The big themes facing the technology, media, and telecoms industry

The three major challenges facing executives in the technology, media, and telecom (TMT) industry are:

Theme 1: Gen AI moving from ideation to execution

The demand for compute power is increasing and access is proving expensive. As companies look to build larger models, the compute resources they require are immense. On the supply side, companies such as Nvidia continue to expand their offerings, and the hyperscalers are announcing plans to accelerate the development of their own chips. However, compute costs are a significant concern for enterprises.

Being data-ready will be critical to making the most of Gen AI. While the need to fix bad data has been emphasized for years, data continues to evolve and is often fragmented. GenAI can sift through and rectify the fragmentation more efficiently. However, companies must focus on defining the parameters of what their data should look like when optimized to be data-ready. This entails having clearly defined criteria and standards for data, ensuring it is structured to maximize the effectiveness of GenAI tools.

The debate between public and private LLMs will continue. Public LLMs may appear more cost-effective, easily accessible, and provide a base for innovation, while private LLMs will be better suited for customization, data privacy, compliance, and regulations. Companies will likely opt for the best of both worlds, just like they do with the cloud.

The initial implementations are focusing on productivity, but companies must move beyond that for disruptive innovation. Initial GenAI implementations are focused on driving productivity improvements, e.g., code assist tools for engineers to code faster or using LLMs to help create content. However, true innovation will occur once enterprises look beyond productivity and reimagine business models.

Theme 2: Streamers pivoting to profitability

While content remains king, the cost continues to rise. Streaming services are facing increasing content acquisition costs. Original content, which is a key differentiator, requires substantial capital investment. Rising input costs, as well as a talent shortage, are making content increasingly expensive to acquire. Streaming services are also venturing into acquiring sports rights, which tend to be costly but drive the demographic stickiness these firms covet in an increasingly competitive market.

With so many options and soaring out-of-pocket costs, consumers look to churn. The large number of services competing for their time, each with a significant price tag, enables customers to be increasingly picky about the services they subscribe to. The prevailing cost-of-living increases have acted as a catalyst for consumers to evaluate their streaming subscriptions.

Ad-funded streaming models provide an additional monetization opportunity. Today, all major streaming services offer the option of subscribing to services through an ad-funded model. This helps expand the customer base while providing a competitive price point. Advertisements on the platforms generate additional revenue.

As streaming services look toward profitability and reducing cash burn, M&A may whittle down the crowded field. With a packed marketplace, streamers—especially those that aren’t market leaders—will likely pursue M&A deals to derive synergies. For example, Warner Media announced a merger with Discovery and is in the process of merging its apps.

Theme 3: Monetizing 5G investments

Telcos have spent billions on 5G rollouts, but the lack of a killer app remains glaring. While users are experiencing faster 5G speeds, the lack of a killer app is making it very difficult for telcos to monetize their investments effectively. Their 5G investments have fallen into old business models of high-speed backhaul for businesses and lightning-fast B2C offerings. However, meaningful value creation for B2B services continues to elude telcos while the hyperscalers are lapping up profits.

5G-Advanced increases the scope of use cases. 5G-Advanced brings additional innovations, including more speed, maximizing coverage, and enhancing mobility and power efficiency. It will enable new services and experiences in AR, VR, and other immersive technologies. Its improved bandwidth and lower latency would allow operators to offer more complex and data-immersive services.

Providers will focus on modernizing internal processes to drive efficiency. Telcos are sitting on several legacy operations and typically have information residing in silos across the organization. Investing in solutions that help bring all that data together and drive further monetization through better customer service, personalization, etc., will be a focus area for telcos.

The Bottom Line: 2024 will be the year of innovation and optimization for TMT companies.

The TMT landscape in 2024 will require companies to navigate the interplay of exciting possibilities and pressing challenges. Success will hinge on two key pillars: innovation and optimization.

For tech companies, this means overcoming infrastructure limitations and maximizing the “data-cloud-AI” trifecta to unlock GenAI’s true potential. Media companies must embrace content creation and delivery innovation while optimizing costs through strategic partnerships and audience engagement strategies. Telcos must find innovative ways to drive 5G consumption beyond faster speeds while optimizing internal processes to improve efficiency and monetize their data effectively.

The companies that successfully embrace new technologies while streamlining operations will be best positioned to succeed.