Nontraditional categories of digital gaming, online video, messaging apps, smart home, and digital music are showing faster growth, with projected five-year CAGRs of 5%-21% according to new research from Omdia. Although of smaller value than established telco services such as mobile data, pay TV and broadband, these fast-growing markets will be worth $513bn by 2027, the two biggest areas being digital gaming and online video. digital consumer services
Digital consumer services refer to any digital products or services that are delivered to consumers over the Internet or through digital channels. Examples include digital entertainment services such as music and video streaming, online gaming, messaging apps, smart home devices, and e-commerce platforms. Digital consumer services are becoming increasingly important in our daily lives as technology advances and consumers increasingly rely on digital solutions for their needs.
Competition from global tech giants poses a challenge to telcos in growth areas
Jonathan Doran, Principal Analyst, Digital Consumer Operator Strategy, Omdia commented: “Service providers must look beyond data and diversify into adjacent digital markets to enable the continued growth of their telco consumer businesses. Many have already invested in TV and online video entertainment, but there are other fast-growing markets telcos can also explore. Adopting the right go-to-market strategy and business model for each individual service area will be critical to striking the balance between achieving market success and mitigating financial risk”.
Other areas offering the strong future potential for telcos include e-health and financial services, and several leading players have already started to invest in these spaces. SK Telecom owns South Korea’s most popular online store with over 34 million active customers, while Vodacom South Africa has over 1.1 million monthly active users (MAUs) for its VodaPay service.
All growth areas, however, will experience significant competition from hyper scalers – specifically the global tech giants Google, Amazon, Meta, and Apple. “In many areas, telcos will need to accept that competing head-on is unrealistic and developing partnerships with such players is not only more pragmatic but will also serve to strengthen their own products and brands” observes Doran. “Omdia’s Digital Consumer Operator Strategy Benchmark shows that the more service providers actively invest in a given service area – including through partnerships – the bigger market impact they have, which in turn better positions them to take a bigger slice of overall market revenue”.
Final Thoughts digital consumer services
In conclusion, the digital consumer services market is growing rapidly, with nontraditional categories such as digital gaming, online video, messaging apps, smart home, and digital music showing the fastest growth. Telco service providers must diversify into adjacent digital markets to enable the continued growth of their consumer businesses. By adopting the right go-to-market strategy and business model for each service area, they can strike the balance between achieving market success and mitigating financial risk. While competition from global tech giants is intense, service providers can still grow their market impact by investing in these areas and developing partnerships. It is clear that digital consumer services are here to stay, and businesses must adapt to these changes in order to thrive in the digital age.
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