Deliotte in its recent study has forecasted that the smartphone multiplier market will hit $397 billion this year.
This is a revised prediction carried out by the Global Head of Technology, Media, and Telecommunication research, Deloitte Touche Tohmatsu Limited, Paul Lee and Global Telecom, Media, and Entertainment leader, Deloitte Services LP, Craig Wigginton following the effect of the pandemic.
Deloitte Global earlier predicted that smartphone multipliers could drive $459 billion of revenue in 2020 alone. This would represent an increase of 15% ($58 billion) over last year.
The organisation noted that, the COVID-19 global pandemic will likely have multiple effects, positive and negative, on the smartphone multiplier market. The revised prediction forecasts smartphone multiplier revenue of roughly $397 billion this year, versus our original forecast of $459 billion. This implies a modest year-on-year reduction of $4 billion—about 1% down year on year.
Smartphone multiplier are the product and services that depend on smartphone ownership.
The study disclosed that the market for smartphone apps, accessories, and ancillary devices is almost as big as the market for smartphones themselves—and it’s likely to continue growing.
Ranging from selfie sticks and ring tones to mobile ads and apps, these ancillary products could eclipse the revenue generated by smartphones themselves in just a few short years.
Smartphones are clearly big business, however the study expect the smartphone multiplier market might grow between 5% and 10% annually through 2023, buoyed by continued robust growth in its largest elements. In 2023, it may generate revenues of more than half a trillion dollars per year.
“Our expectation is that, in the medium term, the smartphone multiplier market will resume its growth. The principal components in this category are mobile ads, apps, and accessories; mobile ad sales, particularly for direct-action ads, will likely fare better relative to sales in other ad categories, remaining flat year on year.
“Constant revenue for mobile advertising, at $149 billion, is projected to be 15% lower than our original forecast. Many consumers are using more apps and games during this time, but we have trimmed our revenue forecast by 5%, from $118 billion to $112 billion. This still implies year-on-year growth of 9%.
“The large-scale shift to working from home may also drive rising sales of some accessories, such as headphones to enable business calls, but the major challenge is smartphone sales.
“Accessories are often purchased to complement a new phone, yet we expect a 14% decline in smartphone shipments in 2020. Accordingly, we expect accessories sales to decline by 16%”, the report says.
The smartphone multiplier market encompasses a wide array of products and services, most of which fall into one of three categories:
Hardware, including audio accessories, power-related accessories, and adjunct devices such as wearables and smart speakers; camera accessories such as selfie sticks, tripods, and gimbals; cases and screen protectors; phone stands; and spare parts.
Content, including mobile advertising and software content spanning games, music, video, and many other content types.
Services, including repairs, insurance, cloud storage, and business software.
In 2020, Deloitte Global expects the three largest elements to be mobile advertising, apps (mostly games), and hardware accessories, potentially generating a total of $370 billion.
Mobile advertising, the smartphone multiplier’s top moneymaker, has thrived despite the smartphone’s relatively small screen. While it offers little real estate, the screen is nearly ubiquitous, heavily used, and deeply personal. We predict that smartphones’ share of all mobile (smartphone and tablet) advertising will reach about $176 billion in 2020, an 18% increase year over year.
Particularly notable is that online ad growth is being propelled by online video and social media—genres bolstered primarily by sustained advances in smartphone technology. Smartphones are also likely to dominate in one other ad format: app install advertisements, which are expected to be worth over $60 billion in 2020. App install ads appear within apps to encourage users to download other apps. While apps are available on all devices, their usage is highest on smartphones, making them the likely primary vehicle for delivering app install ads to users.
‘While only a minority of smartphone owners in developed countries now have a wireless charger, ownership will likely increase in the coming years.’
Interestingly, mobile ads account for almost all the growth in online ad spending since 2014. Mobile ad spend is projected to increase from $56 billion in 2015—about a third of total online advertising spending—to $251 billion in 2021, or 71% of the total. During this period, desktop online ad spending is expected to remain largely unchanged at about $102 billion per year.
Games—and More Games
The second-largest component of the smartphone multiplier market is apps, which could generate $118 billion this year.² We expect the value of app stores to continue to grow in the near term, driven primarily by existing apps.
Apps exist in a smorgasbord of genres, including games, photo and video, entertainment and lifestyle, social networking, and music. In addition, app store revenues include a small proportion of subscription video on demand and music revenue. The largest content providers for these tend to have direct billing relationships with subscribers.
Game apps make the most money by far. They are expected to earn around $80 billion in revenue in 2020, up by more than 10% from 2019.³ And while mobile phones and games have long had a close relationship, the smartphone—along with app stores and the freemium business model—has enabled the mobile game market to take off. According to one forecast, revenues for game apps for smartphones and tablets may surpass $100 billion by 2022, with smartphone users representing over 80% of this total.
The smartphone hardware accessories market, projected to be worth $77 billion in 2020, consists of three principal subcategories: audio, power, and protection. Of these, audio and power are likely to experience significant growth over the medium term.
Headphone sales may grow markedly over the next few years, predominantly driven by users upgrading wired headphones for wireless versions. Over the next few years, we expect most owners to ditch the cable, driving wireless earbud sales up to a potential 129 million units in 2020, from 46 million in 2018.
Further, we expect headphones to be regularly upgraded over the coming decade as new functionalities become available. Improvements in audio quality, noise cancellation, battery life, water and sweat resistance, and wireless charging are all possible. A minority of smartphone owners will also purchase multiple headphones, each suited to different contexts, such as office, exercise, commuting, and high fidelity.
The demand for power-related accessories (external batteries, replacement batteries, chargers, and cables) should remain strong over the coming years. Purchases of higher-speed chargers are one likely driver of growth, especially as more smartphones integrate USB-C technology. Demand for wireless charging accessories will also likely rise. Wireless chargers transmit power more slowly, but some users may find them more convenient. While only a minority (about 20%) of smartphone owners in developed countries have a wireless charger at present, ownership will likely increase in the coming years now that major smartphone vendors have agreed to adopt the Qi standard for wireless power transfer.
For billions of people today, it’s hard to imagine life without smartphones or the apps, accessories, and ancillary devices that integrate them ever more seamlessly into our lives. The booming smartphone multiplier market presents a clear opportunity for businesses that can devise even more ways to extend smartphones’ capabilities—and we don’t expect that opportunity to fade anytime soon.