2019 in Review: Dealing with the Unintended Consequences
A roundup of this year’s winners and losers in tech, media and culture
Author's note: an unabridged version of this article was first published on the Medium site of IPG Media Lab. If you wish to get the latest insights from us, please consider following us on Medium and Twitter @ipglab.
Welcome to the end of 2019. As we close out on this incredible and tumultuous decade, it is truly a marvel to look back and reflect on how drastically our ways of living have been forever altered by the unbridled advances in technology and digital media. This is the decade that smartphones went mainstream, unleashing a mobile revolution that reshaped our economy and lifestyle. Silicon Valley promised us a better world through disruption, and for a while, it seemed like they are truly delivering on that lofty promise. In the 2019 Outlook report that we published at the beginning of the year, however, we saw the tide of public opinion turning against the kind of techno-utopianism that we started this decade with, as the myriad of unintended consequences of technological disruptions across categories became increasingly acute.
Throughout 2019, this round of “tech-lash” has shown no sign of slowing down, putting big tech firmly on the defensive. Facebook and Google executives appeared in front of the U.S. Congress multiple times to defend their business models against allegations of antitrust and compromised data privacy. In the spring, YouTube encountered an intense round of public scrutiny in the first half of the year as content safety issues, especially those around kids content, re-surfaced. Facebook unveiled its grand plans to pivot towards privacy-focused messaging, which was met with widespread suspicion, and later received immediate regulatory scrutiny over its plan to launch a cryptocurrency. As Facebook’s reputation continues to evolve, the rise of TikTok and other connected communities, especially in online gaming, continues to unbundle social media and fragment the social landscape.
Apple doubled down on its stand on protecting user privacy against data collection, yet still found itself in hot water over its censorship in China and undisclosed use of third-party contractors hired to review Siri recordings. Amazon, Facebook and Google also faced varying degrees of backlash for doing the same in the name of improving their voice assistants over the summer. All four companies quickly shut down or modified their respective review programs. In the fall, the thwarted IPO of WeWork and the passing of the AB5 bill revealed some inherent flaws in the much-hyped sharing economy that has been powering the fast growth of disruption economy for the last few years.
Beyond big tech, the ongoing streaming wars also started to escalate in the second half of 2019 with the arrival of Apple TV and Disney . The gap between media haves and have-nots continues to widen as more and more ad-free media subscriptions such as Apple News and Google Stadia launched to much fanfare while ad-supported streaming services like IMDb TV and Pluto TV continue to grow. Data privacy is increasingly akin to a luxury good, forcing brands to re-examine the data-value exchange they offer and seek to restore the balance. Meanwhile, lifestyle branding continues to grow in 2019, with various brands adopting lessons from the D2C playbook to establish direct consumer relationships and build consumer trust.
Despite mounting public and regulatory scrutiny, the tech industry pressed on, furthering their reach into various sectors, including vital, high-margin industries such as personal finance, transportation, and healthcare. Apple launched its own credit card, raising the bar for mobile user experience design and pushing the entire industry forward. Uber and Lyft both launched loyalty programs while diversifying their services. Amazon unveiled a telemedicine-driven healthcare program Amazon Care for their own employees, offering a peek into how they plan to leverage its software and logistics prowess to enter the healthcare market. Tech may be under attack in the court of public opinion, but the industry still made significant progress over the past twelve months.
Taken together, 2019 turned out to be a perfectly appropriate turning point as we finally come to terms with the unintended downsides of tech-fueled disruptions and started dealing with the consequences in earnest. Keeping to our yearly tradition, let’s round up this year’s hottest topics in tech, media and culture, and see how each of them fared and how consumer attention shifted in 2019.
AR 📈 | VR 📉
Building on its meteoric rise to prominence in 2018, augmented reality (AR) maintained its momentum in 2019 as it continued to expand addressable audience and use cases. eMarketer estimated that in 2019, 68.7 million people in the U.S. (about 24% of internet users) used AR at least once a month, up 15% from 2018. With digital platforms like Facebook and YouTube introducing AR-enabled ad products to boost engagement and early-adopter brands like Coca-Cola and Spotify jumping in to experiment with new use cases that add new dimensions to the customer experience, AR has had a great year in the spotlight, and it is poised to become even more central to the next stage of innovation and brand communication in the coming decade with Apple and competitors ready to launch next-gen AR wearable products.
