Last year, I limited my predictions to the U.S. market. But the global economic meltdown has made the world flatter — and landed our nation flat broke. So to keep things interesting, I’ll extend my prognostication across borders.
I was playing with the idea of titling this column “Top Ten Tech Bailouts for 2009″ or “DeathCrunch: 2009,” but thought it best to keep our VentureBeat readers in high spirits (what with the holiday cheer and all). So without further ado, here are my top global trends to watch for the new year:
PC and online gaming continue healthy growth
There is no better indicator of this than World of Warcraft’s Wrath of the Lich King’s first-day sale of 2.8 million copies in mid-November. At $40 each, this accounts for $112 million, an astounding figure. I imagine the folks at Blizzard Entertainment had a pretty nice holiday party — drinking eggnog and munching on gingerbread cookies, macaroons and Turkish Delight to their hearts’ content…
And it’s not just the geeks keeping this segment of the market afloat either. Remember Swingers? Solid proof that cool, hip, unemployed men (and there will be many more of them) tend to play a lot of games.
But does this mean that all video game companies are recession-proof? Will that many more people opt for lazy, relatively inexpensive entertainment over going out? Not really. The NPD Group, a leading consumer market research firm, recently issued a report showing a dip in the overall video game market. October saw an 18 percent increase over sales from last year, but November’s sales were only up 10 percent. So the downturn is in fact taking a toll.
Console sales — which made up $9.4 billion of the $18.9 billion gaming industry in 2007 (according to the Entertainment Software Association) — will take a major hit. How many people will be willing to drop a few hundred bucks on a console? Plus $50 more for a game easily finished in a few days or weeks? That’s a lot to ask in the current environment. Even perennial favorites like Rock Band and Wii Fit will probably trend down due to expensive accessories.
PC and online gaming account for only 9.5 percent of total gaming sales ($9.5 billion). But the segment has the strongest prospects for growth. MMORPGs (massively-multiplayer online role-playing games) and others with multi-dimensional interaction options provide continuous character development, storylines and gameplay that bring you into contact with likeminded others. This gives them longevity and makes them worthier of that initial investment.
Video game makers should take note: Titles that deliver more value over a longer period of time will bring in more money during tough times — and that’s exactly what PC and online games do.
Surface computing slowly breaks into the mainstream
Traditional mouse and keyboard setups will start to be replaced by touch-sensitive screens that allow users to control functions with their fingertips. Hewlett-Packard’s TouchSmart PC is just the beginning.
I’m far from becoming a Microsoft fan, but Microsoft Surface is an important step forward for this technology, which will only become more pervasive in the next year. And Microsoft isn’t the only player in the game. As a TEDster, I have to plug Jeff Han’s multi-touch interface (see video below). All the while, Innotive, a company I advised, offers very cool interactive display technology.
The novelty of surface computing has led Microsoft into partnerships with Sheraton Hotels, Disney and Harrah’s Casino Hotels. These resorts have installed touch screens in their lobbies to provide local information and media tailored to their customers’ needs. The technology may only be mindly entertaining for now, but it provides substantial practical value. With the ubiquity of the iPhone, multi-touch screens are becoming increasingly intuitive, and already feel more natural than typing on a keypad in some settings. Say, for example, you are presented with a multi-touch screen as a menu in a restaurant — one click with your finger orders your meal.
But there’s even more potential in the boardroom with smart white boards becoming a reality. Imagine all the graphic facilitation geeks in your office suddenly gaining the ability to map out their ideas with just their hands? Joyous pandemonium! Dry-erase marker bonfires amid hearty rounds of Kumbaya! (At least that’s how I picture it.)
Shift from offline to online ad spend picks up speed
Advertising goliath GroupM projects that global ad spend will decrease by 0.2 percent to $458 billion in 2009 — dropping 3.2 percent to $157 billion in the U.S. alone. But I think online ad spend is a different story, and should see slow but steady growth. After all, eMarketer forecasts an 8.8 percent increase in online ad spend from $23.6 to $25.7 billion in 2009, and a 10.8 percent increase in 2010.
What will drive this growth? In short, more advertisers waking up to smell the recession. Newspapers make up only 5 percent of Americans’ media diet, yet they consume 30 percent of ad dollars. A report from Morgan Stanley last month revealed that, last year, advertisers spent $288 per home on internet advertising and $818 per home on newspaper ads. There’s something wrong with that picture when “death spiral” is the phrase usually ascribed to the state of print journalism. And more brands are starting to realize it — newspaper advertising has dropped 18 percent (about $2 billion) from this quarter last year.
Innovation increasingly imported from Asia
I appreciate Fareed Zakaria’s vision of a post-American world, but if we’re talking about 2009, I’d narrow it down to just Asia. Already, China and India produce five times as many engineers as the U.S., and it’s predicted that 90 percent of all engineers will hail from Asia by 2011. Yes, as in two years from now.
For the time being, the U.S. leads in R&D worldwide with 35 percent of the total output. China comes in second with 16 percent, and Japan in third with 13 percent — but both are catching up fast. The money is there, no doubt. It’s the culture of creativity and entrepreneurship that will really give these countries the boost they need. Innovation and idea generation are fairly strong in Japan and Korea, and have been picking up in China and India due to improving education and a reverse diaspora. Taking these factors into account, Asia is clearly poised to overtake the west in technological achievement in the coming decade.
As a student of Czech economist Joseph Schumpeter and Columbia University’s Richard Nelson, I believe that this type of achievement is the primary driver for long-term economic growth. With its workforce dominating engineering, its growing entrepreneurial spirit and its hunger for knowledge, Asia is positioning itself as the world’s primary economic engine — with the potential to reign indefinitely.
Regardless, the U.S. will maintain its leadership in innovation through the end of next year, but perhaps not long after that. Will Asia’s brute strength in the tech arena outweigh cultural, legal and policy limitations?
This is a question not just for 2009, but the next five or even ten years. For now, these are my predictions for the year ahead. Do you agree? What global trends do you taking hold in 2009 and beyond?
Originally posted at VentureBeat.