Big Ideas 2023 Summary: Digital Consumers

The trend toward digital consumption is accelerating. Our analysis suggests that consumers will continue to shift their leisure time from offline to online activities, increasing total online waking hours from ~39% today to 53% in 2030. As a result, adjusted for inflation, global digital leisure spending is likely to increase 17% at a compound annual rate from $6.6 trillion last year to $22.5 trillion in 2030, fueled by five consumer trends.

Connected TV (CTV)
Although ~85% of US households have access to one or more CTVs, the CTV ad market accounts for only 23% of US TV ad budgets.[1] CTV seems to be at an inflection point and is likely to take share from ad budgets in both linear and digital TV. CTV offers advertisers targeting and attribution measurements once reserved for traditional digital advertisers. Combining the advantages of linear TV and digital advertising, CTV could capture share of both brand and performance ad budgets. We believe total CTV ad spend will grow 20% at an annual rate in real terms during the next five years, from $21 billion in 2022 to more than $50 billion in 2027. 

New Social Platforms
Nearly 40% of Gen Z consumers prefer to search on TikTok and Instagram over Google Search and Maps.[2] Social platforms with the best recommendation engines are likely to dominate ad budgets, with content-based social media like TikTok likely outperforming follow-and-feed social media like Facebook.

Online Sports Betting
In 2022, during the first NFL season without COVID-19 protocols, total sports betting in the US and Canada increased ~83% year-over-year to ~$117 billion. Relative to the total, online sports betting volume soared from 17% in 2018 to 86% in 2022.[3] Based on ARK’s research, online sports betting in the US and Canada is likely to grow 27% at an annual rate in real terms during the next five years, from ~$117 billion in 2022 to ~$330 billion in 2027.

Video Gaming
The convergence among video games and social media should continue to catalyze revenue growth in gaming. Video games provide end-to-end virtual entertainment that rivals physical experiences that ARK believes should boost revenue growth from 7% at an annual rate during the past five years to 10% during the next five years.

Digital Ownership & Non-Fungible Tokens (NFT)
During 2022, NFT trading volume increased 15% year-over-year, dominated by high-profile collectible projects like Bored Ape Yacht Club and Crypto Punks, despite the minting shift toward utility-based projects—a longer-term trend that should benefit the ecosystem. Based on ARK’s research, global NFT transaction volume is likely to surge more than five-fold during the next five years, from $22 billion today to $120 billion by 2027.

For more information on the Digital Consumer please check out ARK’s Big Ideas 2023 here.

The forecasts presented in this material are based on ARK’s proprietary research models which are subject to numerous criteria, assumptions, risks, and limitations that are inherently uncertain, and there will be variations with real life that could cause substantially different results. The forecasts include assumptions on certain metrics, which are subject to change or revisions over time, that are influenced by ARK’s subjective judgments and biases that heighten the risks and limit the uses of the forecast as a decision-making tool. Given the unpredictable nature of markets and other future events, relying on forecasts is inherently risky. While we believe that there is a sound basis for the forecasts presented, no representations are made as to their accuracy, and there can be no assurance that such forecasts will be achieved or align with any actual results. The forecasts should not be considered alone in making an investment decision.

The content of this article is for informational purposes only and is subject to change without notice. This article does not constitute, either explicitly or implicitly, any provision of services or products by ARK and investors are encouraged to consult counsel and/or other investment professionals as to whether a particular investment management service is suitable for their investment needs. All statements made regarding companies or securities are strictly beliefs and points of view held by ARK and are not endorsements by ARK of any company or security or recommendations by ARK to buy, sell or hold any security. Historical results are not indications of future results. Certain of the statements contained in this article may be statements of future expectations and other forward-looking statements that are based on ARK’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Certain information was obtained from sources that ARK believes to be reliable; however, ARK does not guarantee the accuracy or completeness of any information obtained from any third party.

Works Cited

• Altruda, C. 2022. “Legal US Sports Betting Revenue, Handle And Tax Totals Since PASPA Repeal.” Sports Handle. https://sportshandle.com/sports-betting-revenue/
• Arizona Department of Gaming. Current ADG Reports. Data as of 01/25/23. https://gaming.az.gov/resources/reports#current-adg-reports
• IAB 2022. “2021 Video Ad Spend & 2022 Outlook May 2022.” IAB. https://www.iab.com/wp-content/uploads/2022/05/2022-IAB-Video-Ad-Spend-Report.pdf
• Insider Intelligence. Connected TV Ad Spending. Data as of 12/22/22.
• Insider Intelligence. TV Viewers and Penetration. Data as of 01/12/23.
• New Hampshire Lottery Commission. Financial Reports. Data as of 01/25/23. https://www.nhlottery.com/About- Us/Financial-Reports
• PA Gaming Control Board. Gaming Revenue Fiscal Year 2022/2023. Data as of 01/25/23. https://gamingcontrolboard.pa.gov/?p=320
• PLAYWV. West Virginia Sports Betting Revenue. Data as of 12/30/22. https://www.playwv.com/revenue/
• S&P Global Market Intelligence. Global Advertising Expenditure Forecast. Data as of 01/25/23.
• State of Colorado. Sports Betting Monthly Reports. Data as of 01/25/23. https://sbg.colorado.gov/sports-betting-monthly-reports
• Virginia Lottery. Sports Betting. Data as of 12/30/22. https://www.valottery.com/aboutus/casinosandsportsbetting/sportsbetting
• Wyoming Gaming Commission. Online Sports Wagering Revenue Reports. Data as of 12/30/22. https://gaming.wyo.gov/resources/revenue-reports/osw