According to Technavio Research, video entertainment, music, voice and messaging revenues for service providers will grow about $77 billion--roughly 13 percent on a compound annual basis--between 2019 and 2023. It is not actually very clear what all that means, if a correct forecast.
Other credible forecasts suggest total industry revenue will grow by perhaps one percent a year to 2022. All of which suggests net growth will be low, losses balanced almost exactly by losses.
The way we can understand the different forecasts is to understand that one forecast looks at revenue growth from new products, without considering losses in legacy product lines, while the other is a look at net changes in revenue, including both gains and losses.
Beyond that observation, projected shifts in consumer spending on communications and entertainment products have to be evaluated against actual past behavior.
Consumer spending does not change too much from year to year. Nor does the percentage of income spent on various categories change too much.
In Myanmar, a new mobile market, spending per household might be as high as eight percent of total spending. In Australia, communications spending (devices and services) might be just 1.5 percent of household spending.
In South Africa, households spend 3.4 percent of income is spent on communications (devices, software and connectivity). In Vietnam, communications spending is about 1.5 percent of total consumer spending.
In the United States, all communications spending (fixed and mobile, devices, software and connectivity, for all household residents) is perhaps 2.7 percent of total household spending. U.S. household spending on communications might be as low as one percent of household spending, for example.
Even spending on video streaming, which is climbing, might not have affected aggregate video subscription revenues too much. What has changed is the allocation of spending between linear and over the top services.
Also, prices for connectivity services are dropping. From 2000 to 2018, mobile and fixed line charges in Europe and other developed markets have dropped by as much as 59 percent, while fixed network services dipping by as much as 48 percent.
So even if usage climbs, and new products are added, unit prices are under pressure. The point is that we have to distinguish between product line growth or decline, total market growth and decline and differences between firms and markets.
Yes, consumer demand has shifted, and is shifting. But consumer spending for communications, audio and video arguably has changed very little, in terms of aggregate spending.
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