In contrast, the spotlight on Virtual Reality (VR) significantly dimmed in 2019. Facing stagnant headset adoption, waning consumer interest, and dwindling VC funding, many VR startups like Jaunt and Vreal had no choice but to downsize or pivot, if not outright close shop. Despite the arrival of more affordable, standalone VR headsets like the Oculus Quest and Lenovo Mirage Solo, VR adoption among consumers has yet to see a significant uptick. According to data from IDC and Statista, worldwide VR headset shipments for consumer use totaled 4.55 million in 2018; it was estimated to grow just 6.6% to a meager 4.8 million in 2019. Both Samsung and Google have decided to officially cease work on their respective mobile VR headsets.
While mainstream adoption of VR remains a distant hope, new experiments aiming to build social VR and immersive storytelling, such as Facebook Horizon, are seeding the foundation for the future of VR. Even though VR is still far from realizing its full potential as a mass media platform, it nevertheless remains an exciting technology tool for brands to employ for on-site experiential activations. It is entirely possible that the mainstream adoption of AR headsets over the next decade will pave the way for VR to eventually make a comeback.
TikTok & Instagram 📈 | Facebook 📉
TikTok is undoubtedly the breakout app of 2019. The Bytedance-owned social video app waged a heavy paid media campaign and became the first Chinese-owned app to break into mainstream consciousness in the U.S., especially among the younger generations. About 60% of TikTok’s 26.5 million monthly active users in the U.S. are between the ages of 16 and 24. The impact of TikTok memes reverberated strongly throughout pop culture this year with highlights including “Old Town Road” and “OK Boomer”. Globally, TikTok has passed 1.5 billion downloads worldwide, according to data from Sensor Tower. Its tie with China, however, proves to be potentially detrimental to its global ambitions, as allegations of censorship started to emerge while the U.S. government launched a national security review of TikTok owner ByteDance near the end of 2019. TikTok had a great year of breakthrough, but it remains to be seen if the short-form video app can maintain its cultural relevance in 2020.
If TikTok is the rising ingénue hot on the social scene, Instagram is still the star of the show in social media. With over one billion monthly active users worldwide, who spent an average of 15 minutes per day, Instagram remains the epicenter of digital culture and trends, largely unaffected by the wave of public scrutiny towards its owner Facebook. Stories continued to grow in popularity as more users embrace the private and transient nature of the format, and ad spending naturally followed as Story Ads pushing Instagram’s revenue to new heights, which Statista projected to more than double to $14 billion this year.
In addition, both Instagram and TikTok have started to venture into social commerce as they roll out shoppable features and ad units. At a time when 69% of Millennials have made a purchase based solely on an online influencer recommendation, per data cited in Magna’s 2019 report on influencer marketing, it is important for brands to keep an eye out on the growth of these two social media darlings.
Not everything is sunshine and rainbows in the land of social media. As we mentioned earlier, 2019 turned out to be another tough year for Facebook as the social media giant struggled to fend off regulatory sanctions and rehabilitate its public image. Still dealing with the aftermath of the 2018 Cambridge Analytica scandal, not to mention the many, many minor ones around data privacy that broke out since, Facebook’s brand trust hit an all time low in 2019, with over 60% of U.S. users surveyed say they would not trust Facebook with their personal data. At the end of 2019, Facebook stands out as the company most likely to suffer in ongoing antitrust crackdown on big tech. Nevertheless, Facebook remains a formidable force in social media with unparalleled reach in global audiences and maturity in its sophisticated ad products.
OTT Streaming 📈 | Linear TV 📉
The shift of audience attention from linear TV to on-demand streaming services continued apace in 2019. OTT streaming services, led by Netflix and Hulu, maintained their strong growth momentum throughout the year, with consumer enthusiasm hitting new peaks with the arrival of Apple TV and Disney in November. Netflix alone released 371 original series and movies in 2019, representing over 50% increase over 2018. To put that into perspective, that is more than the entire TV industry output in 2005. Meanwhile, Disney has scored an estimated 24 million U.S. subscribers as of the end of November, Variety reports. Overall, Hollywood’s business model is changing as the rise of super bundles opens up an opportunity for the media companies to pivot away from its risky hit-driven business model.
