Long reads

Mobile commerce will lead the way in 2021

Jonathan Kriegel

Jonathan Kriegel

Director & Group CEO, DOCOMO Digital

Pandemic fuelled acceleration of smartphone content consumption, mCommerce and mobile payments will continue in 2021

Predictions are notoriously hard to make, and even more difficult for 2021 given the constant economic turmoil caused by the coronavirus pandemic. But with national governments worldwide imposing new lockdown restrictions every week we can be reasonably sure that the first quarter of this year will see digital content consumption and eCommerce trends of last Spring and Summer to continue if not amplified.

It was noticeable that subscription video on demand (SVoD) providers like Netflix saw a surge in new registrations in the second quarter of 2020 when national lockdown restrictions were first introduced in countries across the world. The same trend saw Disney+ quickly attract over 73m paying customers in the first 12 months of its operation as parents with young children judged a subscription as a convenient and easy-to-access form of family-friendly entertainment during long periods of home confinement.

After easing some restrictions over the Summer and Autumn months, severe lockdowns are back with a vengeance for the Winter and are not expected to be reduced in many countries until March 2021. That leaves hundreds of millions (if not billions) of workers and students again confined to their houses on a mass scale in the early part of this year, with few entertainment options available beyond their televisions and computers.

Last year's rapid growth in SVoD subscriber numbers will be harder to replicate, however, not least because of the additional competition coming from new market entrants.

With Warner Media and HBO debuting in the US at the end of last year, for example, the rate of customer switching between different services has already started to rise according to research from market intelligence firm Kantar. And the willingness to switch between providers is likely to accelerate further if movie studios continue to release their current backlog of new titles directly onto SVoD platforms rather than Coronavirus restricted cinemas (read more detail in our recent blog here).

Mobile and cloud gaming will drive participation and revenue

Many people also turned to computer games for entertainment last year, so much so that research firm Newzoo revised its original market forecasts upwards by 9% to predict that the global gaming market was worth US$175bn in 2020. I expect the same drivers to push growth even further in 2021 – driven again by continuing lockdown restrictions coupled with improved digital infrastructure in emerging markets.

I expect to see that Smartphone games will expand to account for an increasingly large percentage of total gaming revenue. They made up 43% of the 2020 total, having grown 29% year on year.

And Newzoo's predictions for 2021 were made before governments across the world began to enforce nationwide lockdowns to cope with new variants of Coronavirus in December and January however, and I expect the pace of growth to again pick up in the first calendar quarter of 2021.

Cloud gaming platforms newly launched and updated in 2020 – including Sony's PlayStation Now, Microsoft's xCloud, Nvidia's GeForce Now and Google's Stadia – will attract additional regular, subscribers in 2021, while enticing existing mobile gamers to spend more time and money playing new titles. ABI Research's latest 5G Media and Entertainment application analysis report estimates that the extra reach and enhanced performance of 5G networks will drive almost US$1.9bn of new

eCommerce growth uneven

Beyond the entertainment sector and with shops in many cities having again closed their doors, people will have little choice but to again buy many of their non-essential goods online in 2021. Another surge in specific categories of eCommerce is once more on the cards despite an overall decline in overall retail activity as some families rein in their spending amongst continuing economic uncertainty.

Statistics compiled by eMarketer and Insider Intelligence suggest online sales of cleaning supplies, personal hygiene, and food (both groceries and takeaways), consumer electronics and appliances, toys, books, games, footwear and clothing rocketed in 2020, alongside those of fitness and wellness goods, furniture and home décor products. Those buying patterns are likely to continue in the first half of 2021 both as long as lockdown restrictions persist, and indeed afterwards as people stick to their newly discovered or expanded online shopping habits.

Older shoppers are switching to digital purchases for the first time. A survey of over 4,000 consumers in the US, Germany, the UK, Italy and Spain conducted by the Economic Intelligence Unit (EIU) as part of its Influential Shopper research programme found it was people in the Baby Boomer (born between 1946 and 1964) and Gen X (1965 to 1980) age groups which increased their online buying activity by the largest percentage during the first and second quarters of 2020.

mCommerce and mobile payments take an increasing share

The volume of mobile eCommerce (mCommerce) transactions was already growing before Coronavirus hit, and I expect them to expand further this year. Shopping through smartphones, tablets and other mobile devices rather than desktop computers will be made progressively faster and easier in 2021 as hardware makers, software developers and online retailers focus on improving small screen customer interfaces and transaction processes.

Even before additional lockdown restrictions were announced, Statista was already predicting that mCommerce sales would expand to represent almost 73% of total retail eCommerce sales worldwide, up from just over 70.4% in 2020 and 67% in 2019. As individual mCommerce transactions' value rises, identity verification will become increasingly crucial for purchases, with embedded biometric security mechanisms in smartphones ideally placed to validate logins and financial transactions.

Coronavirus health concerns have already prompted many physical bricks and mortar retailers to upgrade their point of sale (POS) infrastructure to support contactless payments, with some refusing to accept cash transactions entirely in 2020. That trend will continue and potentially accelerate in 2021, encouraging more people to use contactless payment technologies like NFC and RFID embedded in their smartphones.

Mordor Intelligence is now forecasting a CAGR of almost 27% for the mobile payments market between 2020 and 2025. And new market estimates from Juniper Research published in December 2020 have predicted that the total value of mobile commerce payments will reach US$3.1tn in 2025, up from US$2.1tn in 2020 after a massive boost in the volume and value of transactions processed using electronic wallets (eWallets).

Flexible payment options in demand

Whatever people buy this year, having a fast, secure and convenient digital payment mechanism at their fingertips will be essential to facilitating their purchases of both digital and physical goods and services.

If 2021 does turn out to be the year of the "Boomerang" SVoD subscriber who switches from one provider to another to access unique content, for example, being able to quickly and conveniently cancel or suspend one whilst signing up to another is likely to be a key enabler.

Gamers, too, particularly those playing on mobile platforms, will need flexible approaches to paying for new titles and downloading additional content. SVoD providers and game developers can reach a much larger pool of potential customers by enabling purchases for younger segments of the population and those in emerging economies without access to credit or debit cards, or even bank accounts.

The key for retailers is to support as many digital payment mechanisms as different customer segments demand to maximise sales and minimise the rate of transaction abandonment. With smartphones rapidly becoming the device of choice for eCommerce purchases, partnering with mobile network operators (MNOs) to fund purchases directly from a mobile subscribers phone account represents a safe, secure method of enabling and processing those transactions.

Digital adoption trends will persist post-pandemic

Governments have already warned that pandemic restrictions will not end with a bang but are more likely to be gradually phased out over a longer timeframe. And suppose new coronavirus variants continue to emerge. In that case, partial and full lockdowns may be reinstated on a temporary or regional basis.

Consequently, I expect many consumers to stick with the habits they have developed in response to the Pandemic in 2020 through 2021 and beyond, perhaps simply because going back to the old way of doing things might be disruptive in more ways than one.

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