March 30, 2015
Digital sector set to become ‘pivotal’ in Middle East over next five years
Deloitte has launched a new report into the Technology, Media and Telecommunications sector in the Middle East. Deloitte predicts that 2015 will be ‘pivotal’ for Digital Islamic Services as they start to take off across the Middle East region. The report estimates that within the next three to four years the region’s digital economy will nearly double in size from around US$15 billion currently to around $30 billion by 2018. The predictions are based on hundreds of discussions with industry executives, analysts and commentators, along with tens of thousands of individual interviews. The report also predicts that Gulf Cooperation Council (GCC) countries will make significant open data advancements in 2015, and within the next three to five years, break into the top half of countries ranked the most ‘open’ in the world.
However the report also concludes that the Gulf countries will take some time to match the level of leading ‘open’ countries to reap the benefits of open data. GCC countries that have not yet outlined open data initiatives will begin to do so in 2015, while those that already have will embark on their journey towards open data implementation.
The GCC is also making strides in its development of smart cities with Deloitte predicting that the number of new smart city greenfield developments in the GCC will double within the next two to three years. This follows the launch of six entirely new, master-planned smart city developments in the GCC over the past decade. The report suggests that the majority of new city sub-developments will incorporate at least some element of “smart” infrastructure. The region’s smart city growth will largely be driven by developments in the government planning, administration, and operations area, backed by significant GCC government investments in e-government and mobile services.
Other predictions explored in the report include:
Internet of Things
The Middle East region is estimated to currently represent about 2-3 percent of the global IoT enterprise market. As such, around 25 million IoT devices are anticipated by Deloitte to be shipped to the Middle East region in 2015, leading to an installed base of around 70 million IoT devices. This would likely be worth around $250 million in IoT-specific hardware, with revenues of around $1.7 billion in associated IoT services.
3D printing in the Middle East
The Middle East region is a relatively immature market, representing a small fraction of the global 3D printing market, but is expected to grow quickly and follow global growth trends, where Deloitte predicts adoption to be driven by enterprises in the region.
Short-form versus long-form viewing trends
Total time spent watching short-form video online in the Middle East in 2015 will represent under three percent of all video watched locally on all screens. On average, the region’s viewers will consume an estimated 545 million hours per month, of short-form video (5.5 percent of global short-form estimates) in addition to watching over 23 billion hours per month of traditional long-form television (about 5 percent of global long-form viewership).
Media content spending
Millennials in the Middle East will spend around $37 billion on media content in 2015 ($300 per millennial, in purchasing power parity terms). High rates of smartphone adoption, broadband, technological advancements and increasing literacy rates play a key role in the growth of media consumption in the Middle East in 2015 and beyond. Despite these advancements however, media spending by millennials in the region is quite low in comparison to more developed markets such as North America.
Internet and broadband penetration
Total internet penetration in the Middle East will reach around 38 percent in 2015, over approximately 25 million homes. Fixed broadband penetration however, is expected to reach just over 25 percent of Middle East households (around 14 million households). Fixed broadband penetration rates vary significantly across the region due to high economic disparity – particularly when comparing GCC countries with significantly higher penetration rates to those in North Africa where dial-up connections are more common.