeting rooms. Thevisual quality of a presentation delivered on large, high resolution sets may be higher than that for an overhead projector, and may in some cases be cheaper, when factoring in the cost of a high quality projection screen. 26 28. Dual video screening readiesforprimetimeDeloitte predicts that in 2013, about ten percent ofHoweverthis presentation of images has had littlehouseholds in developed countries, and about threetakeup, as the smaller image has been unsatisfactorilypercent of households in developing countries, will dualsmall and the larger image unsatisfactorily compromisedvideo screen their television consumption on a monthlyby the former, leaving both sets of viewersbasis. Thatis, they will have two (or more) screens, mostdissatisfied123. Dualvideo screening also replicates thelikely of different sizes, showing television programs at work place environment for millions of workers aroundthe same time and in the same room. Thesetelevisionthe world who work with two or more screens on aimages may be separate programs or alternate streamsregularbasis.of footage for the same event, such as differentmatches in the same golftournament.The growing availability of overthetop (OTT)program and movie demand services has per theBy the end of 2013, time spent dual video screening law of unintended benefits enabled the ambition ofcould exceed the time spent consuming the pictureinpicture to be realized, but through the offer ofcombination of a television program and its dedicated pictureandpicture. Overthetop is access to premiumprogram app orwebsite. content via the Internet on any connected device,marketed as enabling subscribers to consume anywhereThe key driver for dual video screening is simple: just (known as TV Anywhere or TV Everywhere). Astakeupone television stream may be insufficient for the personaccelerates it is likely to be used to consume contentor people in the room. Thereare likely to be two mainin the same room as the main settop box. Freetoairreasons for that being thecase.TV broadcasters OTT offerings would also facilitatesimultaneous consumption of two or more videoFirst, there is a desire among household membersstreams in the sameroom.to spend time together. Watchingtelevision is inmany homes a principal family activity. However,it Another reason for dual video screening is to satisfyis sometimes difficult to agree on what to watch. viewers desire to consume more of a particular pieceOnesolution is to watch two separate programs andof content. Thisis likely to be particularly prevalent withthat is most easily achieved on twoscreens.sport, in which multiple simultaneous events might havea bearing on the outcome of the principal video stream.In 2013, most dual video screening will be based on Amotorsport race, for example, is an edited highlighta combination of traditional TV set and a connected of as many as dozens of cameras. Traditionally,viewersdevice, most frequently a laptop, but also possibly a have only been able to view one image at a time,tablet (among the minority of individuals who own often the contest for the lead or a leading position.one) and occasionally a smartphone. Oneperson or TVcoverage of tennis tournaments typically only showsmore will watch and listen to the main TV, while thethe match the producer believes the majority of viewersother (or others) will watch on the smaller devices and want to watch. Yeta motorsports fan may also want touseheadphones. watch the progress of a favored driver and a tennis fana preferredplayer.Deloittes prediction is that the smaller screen will oftenbe used to watch sport reflecting who has real controlFor major events, viewers may be able to chooseof the remote in the household. Dualvideo screeningbetween a range of cameras, but selecting whichenables families to spend time together, withoutcamera to watch may be a little slow and labored.compromising on what to watch even if those on theDual(or multiple) video screening enables the viewersmaller screen may not be entirelyhappy. to flick quickly far faster than would be possiblethrough physically changing channels from one set ofDual video screening in this manner realizes aevents to another. Deloittepredicts that during majorlatent demand that has existed for decades122.sports events for which multiple streams are available,Televisionmanufacturers have long offered the abilityup to ten percent of households will be using multipleto watch two television images, through installing twoscreens in the same room in 2013, with the secondtuners in a TV set and placing a smaller picture in the (or additional) screen being a connected device or amain image (pictureinpicture).second television set; for example one brought in fromthekitchen.Technology, Media& Telecommunications Predictions 201327 29. Multiple video screening of the same content does notStill, a decade from now some readers may well look mean viewers will necessarily watch more television, back nostalgically on an era when they just had one although it is likely they may watch the same eventTV set on the wall; much as some workers, particularly for longer. Multiscreening viewers may watch more those working with data, may remember a time when attentively, in the same way that chatter about a programthey had only a single monitor toanalyze. on social and other networks ratchets up the intensity and buzz associated with consuming aprogram. Deloitte expects that dual video screening of the sameBottom line content in the first half of 2013will be dominated Broadcasters, who are likely to remain unsure by combinations of TV sets and smaller connectedof how best to monetize any form of dual devices, with the latter often positioned on the viewers screening, may want to consider video streams, lap. Thereafter,second TV sets and larger computer which do not necessarily require the creation monitors may start to predominate and are likely to beof additional content. Existingdistribution positioned adjacent to the main TV set. Akey reasonarchitectures can also readily cope. for this will be ease of use: it is easier to view two videoLicensingarrangements permitting the viewing images by moving the eyes from side to side than to of content on any device agreed for the launch move the head, and changing focus, from nearby on a of overthetop services have long been in small screen to