[Software] Industry Outlook 2023-2025: Digital Services and Software

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Total revenue to the digital services and software industry is forecast to grow at an average annual rate of 19.0-20.0% over 2023-2025, due to consumers’ increasing reliance on the ease and comfort provided by digital services and the post-Covid growth in mobile-based contactless payment systems. In addition, the industry will also benefit from greater investment in businesses’ digital transformation and the accelerating drive to build added value using digital technologies. 1) Digital services: Revenue will rise by 22.0-23.0%, supported by continuing growth in normal day-to-day transactions on digital platform that expand outside areas to more rural regions. Large digital service providers are increasingly partnering with other businesses to offer a more comprehensive range of services. 2) Software and software services: Revenue is expected to strengthen by 11.0-12.0% per year, driven by business transformation towards real-time big-data analytics especially on cloud service system to add value through mass customization of goods and services. 3) Digital content: Revenue growth should average 13.0-14.0%, driven by stronger performance by the gaming industry, in particular by the development of games that offer new types of experiences for greater platform engagement. The animation and character segment will enjoy a recovery thanks to stronger demand from overseas buyers from the entertainment industry, especially from growth in Over-the-Top streaming. Krungsri Research view During 2023-2025, overall revenue to this business has a potential to grow further for every group of segments especially for digital services business that is forecast to be a main driver of overall performance. Digital services: Revenue will tend to strengthen on more intense competition between enterprises to offer platform-based services to customers, while new technology is allowing companies to develop and expand the range of services that they offer. The markets for e-retail, e-logistics, and online media e-content are now sizeable and so turnover and growth rates will be healthy for players active in these. While the e-tourism and e-health markets are still small, the reopening of Thailand will help to support faster rates of expansion. Software and software services: Revenue growth will be supported by expansion in the provision of cloud-based technologies and in the greater reach of 5G networks. This, together with the use of large-scale data analytics, will then allow businesses to engage in the mass customization of goods and services. In terms of turnover, the best-performing areas will be SaaS, and software integration and customization, which will then have the consequence of boosting demand in adjacent areas in supply chains, such as software consultancy, although competition will remain intense. Digital content: Revenue growth will accelerate as platform-based game developers and distributors offer gamers new experiences, boosting turnover. For players working on animation and character development, revenue will also benefit from the recovery in demand for entertainment and media in export markets. Overview The digital services and software industry is responsible for the design of products and the offering of services that are based on digital technology. This includes the development of digital platforms and the use of these to deliver informational and other types of content to users, as well as software development and the provision of software services. This has now become a crucially important part of the value creation process towards digital economy. Indeed, the global industrial transformation is now shifting business leaders’ attention away from a focus on raising the efficiency of industrial processes to a new business model of digitalization that uses digital technology to add value to goods and services. These processes are thus tending to broaden the ways in which value-added is built into digitalized services (UNCTAD 2021, Figure 1).

https://www.krungsri.com/en/research/industry/industry-outlook/services/digital-software/io/io-digital-software-2023-2025