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Gazing into the tech crystal ball: TMC Predictions for 2015

So what will 2015 bring for the Technology, Media and Communications sectors? In this piece we get out our Taylor Wessing crystal ball (cut in a very forward thinking shade of green glass) and try to predict some key developments in a few of the areas in which we’re seeing the most disruption and growth.

December 2014

We're not focusing on any particular country or market, but rather on industry developments (although we have thrown in a few legal issues where relevant, we couldn't help ourselves). We have limited ourselves to one or two predictions in each of the areas we've highlighted - after all we wouldn't want our insight to spoil the festive fun of guessing what the next twelve months might bring for the sector...

Data will be the new medicine

International Data Corporation (IDC) predicts that with healthcare costs rising for our ageing population, operational efficiency will become critical at 25% of hospitals.  Driven by the need to improve quality and manage costs, 35% of hospitals will create a comprehensive patient profile by 2016, to allow the delivery of personalised treatment plans. The advantages for healthcare providers are obvious: improved communication between medical professionals would remove duplication and inconsistency, driving efficiency and potentially improving patient care and outcomes. However, increased use of data also brings  increased security risks and IDC predicts that healthcare organisations will typically have experienced between 1 and 5 cyber attacks by the end of the year. Healthtec suppliers will inevitably be pressured into providing robust data security commitments and we are likely to see an increase in risk sharing and a growth in the cyber insurance market, not to mention more litigation in the market.  Clear and robust contracts with a fair allocation of risk will be key to protecting suppliers to the sector.

...but it won't cure everyone

pile of EurosThere is a lot of 'chatter' about how much people are prepared to pay to live in an ad-free cyber world and protect their personal data.  A recent survey in Germany found 35% of people were prepared to pay up to EUR 41 per year to do so.  We have already started to see this type of offering in the market.  There has been much speculation, for example, on the future of Ello's ad-free social network. The manifesto bravely states:

Your social network is owned by advertisers ... Every post you share, every friend you make, and every link you follow is tracked, recorded, and converted into data. Advertisers buy your data so they can show you more ads. You are the product that's bought and sold ... We believe there is a better way. We believe in audacity. We believe in beauty, simplicity, and transparency. We believe that the people who make things and the people who use them should be in partnership

To back this up Ello converted to a Public Benefit Corp, whose charter states:

  1. Ello shall never make money from selling ads;
  2. Ello shall never make money from selling user data; and
  3. In the event that Ello is ever sold, the new owners will have to comply by these terms.

With the platform attracting as many as 40,000 requests for registration per hour, early signs were good, although take-up has reportedly since waned. It is impossible to predict whether it will gain mass market acceptance and dent Facebook's dominance, although one only has to recall a certain Myspace to wonder. It is not only the sheer scale of Facebook's audience but also the increasing pervasiveness of its partnership ecosystem that would suggest that any such tipping point is some way off. "Sign up through Ello" may well be a check box we see in the future, but even if it's unlikely be ubiquitous as early as 2015, the 'no ads, no data sharing' business model is likely to be a growth area, along with growth of the "freemium" model where users can purchase additional functionality, bringing platforms into the arena of e-commerce laws including the Distance Selling Regulations.

Users will write the news

The viral spread of compelling user generated content has been aided by, and driven, the growth of major social platforms such as Facebook and Twitter and, of course, YouTube. User content is increasingly being used by broadcasters and publishers to report real time events, enabling broadcasters to scoop a story before competitors. An entire eco-system is developing over the ability to source and distribute such content in real time, brokering publishing deals with users over their mobile phone footage. 2015 is likely to see the growth of this phenomenon accelerate. The ability to assess risks around data protection and validity and ownership of intellectual property rights is key to the ability of publisher to use the content and also to the value of the content.  Those businesses with the platforms ready to source and licence user content in a way that addresses these legal risks, are likely to be much in demand and see values increase significantly.

advertising definitionContent, not adverts

As well as use of user content, 'content marketing' has grown significantly over the last few years and this looks set to continue in 2015. This is caused, in part, by consumer sentiment (not wanting to be 'sold' to) but also the evolution of Google's and other search engine algorithms and the increasing value they place on content. According to the Content Marketing Institute, content marketing is "a marketing technique of creating and distributing valuable, relevant and consistent content to attract and acquire a clearly defined audience – with the objective of driving profitable customer action." In short it is "the art of communicating with your customers and prospects without selling.".

Although perhaps not as real-time in some cases as using content for news reporting, to successfully use content, marketing brands need to be able to identify and publish content that is current, and original. Content very quickly loses its currency and, in the hands of a competitor, loses its originality so brands need to be able to act fast. Many mature brands find a real tension exists between this need and the need to clear the content against legal risks (such as IP infringement, false endorsement or possible defamation) and company brand policy. Brands and agencies, therefore, need to develop  clear and comprehensive content marketing policies, along with actionable 'decision-trees', which take into account the relevant legal and brand risks, in order to allow content to be cleared (or rejected) quickly and used in the appropriate channels.

We'll all be VCs

In 2014, more corporates caught the VC bug. The increased scale and pace of innovation and possibilities for rapid growth on an international scale have meant that, for many corporates, partnering with startups has become a core business imperative rather than the stuff of niche business units put out to pasture at the first signs of a downturn. Partnering is increasingly taking the form of investment, often by way of equity, and one only has to walk around Shoreditch and look at the number of startup accelerators and gateways powered by global brands to get a flavour of the level of activity (do stop for a coffee with us at our Tech City office if you pass by).