a larger screen several metersaway.place. Thefalling cost of principal and ancillary cameras means there will be even more footage Looking to the longer term, Deloittes prediction isto select from. Themarginal cost of hiring an that by 2020between five to ten percent of homes inadditional producer to curate secondary video developed countries will have a second large TV set infeeds may be lower than the cost of building an their living rooms, primarily to facilitate secondary video app or website for a program and is also closer viewing. Thesecond set is unlikely to be used for everyto the average broadcasters core skillset. program or indeed even for the majority of programs but for major sports events, and for when familiesDual video screenings prospects should not be want to spend time together, and agree to disagreeequated with pictureinpictures disappointing over what to watch. SecondTV sets are also likely to betakeup. Bothapproaches attempt to serve used with households with games consoles to enablethe same need, but the user experience for multipleplayer gamesplay. pictureandpicture, using current technologies, is far superior to the fundamental compromise of A second large TV screen is likely to be better value pictureinpicture. for money than splitting a very large screen into two sidebyside images: even today the cost of a 42inch TVFor those who think that having multiple screen is less than $400, which is less than ten percentscreens in a room is too intrusive, tolerance of the cost of an 80inch screen, and about a third of the TVs physical impact in the home is remarkably price of a typical 60inch screen124. Itis worth notinghigh and is growing; we accommodate what that a 42inch screen is also cheaper than many ten inchwe find valuable125. InHong Kong, a market tablet computers, and with 21times the screen area:characterized by relatively small homes, the per square inch as well as per hour of consumption, fervor for TVbased karaoke systems predated television is likely to remain excellent value in 2013andthe arrival of flat screens. Karaokefans were in the long term. Further,the weight of two 42inchproud of karaoke systems based on large television sets can be a quarter that of a single 80inch cathode ray tube (CRT) sets that were as deep as television set and would be distributed over a larger areascreens werewide. with more mounting points. Twoscreens are also much less likely to require strengthening of the supporting wall.Advertisingfunded broadcasters and media agencies should consider the impact that dual Over the past decade consumption of TV has risenor multiple video screening will have on the steadily in many markets, with some currently averaging measurement and impact ofadvertising. five hours viewing per day, equivalent to more than a quarter of waking hours. TheTV set has also become an everlarger physical presence in thehome.28 30. Connected TV: hits and missesIn 2013, Deloittepredicts that tens of millions of The effective base of connected TV households is soconnected TV sets will sell globally, and the installed high because there are multiple ways by which a TVbase of TV sets with integrated connectivity should set can be connected. TVscan be connected via aexceed 100million126. Bythe end of the decade, the vast wide range of peripheral devices, many tens of millionsmajority of new TV sets sold in developed countries willof which around the world are likely to already belikely incorporate twoway connectivity127. However,this permanently connected to the TV. Currentgenerationmay be because it will have become nigh impossible to games consoles, settop boxes and BluRay playerspurchase an unconnected TV set, much as it is the case typically have twoway connectivity built in and, inthat in developed countries it is very hard to purchase a most homes, they are permanently connected to TVbrand new cathode ray tube (CRT) TVset.sets. Theseperipherals often offer dedicated menusand apps to access movie and TV on demand services.But despite the forecast boom in sales, only a modest Theprincipal usage of connected TV tends to be toproportion of connected TV sets sold in 2013andaccess more content. Sohouseholds whose TV set isbeyond 15percent at most are likely to beattached to a peripheral with twoway connectivitypurchased solely or primarily for their integratedwould not need to purchase a connected TV to accesstwoway connectivity 128. Inthe vast majority of cases video content ondemand.price, size, thinness or bezel width are likely to be theprimary reasons forpurchase. Other devices that may not be constantly connectedto a TV set can also make a TV connected.Most customers purchasing connected TVs are likelyLaptops,tablets and highend smartphones can allto regard twoway connectivity as a welcome bonus.be connected to a TV set, via a wire or wirelessly.Somemight be indifferent129. Somemay struggle toTheinstalled base of these devices numbers over threeaccess the functionality. Afew might feel put out at billion globally. Modernlaptops often incorporatehaving to pay for functionality which they have nohigh definition multimedia interface (HDMI) ports thatintention of using, or to which they already haveaccess. provide simpletouse, highdefinition (HD) connectionsto TV sets; tablets can connect via wires or via a WiFiA key reason why connectivity per se is unlikely to connection; phones can connect via mini HDMI orbe a key selling point for new TVs in 2013is because wirelessly. Inshort there are already myriad ways andhundreds of millions of households around the world billions of existing, owned devices that can enable a TValready have one or more ways of connecting their TVto becomeconnected.sets. Inat least ten countries around the world, over30 percent of households already have connectedTV even if in some cases they may not realize it130.Ina few markets those with high broadband and PCpenetration the effective connected TV base may bedouble this, at 60percent of households131. Technology, Media& Telecommunications Predictions 201329 31. It should, in practice, be easier to use ondemand TV In summary, the base of households supporting twoway and movie services on a TV set with builtin twowayconnectivity is already vast; the usage of that connectivity connectivity. Afterall, laptops, tablets and smartphones has remained sparse. ConnectedTVs