As the streaming services rise, the pay TV audience dwindles. The most recent Media Access Quarterly by Magna found that cord-cutting accelerates once again with 69% of US homes subscribing to a pay TV service, down from 90% 10 years ago. The number of homes with traditional cable TV subscriptions has continued to decline from last year’s 74% coverage down to 69%. Meanwhile, smart TV sets and stand-alone OTT devices continue to see growth with 72% of US households owning at least one connected device, corresponding to 70% of homes subscribing to at least once SVOD service.
Looking ahead, streaming will account for 60% of all video viewing in 2020, compared with 56% in 2018, and is poised to account for 70% in 2024, according to a new joint report by Magna and the Lab. 2020 will serve as a moment when streaming fully takes over linear TV as the dominant mode of video consumption for some audiences, thus altering the rules of engagement for brands looking to reach video audiences at scale.
AirPods 📈 | Foldable Phones 📉
In terms of tech gadgets, nothing is hotter than Apple’s AirPods this year. As the trendsetter in the “hearables” sector, which consists mainly of wireless headphones with digital assistant integrations such as Google’s Pixel Buds and Amazon’s Echo Buds. AirPods have been steadily gaining popularity and cultural relevance since its initial launch in December 2016, as evidenced by the numerous memes it engendered. In many ways, the arrival of the AirPods Pro in November this year marks an inflection point for the hearable market. Thanks to the H1 chip Apple specifically designed for AirPods, users can seamlessly switch between active noise canceling and a new Transparency Mode, which allows users to hear the environment despite wearing earplug-like earbuds. In other words, people can now selectively augment or silence their environment, on-demand. This indicates that Apple is cognizant of some people keeping their AirPods on all the time. This behavior, combined with the existing hands-free Siri access, opens new, intriguing ways for brands to prompt consumers with contextually relevant audio cues based on location and other data sources.
Working with wrist-worn wearables, AirPods and other hearable devices conjure up a tantalizing glance into the next stage of voice computing, where everyone has a personal assistant whispering in their ears, offering helpful prompts and personalized information. Moreover, unbundling voice assistants from the smartphone and smart speakers will also bring them into new contexts to unlock new use cases that brands can leverage.
In comparison, this year has not been so kind to the foldable phones. Although they entered 2019 with a lot of hype, a botched launch of Samsung’s Galaxy Fold in April, arguably the most anticipated foldable phone launch from a major smartphone brand so far, made it clear that foldable phones are not quite ready for the mass market yet. In addition, questions linger around exactly what value a larger, albeit foldable, screen can really add to the mobile experience and whether a novel form factor alone would be enough to convince smartphone users to upgrade. If anything, the upcoming foldable Motorola Razr, a reincarnation of the beloved flip phone, seems like a better design concept in comparison, although its $1,500 price tag could severely limit its market appeal.
Fortnite 📈 | Google Stadia 📉
As the leading MMO game (massively multiplayer online game), Fortnite hit some incredible new heights in 2019. Having burst onto the scene in 2017, Fortnite has since become a worldwide cultural phenomenon, amassing almost 250 million players as of March 2019. Even though it is a free-to-play game, players are spending real money in the game to stand out with customized looks and dance moves. A 2018 survey found that 69% of Fortnite players have made in-game purchases, spending $85 each on average. No wonder brands like Nike and Gucci have released exclusive virtual goods in Fortnite to build brand affinity.
But Fortnite is more than just a popular online game that marketers can partner with for brand integrations. For some, it has quickly become a virtual space to hang out in, either with friends they know in real life or the ones they made in the game. In other words, think of Fortnite as less of a game and more like a place for people to congregate and socialize, to attend a virtual concert by DJ Marshmello with 10 million other players, or to watch the latest trailer for Star Wars while playing with lightsabers. It could very well become a media channel as it grows as a group social experience, creating new opportunities for brands to reach a growing global user base.
