Phablets to drive mobile data growth, cord-cutting at ‘tipping point’: Deloitte

Increased sales of larger, “phablet” smartphones will drive growth in mobile data consumption in 2014 as more consumers use the bigger devices to watch more mobile TV, consulting firm Deloitte Touche Tohmatsu LLP said in its annual media and technology predictions. In predictions released Tuesday, Deloitte said larger smartphones with screen sizes between five and 6.9 inches will account for 25 per cent of global smartphone sales in 2014, totalling about 300 million phablets sold worldwide, or about twice as many as in 2013. Duncan Stewart, Deloitte Canada’s director of technology, media and telecom, said in an interview that the higher volume of phablet sales is good news for mobile providers who can capitalize on their subscribers’ use of more data-intensive mobile services. “With a bigger screen, you are more likely to do high-end gaming and — say it with me now — mobile TV,” Stewart said in a telephone interview last week. “People don’t watch very much video on four-inch phones. As you get to bigger and bigger phones and phablets and as you get to larger screens, people will do more video. … Video is the thing that drives data.” Mobile TV services are expanding in Canada as broadcasters have raced over the past year to launch applications that give their subscribers access to TV content on their mobile devices, and as mobile providers roll out their own mobile TV products, such as BCE Inc.’s Bell Mobile TV, and Quebecor Inc.’s Videotron illico service. BCE said in September that more than one million of its 7.8 million mobile subscribers were using its mobile TV service, which costs $5 a month for up to 10 hours of mobile TV viewing. In a quarterly report released in November, the company cited mobile TV as one of the factors that contributed to an 18.4 per cent growth in its quarterly mobile data revenues. In its report, Deloitte said video streaming represents about 40 per cent of peak-period, downstream mobile data traffic across North America in 2014 despite what it called “limited viewing hours.” The group said the average American mobile TV viewer watched six hours of mobile TV content per month last year. In Canada, Media Technology Monitor — a joint research project between CBC/Radio-Canada and BBM Analytics — said in reports released in March and July that seven per cent of anglophone Canadians watched TV on their smartphones, while 14 per cent watched videos on their phones. While Stewart said phablet users are more likely than those with smaller phones to watch mobile TV on their phones, he noted that the larger devices aren’t for everyone. In an Ipsos Reid poll of 1,034 Canadians conducted on Deloitte’s behalf, Stewart said, about a quarter of the respondents said they would be interested in owning a phablet. Deloitte said that expected improvements in phablet screen quality could contribute to increased mobile data usage if phablet manufacturers introduce ultra-HD screens that offer better resolution. “As phablet screens move to higher resolution, the data required for video or gaming will increase sharply,” it said in its predictions, noting that ultra-HD devices can consume 16 times as much data as some other phablets accessing the same video. “Carriers’ data plans will need to reflect the fact that phablet users are likely to be amongst the heaviest smartphone data users,” it added. With an expected $125 billion US in sales in 2014, Stewart said, the phablet market will become the third-largest technology market in the world behind personal computers and the wider, more general, smartphone market. According to Deloitte’s predictions, he added, the worldwide TV set industry will total $105 billion US in 2014 sales, while the tablet industry will total $99.8 billion US in global sales this year. So-called “wearable devices,” such as smartwatches and smart glasses, will record about $3 billion US in global sales this year, Deloitte predicted, with smart glasses expected to account for about $2 billion US of those sales. Smartwatches, Stewart noted, are already available in Canada, while smart glasses will likely crack the Canadian market this spring, he predicted. In other predictions released Tuesday, Deloitte said the 20 per cent of English-speaking Canadians who watch the least traditional TV will further reduce their daily television consumption to an average of about 30 minutes per day in 2014, down from about an hour per day ten years earlier. While increased daily television viewing among the most frequent TV watchers will help keep Canadians’ overall viewing rates flat in 2014, at an average of 3.8 hours per day, Stewart said those that watch the least TV may be reaching a tipping point, and may soon cancel their home TV services altogether. “If you move from watching two hours a day to an hour-and-a-half of TV a day, you’re still watching an hour-and-a-half per day and it probably makes a lot of sense to pay for TV,” he said. “If you move from 30 to 15 minutes, if you move from 15 to one, absolutely there must be some magic number at which point more than 10,000 Canadian homes will say, ‘Yeah, we watch traditional TV, but we just don’t watch enough of it to bother paying for it.’ ” Stewart said that no country has reached this type of tipping point so far, and that there is no available data that could indicate how much TV Canada’s least enthusiastic viewers need to watch each day to continue justifying the cost of their television services. “It’s kind of like finding out where a cliff is in the middle of the night,” he said. “The easy way of finding out is not necessarily the good way.” To date, Stewart said, Canadian “cord-stackers” — who subscribe to both a home television service and at least one over-the-top video service — outnumber Canadian cord-cutters, or those who have cancelled their home TV service. Deloitte predicted that about 2.5 million Canadians will have “multiple TV subscriptions” in 2014, up more than 150 per cent since 2012. Ottawa-based consulting firm Boon Dog Professional Services Inc. said in November that Canada's publicly traded TV providers lost about 19,000 subscribers in the one-year period that ended in September. “While everyone’s been predicting cord-cutting, the actual thing has been cord-stacking,” Stewart said. “If cord-cutting does become significant though, it would presumably be from the people who watch the least TV.” Stewart said the over-the-top services that cord-stackers are subscribing to include general programming services such as Netflix Inc., as well as niche services such as those offered by many professional sports leagues that allow fans greater access to games and other live content. Deloitte also predicted that the global cost of sports video rights will increase by 14 per cent in 2014, up from about five per cent growth per year from 2009 to 2013. — With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Phablets to drive mobile data growth, cord-cutting at ‘tipping point’: Deloitte

Broadcast | January 13, 2014

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Phablets to drive mobile data growth, cord-cutting at ‘tipping point’: Deloitte

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