2020 Technology, Media And Telecom Sector Update

As the COVID-19 pandemic continues to impact everyday life, the technology, media and telecom sectors are playing critical roles in keeping people connected, working, and entertained. As more people work remotely and home school, the services provided by tech and telecom companies remain in peak demand by families and businesses.

• Acquisitions are driving growth in the tech sector, and there is more investment in innovation and R&D.
• Collaborative tech is expected to see sustained growth.
• As tech companies embrace working-from-home, talent is being spread out more geographically.
• Telecommunications companies are being relied upon for connectivity more than ever during the pandemic, and the focus on 5G-network implementation is a major priority.
• Broadcast TV faces challenges amid declines in advertising and fewer live sports, but ad revenue is expected to increase as many major sports are returning to play. Digital streaming and retransmission fees could also offer new opportunities.
• As video gaming and e-sports have undergone dramatic growth spurts during the pandemic, acquisition activity is expected to increase.

 

The Collaboration Technology Market

The collaboration tech market is seeing significant growth. Pre-pandemic, this market was forecast to grow at 12.4% CAGR through 2023, per the International Data Corporation. As a result of COVlD-19, verticals within the market are expected to grow twice as quickly.

• The conferencing market had a pre COVID-19 CAGR of 13.6%, and now projects nearly 30% growth per year through 2023.
• The email market was previously one of the slowest growing verticals in the collaborative market. It is now expected to double through 2023.

A New Era for Broadcasting

In the early part of the year, challenges arose for the TV, radio and media sectors as live sports were cancelled and marketing budgets were cut. Ad revenue for broadcasters dropped in the second quarter due to these reasons.

• The now postponed 2020 Olympics would have brought in more than 510 billion in ad revenue with sponsorship deals and promotional events.
• At the same time, there has been a large uptick in local news viewership, daytime TV viewership, and viewership for local and financial news.
• Car dealerships are expected to spend more in the second half of 2020 as auto sales rebound and inventory will need to be moved.
• Retransmission agreements are also expected to be a boost for broadcasters.
• Digital ad revenue remains up in 2020, with traffic increasing on streaming platforms.
• Video gaming and e-sports are also seeing significant upswings, and e-sports captured a large part of the spotlight as live physical sports were put on hold. With most growth seen in Asia, e-sports are now growing more popular in Europe and North America, with consumer spending on the rise.

Going More Remote

Even before the pandemic, many segments of the tech workforce were working either partially or fully remote. The pandemic has increased the number of people working from home, especially for tech companies such as Google, Twitter and Facebook. Even after the pandemic, remote work is predicted to remain a common way for businesses to operate, especially for middle market technology companies, some of which are likely to be acquired by big tech companies as there is a continued demand for innovation.

• R&D spending by the five largest U.S. technology companies continued to increase during the first months of the pandemic, spending more than $500 billion, which represented a 15% jump from the same quarter of 2019.
• Telecom companies have been vital to keep people working, educated, and entertained during the pandemic, as more people are working from home and students are doing online learning.
• Ongoing 5G deployments will be key to growth in the telecom sector and the major carriers in the U.S. have reported that they are ahead of schedule on their 2020 goals. Expectations for 5G device sales in the U.S are expected to grow from nearly 15 million in 2020 to nearly 100 million in 2023. Subscription services are predicted to be a solid growth opportunity for these telecom companies’ revenue streams.
• While these companies are relatively insulated from negative impacts of COVID-19 as people need to continue to remain connected to work, family and friends, there is the risk of unemployment and loss of business revenue which could result in consumers being unable to afford large or unlimited data plans or companies that cannot sustain extended lockdowns.

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