Every year, Nomura Research Institute (NRI) publishes IT Navigator, which provides insight into future business model possibilities. In addition to the 26 fields covered last year, the 2019 edition adds 5 new topics including “xTech”, which uses digital technology to bring about structural changes in a variety of industries and fields. We also conducted consumer and employee surveys and forecasted the market size by 2024. In this paper, we introduce the latest trends and future prospects of areas of particular interest.
Digital Transformation Accelerated by 5G――Shunichi Kita, Partner Consulting Division
Commercial 5G (5th generation mobile communication system) services are set to begin from 2019. As a platform to realize Society 5.0, 5G is expected to accelerate the digital transformation (DX) of society and industries, and bring about working and employment styles that are not restricted by time or place. Nonetheless, digital technology including 5G are mere tools.
With the acceleration of digital disruption, the value proposition of all industries and companies is being redefined. Traditionally, each industry had a different definition for its users, such as “audience” in the broadcasting industry, “consumers” in the retail industry, and “depositors” in the banking industry. However, now they must provide value to “digital consumers” who can get all services in their smartphone, regardless of the industry. Moreover, the number of people above the age of 50 will comprise more than half of the population by 2024. In the ICT industry, all fixed-line telephones will be converted to IP and the lack of personnel involved in exchange maintenance will become a serious problem. A revolution in human development and productivity is required across society and industries.
A company’s corporate philosophy and vision is also its foundation to avoid being vulnerable to environmental changes. NRI believes that cultivating digital human resources on an urgent basis is important in order to rebrand itself as a company that can continuously reform itself while making full use of various technologies including 5G and to properly define the kind of value it provides to the world.
Emerging e-sports industry――Daichi Kumabe, ICT Media & Service Industry Consulting Department
E-sports is an abbreviation of “electronic sports”, and is a generic term for competition using video games. As they can be played by anyone regardless of gender, age, and physical ability, their popularity is exploding throughout the world. The market size in 2018 was estimated to be about 900 million dollars, and it is expected to grow to between 1.6 and 3 billion dollars by 2021.
In Japan, more and more companies are focusing on e-sports even in industries unrelated to video games, including companies like KDDI, Leopalace 21, Aeon, Nippon TV, etc. However, the market size in Japan is only 500 million yen, far behind the rest of the world.
The reasons for this are low recognition, low acceptability (discomfort with terming video games as sports), and legal issues. Due to the legal issues, it is difficult to offer expensive cash prizes or to hold tournaments. In order to promote their future spread, it is first and foremost important to properly recognize them. To do so, it is important to have star players who can communicate the appeal of e-sports. Their usage scenario is expected to expand beyond tournaments to fields such as education and healthcare.
Ecosystem to support startups in Shenzhen, China――Zheng Yuan, NRI Shanghai
It would not be an exaggeration to say that it is Shenzhen that supports China’s rapid advances in innovation. The number of newly registered companies in Shenzhen is greater than even Beijing or Shanghai, and approximately 9 times that of Tokyo at 380,000. Major companies headquartered in Shenzhen alone account for more than half the number of PCT (international patent) applications in China.
Shenzhen is known as the hardware capital of the world, but recently, companies in the fields of healthcare, tools & software and e-commerce are also growing rapidly in the city. In addition, the Shenzhen fund investment scale is 50 billion yuan. There are plenty of players and places to foster and support multiple startups from the financial and development perspective.
In Shenzhen, which is a “mass entrepreneurship and innovation” area where people, funds, and places are integrated, it is important for Japanese companies to have some point of contact in order to partner with startups. Further, they should consider promptly creating small success stories by making use of makerspace and accelerators, and optimizing global R&D based on that experience.
Industrial Drone Market――Taichi Natake, ICT Media & Service Industry Consulting Department
The estimated value of the industrial drone market in 2018 was 31.9 billion yen, and it is expected to reach 150 billion yen by 2024. The drone market can be divided into 5 broad use categories, namely “production support for agriculture, forestry, and fisheries”, “infrastructure inspection”, “aerial photography and monitoring”, “surveying”, and “transport”. The largest one at present is spraying of pesticides; it is said that more than 40% of paddy fields in Japan use drones (such as unmanned industrial helicopters) for spraying pesticides. In the future, promising growth is expected in the area of checking and inspection of social infrastructure such as bridges and electrical power equipment. In transport as well, demonstration experiments for logistics between remote islands have already started, but commercialization is expected to take time due to safety issues.
The role of the government is also important in the future development of drone use. The government has created a roadmap for drone utilization. Level 2 “Autonomous flight within line of sight” has been commercialized, and demonstration experiments for Level 3 “Out-of-sight flights in unmanned zones” will start from this year. However, there are many non-technical hurdles to overcome before achieving Level 4 “Out-of-sight flights in manned zones”, such as review of the responsibility and insurance system for accidents and societal acceptance. It is necessary to watch closely how the government and the industry collaborate and how it can develop as an industry.
Sustainability management and use of ICT――Kaga Yanagisawa, ICT Media & Service Industry Consulting Department
There are various noteworthy topics for 2024. In the present times, there are virtually no industries that are not connected to ICT (Information and Communications Technology), and thus it is important for all of them to understand the latest trends in ICT. Moreover, companies must also keep the perspective of sustainability in mind. The importance of sustainability management is in the fact that it sheds light not only on economic value but also on social value from a long-term perspective. As the threat of digital disruption is attracting attention, in order to suppress this risk and discover new business opportunities, it is important to determine the kind of social value that companies should create in the mid-long term and to operate while using ICT "intentionally" and "strategically".
Nomura Research Institute, Ltd.
Corporate Communications Department