Marketing to people won't be enough

Gartner predicts that by 2016, $2.5 billion in online shopping will be undertaken by digital assistants. Brand owners and agencies will need to get wise to marketing to machines as well as people.  Can a machine be capable of understanding and agreeing to the all important small-print in the forms of terms of sale, refund policies, privacy and cookie statements and so on?  This raises questions that will need to be tackled, if not in 2015, then some time soon.

Mobile payments might finally catch on which might drive a wider eco-system

The mobile payments market has been on a slow burn, despite the arrival of Google Wallet in 2011 and widespread take-up in Japan as well as in some developing markets.  New entrant to the market, Apple Pay, may just provide the fillip the industry needs to drive widespread adoption of such technology and will hopefully benefit the whole sector as a result.

wallet on keyboardOne of the main reasons for the slower uptake in the West are concerns around security of payment data and fraud.  Apple claims to have addressed these areas – retail assistants will no longer see payment card details, name or security code and so fraud leakage from retail payments would seem almost impossible.  However, security of payment data may remain a key concern and stats suggesting that iPhones are the most stolen handset might hinder take-up. In this regard, Apple points out that the phone does not store credit card details, however, given a key element of the functionality depends on taking a picture of the card, it will be interesting to see the extent to which the fraud risk actually reduces.

The regulatory environment in Europe is more challenging for payment service providers than that in the USA, both in the area of payment services regulation and in relation to data protection. Authentication of use will become increasingly important and regulators are likely to require payment platforms to require stronger access protection. This is likely to drive new opportunities in the access authentication sector which we see as a key beneficiary of the increase in mobile payments.

2015 could be a make or break year given the legislative developments in both payment services and privacy promised during the next twelve months.  For more on this, see our predictions for Financial Services in Financial Services – predictions 2015 and When will there be a new EC data protection Regulation?.

Privacy will become a differentiator

The increased digitisation of our lives brings increased security risks and while the continued pace setting of key players such as Google and Apple may drive consumer trust generally (although it's fair to say that the market leaders also face considerable public scrutiny), the inevitable need to trust personal data to the cloud will direct consumers towards those brands that inspire the most confidence in their security. Businesses will, consequently, need to invest more in data security, invest more in their messaging about data security and, critically, think more carefully than ever before about the value of leveraging customer data against the cost of denting the trust of their customers. A suitably worded privacy policy might well allow data to drive ad revenue but, as we've seen by Facebook's ad reach dwindling, such revenue may be short lived. Against this backdrop, the potential introduction of the Data Protection Regulation (see our article, When will there be a new EC data protection Regulation? for more) will sharpen the teeth of privacy laws (exactly by how much remains to be seen), and instil the need for 'privacy by design'. In short, whilst privacy may never be sexy, it will increasingly be a differentiator.

Game over for freemium?

finger on appThe freemium model has been, some would argue, the fuel behind the rapid growth of the apps market.  It has also given a well-needed boost to the games sector over the last few years.  However there have been growing concerns over exactly what is meant by "freemium", and the extent to which users are tempted into downloading a 'free' app or game only to find that in-app / in-game purchases are necessary in order to really enjoy its functionality / gameplay.  An adjudication was published earlier this year by the UK Advertising Standards Authority (ASA) in respect of a marketing email for EA's freemium app game, Dungeon Keeper. In summary, the ASA found that EA had breached the UK CAP Code and stated that:

"Although the game activities were available without cost to the player, we considered that for players to achieve the gameplay experience that was reasonable for them to anticipate, it was likely that they would need to spend money on the premium currency. The ad should therefore have made clear what consumers could expect from the free elements and that in-app purchases would have a significant impact on gameplay ... While we understood that the average consumer would appreciate that free-to-play games were likely to contain monetisation functions, we considered that they would also expect the play experience of a game described as 'free' to not be excessively restricted."

2015 is likely to see the ASA flexing its muscles which might affect the way in which operators market their games and the extent to which gameplay is dependent on in-game purchases.  Given the relatively low level of conversions generally, operators that rely on acquiring significant numbers of players quickly might well need to look at their business models.

Clouds will continue to form

The fact that nearly half the world's population will effectively have a computer in their pocket in 2015, will continue to drive the growth of cloud-based services, most notably centrally coordinated applications that can be delivered to any device, enabling users to maintain synchronous content and application state across multiple devices. Increased use of cloud models will continue to drive demands for service levels around availability (particularly from business users where a one-size-fits-all approach no longer works) as well as driving concerns around data security and portability. However, cloud will, and arguably has, become part of the norm, it is just a question of how much of the sky is covered.

Laws will change

clockHere's some real insight for you: the laws will change, it will take industry and its lawyers a while to work out how they apply in practice, and then, by the time we all do, technology will have moved on and the laws will be out of date.  In some ways 2015 will be much like any other year...

If you have any questions on this article please contact us.

close-up of person gazing
Graham Hann

Graham predicts some key trends in tech and media for 2015.

"Data will be the new medicine, users will write the news and we'll all be VCs."

"Here's some real insight for you: the laws will change, it will take industry and its lawyers a while to work out how they apply in practice, and then, by the time we all do, technology will have moved on and the laws will be out of date."