After a wild 2023 that included economic headwinds, strikes and shifting customer demand, the communications and media industry is expected to see another year of change. Here are five predictions for 2024:
#1: The funding winter tapers, and strategic deals begin to emerge
Many communications and media companies have accumulated debt positions by leveraging low interest rates to fund 5G and fiber rollouts. They face a debt wall that may require refinancing at today’s borrowing rates—which are at their highest since the 2008 financial crisis.
While the U.S. Federal Reserve’s contemplated plan for multiple rate cuts this year could result in an increase in strategic dealmaking by late 2024 and into 2025 as private equity, sovereign funds and high-market-cap tech companies invest in or buy out smaller companies struggling to secure financing.
We also expect to see co-investment partnerships and deals with hyperscalers and global system integrators (GSIs) to better monetize legacy networks, and even sharing of new network deployments to manage capital expenditure. GSIs and hyperscalers are expected to kickstart a wave of “softwarization” of networks to allow for efficient, optimal service deployment and service management.
#2: The Future of AI in Communications and Media
We can expect to see significant progress in the implementation of AI-powered solutions in both enterprise and entertainment. In the enterprise sector, we anticipate that production use cases for Gen AI will move from theory to practice, focusing on cost optimization, efficiency, and reliability. Communications and media companies will likely look to optimize network performance, reduce downtime, and improve the quality of service with the help of AI. At the same time, improving the user experience and workforce efficiency through intelligent insights and automation will also be a top priority.
In the entertainment industry, AI is transforming live events by enhancing the user experience through advanced technologies such as adaptive gaming, personalized content creation, and customized recommendations for AR/VR. However, this integration of AI also presents challenges, including potential job displacement, content ownership and copyright concerns, and privacy issues. As AI's presence grows, we can expect to see a surge in legislative and regulatory actions to address these ethical, legal, and privacy concerns, shaping the future landscape of AI in entertainment.
#3: Now going mainstream: NaaS, 5G stand-alone deployments, and non-terrestrial networks
Communication service providers (CSPs) are expected to begin realizing the value of highly touted 5G use cases such as vehicle-to-vehicle communication, remote surgery, and virtual reality-based immersive metaverse networking. The most promising use case for CSPs remains Wi-Fi upgrade - from broadband to fixed wireless access and private 5G. 5G use cases and operational automation will depend on CSPs’ ability to create cloud-native network platforms with end-to-end programmability.
With the communications industry’s AI focus shifting from creative use cases to efficiency and optimization, we expect to see mainstreaming of Network-as-a-Service (NaaS) with unsupervised, closed-loop learning and intent-based architecture by automating and optimizing the creation, orchestration, and management of cloud-native network components. NaaS brings CSPs the ability to provide granular abilities around connectivity - from location, bandwidth, and billing perspectives. In 2024, we expect strategic partnerships with service providers to identify new use cases and define new APIs. Last year’s launch of the GSMA Open Gateway Initiative and the showcase of API-based use cases point toward the future of monetization.
5G stand-alone (SA) networks are gaining steam and expanding, with 121 operators in 55 countries investing in public 5G SA networks as of October 2023. To deliver on 5G’s value proposition of high data speeds and low latency, CSPs will need to accelerate SA deployments even faster in 2024. In addition, non-terrestrial networks (NTN) have been making progress with newly evolving technologies like low-earth-orbit satellite constellation. This year will witness the emergence of hybrid networks in which NTN technology extends wireless broadband to areas inaccessible to traditional terrestrial networks.
#4: Network sustainability becomes a C-suite mandate
Commitment to net zero will be a topic of top significance in many corporate boardrooms. 5G uses less energy per bit of data than 4G, but the massive increase in data volume means 5G’s energy footprint is significantly larger. As a result, telecommunication companies face social, regulatory, brand and cost pressure to optimize energy consumption. We expect to see telecommunication companies borrow ideas from other industries, such as power distribution and oil and gas, as they blueprint best practices for network sustainability. Telcos will likely need to revisit their radio planning and optimization approach, deploy air-cooled and liquid-cooled edge capabilities, and even scale up network operating centers to drive network sustainability.
#5: M&A deals likely to bounce back in media, broadcast, and digital publishing
The media, broadcast and digital publishing industry is on the cusp of transformation. As streaming platforms like Netflix, Hulu and Disney+ hit a growth plateau, these companies are responding to industry changes by consolidating and enhancing their content.
Last April, Warner Bros. Discovery combined HBO Max and Discovery+ into a unified service named Max. In December, Disney introduced a beta version of a single-application experience that integrates Disney+ and Hulu. Media outlets have reported that Warner Bros. Discovery and Paramount Global are in discussions about a possible merger. The trend underscores the companies’ ongoing efforts to strengthen their market positions and increase competition barriers. Additionally, rising programming costs have forced most streaming providers to increase their subscription price. To hold price-conscious “cord-cutters,” providers like Disney+, Netflix, Max and Amazon Prime are all taking a page from the Hulu playbook and introducing ad-supported streaming, which was essentially the economics of cable TV.
The upshot is that after a relative pause in 2023, interest in M&A is expected to resume in 2024. As streaming costs outpace revenues and content budgets continue to fall, major streamers like Netflix and Amazon Prime, as well as Big Tech behemoths, will eye vulnerable traditional media players - following Amazon’s buyout of MGM.