The shift from console-based gaming to cloud-based gaming is not without its complications. Google’s highly anticipated cloud gaming subscription service Stadia offers a stark reminder of the dangers of when execution does not always match with consumer expectations, even if the technical foundations are theoretically sound. After much fanfare, Google launched Stadia in November to mixed reviews that cited prevailing performance issues. Early users reported lagging and syncing issues with the service, as well as the video quality being below the 4K resolution that Google promised. While it’s possible some of the performance issues Stadia users ran into were from their own subpar internet speeds,. But even players on high-speed internet services reportedly encountered these problems.
Additionally, it is also missing some of the cool features that Google previously announced, including all the multiplayer and social features for sharing and collaborating on games. All these issues could be attributed to early jitters at launch, but they nevertheless suggest that Google’s cloud services may not be optimized properly to handle the cloud computing that a service like Stadia requires. More questions also remain on whether the streaming model is truly suitable for premium video games, given today’s market dynamic and user behavior.
Cannabis & CBD 📈 | Vaping 📉
2019 was a breakout year for Cannabis products and in particular, CBD-infused products, thanks to the wave of marijuana legalization sweeping the states. An entire value chain has sprung up around weed and weed-adjacent products. While the weed economy has been around for decades, it did not enjoy the kind of scale and visibility brought on by legalization. From on-demand delivery to high-end designer weed, VC investments are pouring in to modernize the weed business just as they have done with many other CPGs. Based on the $52 billion in sales the industry posted to the 76% increase in cannabis jobs this year, marijuana legalization is already making solid contributions to the U.S. economy.
CBD, a non-psychoactive chemical extracted from cannabis, has been exploding onto the scene thanks to the passage of the US Farm Bill in 2018. Depending on where you live, CBD-infused products can be found in supermarket aisles, in convenience stores, and even some restaurants and bars. In 2019, CBD is also being incorporated into a wide range of lifestyle products from athleisure apparel and skincare products to household goods like candles and pillows, becoming a catch-all magical ingredient for brands looking to capitalize on the buzz and add some competitive edge to their offerings.
Interestingly, the booming weed business may come at the expense of other sectors of the vice economy. In particular, the vaping industry took a significant hit this year due to increased regulatory scrutiny. Over the past few years, the growing popularity of vaping products such as JUUL and JUNO among younger generations have been regarded by some as a comeback for nicotine products in developed markets, but heightened awareness of their health risks, with some high-profile fatal incidents in 2019, is pushing regulators to react and issue bans on flavored vaping products. With the minimum legal age for buying tobacco products officially raised to 21 years old, younger consumers now have limited access to vaping products.
Meat Alternatives 📈 | Dairy Products 📉
2019 was a big year for alternative protein products, as many legacy players getting into meat substitutes as the next growth area. In January, Aldi launched their own private label plant-based burger while Costco started rolling out Don Lee Farm’s vegan burgers. Even Tyson, leading U.S. meat supplier, is re-positioning itself as a “protein innovator” by investing in the space. Throughout 2019, meat alternative brands like Beyond Meat or Impossible Foods started to appear on the menu at fast food chains such as Burger King and McDonald’s. U.S. meat substitute sales in CPG categories have risen an average of 15.4% each year between 2013 and 2018, outpacing the 1.2% average annual growth of processed meat over the same period, according to data from Euromonitor. All these recent moves to bring meatless products to more restaurants demonstrated a growing consumer demand and a long runway for plant-based products.
As more and more health-conscious U.S. consumers opt for more meat alternatives, they are also drinking less milk and consuming fewer dairy products. Mirroring the ongoing trend in the meat industry, milk sales went down by more than a billion dollars in 2018, while the market for plant milk alternatives keeps growing. And the decline is showing no sign of stopping, as a recent report by RethinkX predicts that by 2030 the demand for dairy will decline by 90% in the United States.
Food production plays a big part in how we use natural resources, and a plant-based diet is proven by studies to be more environmentally friendly than one based on animal products. The vegetarian movement used to be more of an animal welfare issue; now it is about saving the earth. As environmental activism moves into mainstream spotlight, expect more brands, not just those in food but also in fashion, travel, and auto, to adopt a lifestyle branding to cater to the demands of a consumer base that is increasingly eco-conscious.
Thank you for reading our articles in 2019. We hope you’ve found them interesting and insightful. Curious about how the next decade will shake out? Please sign up for our newsletter to read our CES trend recaps and our brand new 2020 Outlook report.