will sell, but most may be out of the house at the time when someonelikely primarily for the thinness of their bezels, the wants to watch connected TV. Butthe greatersharpness of their screen or their value formoney. easeofuse would only be a significant differentiator if viewers were to use connected TV services frequently. Inpractice, connected TV sets are likely only to be used occasionally to play online games, browse the Internet,Bottom line download apps, or even video conference; theprincipal In 2013, because of the volumes of connected TV usage of a TV set is likely to remain to watch TVsets sold around the world, the implications of programmes and movies. Usageof TVondemand connected TV chief among which is the ability is rising but is likely to remain a small proportion ofto disintermediate traditional broadcasters, overall TV viewing. Themajority of programs and films or even traditional TV content will likely that people watch in 2013will likely be available and be the subject of intense, and occasionally consumed via broadcast terrestrial, satellite orcable.underinformed, debate at conferences focusedon the TV sector132. In the majority of cases, broadcast quality and broadcast programs recorded to a DVR should be better than thatBut the bottom line is that unless mustsee which is available online. TheInternets rivalrous nature content at a competitive price point is made should never be overlooked: it is a shared resource. exclusive to connected TVs, for example via Yourneighbors use of the Internet may affect the a channel or portal that is only available via quality of service in your home. Ifbandwidth is scarceconnected TVs, the need for connectivity in in your neighborhood, this may compromise your ability televisions is likely to remainmarginal. to watch TVondemand, particularly when the pictures are being shown on a large TV screen, rather than aTV manufacturers do need to consider ways mediumsized laptop screen, or a small smartphoneof differentiating their products. Theydo need screen. Broadcast,by contrast, is a nonrivalrous service,ways in which to boost the often tight margins and everyone in your street or block can be consumingthat characterize the industry. Butthey should TV pictures with no impact on yourquality.also determine precisely which functionality andfeatures customers are most likely tovalue.Broadcasters, in considering which services theyIn the majority of cases, broadcast should offer, should keep track of the installedbase of devices on which their content could bequality and broadcast programs recorded received and consumed. Andthey should alsomonitor carefully the extent to which new formsto a DVR should be better than that of consumption grow inpopularity.which is available online.30 32. Overthetop may lift legacy broadcastersand distributors more than pure playsDeloitte predicts that in 2013, in markets where services Another factor expected to drive demand forare available, two of the top three overthetop (OTT) TV broadcasters OTT services is awareness: the majorityprogram and movie services are likely to be provided by of viewers will have been exposed to the broadcastersexisting broadcasters anddistributors. brand for decades: the OTT service is a natural andseamless extension of that brand. Broadcastersare alsoOTT services use the Internet to distribute TV andlikely to promote their own OTT brands regularly over themovie content to homes. Anycompany can provide typical 35hours viewing of broadcast or prerecordedOTT TV and movie services and many do so, including TV that the average citizen with access to televisionTV broadcasters, device manufacturers and fast food watches daily. Overthe course of a week a viewer wouldvendors133. Pureplay OTT providers and OTT divisions likely see dozens of promotions for broadcasters OTTof larger companies not in the TV industry are likely services. PayTV providers and subscription channelsto enjoy growing market share and take up, but in are likely to continue to promote their OTT services tomost markets their active paying subscriber baseimprove perceptions of value for theirservices.will probably account for less than ten percent ofhouseholds. Themarket is shaping up to be dominatedOTT pure plays and divisions of larger companies startby existingplayers.from a much smaller audience base than broadcasters.Insome cases their brands may be entirely new toCombined OTT revenues for existing broadcasters and the market, niche or in an adjacent or even unrelatedpure plays are likely to be less than two percent ofspace137. OTT pure plays, as recent entrants to theearnings (from subscriptions and advertising). Freetoairmarket and with limited access to current programming,TV broadcasters are likely to offer OTT for free, while pay may have to rely primarily on archive content. TheymayTV companies are likely to include OTT access as part oflack the calltoaction appeal of broadcasters OTTsubscription packages. Totalglobal revenues from TVservices.advertising and subscriptions are likely to reach about$400billion in 2013134.Some customers will willingly subscribe to OTTservices based mostly on archive content. ForsomeThe two factors underlying the popular appeal ofthe ability to access box sets of TV series at a pricelegacy broadcasters OTT services are brand and point that is typically much lower than pay TV maycontent. Mostviewers are likely to remain faithful tobe exactly what and how they want to consume TVthe broadcasters and programs they have watched inprograms. Forothers, watching every episode of aprevious years, so long as those broadcasters continueseries sequentially may be akin to consuming dozens ofto provide the type, quality and quantity of programs breakfasts in arow.that viewers like. Viewerswill likely remain averse tonew sources of content in 2013, due to the opportunityThe consumption of programs and movies via OTTcost of taking time to watch a program they may distribution is likely to remain small in proportion to totalnotenjoy.consumption138. Thevast majority of viewers in 2013,and in subsequent years, are likely to continue to defaultViewers will mostly use broadcasters OTT services to to broadcast and the TV schedule, before checking whatcatchup on programs they were unable to watch or is stored on their Digital Video Recorder (DVR) beforewere unaware of w