Top 5 Global Growth Industries in 2017: Examining The Market Drivers, Opportunities and Risks

MarketLine Theme Report
Top 5 Global Growth

Industries in 2017
Examining the market drivers,
opportunities and risks
Reference Code: ML00026-007
Publication Date: August 2017
WWW.MARKETLINE.COM
MARKETLINE. THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED
Global Growth: Examining five of the world’s most exciting growth industries in 2017 ML00026-007 08/2017
© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 1

EXECUTIVE SUMMARY
In the world economy, the forces of growth and prosperity are complex and ever changing. New engines of growth
emerge and decline rapidly and pinpointing their trajectory and long-term relevance can be elusive. The catalysts of
change can be fundamental factors such an emerging technology, the needs of the global population, a change in
regulation or a new method of monetization. In this report, we examine some of the most rapidly growing industries
globally including: the construction industry, cloud computing, online retail, the marijuana industry and music streaming
industries to look at why they are growing so quickly and what issues are emerging that might affect these industries’
long-term prospects.
Figure 1: Key global growth industries 2016, % growth YOY
SOURCE: MarketLine
MARKETLINE
Construction industry: Springing back into life but concerns

over financing are troubling
The global construction industry has had a difficult period in recent years, after the global recession in 2007, the industry
was directly affected by a huge drop in available investment from banks and financial institutions. It has become
increasingly evident though those financial institutions have regained their confidence in the industry and such have been
backing big projects. However, there is concern that the levels of growth currently being seen are not going to last much
longer and the primary source of the current investment is not providing the kinds of returns that were expected. The
major factor in the industry, is just how much longer China will continue to bank roll the industry and despite enormous
investment programs such as the Belt and Road program, eventually the construction industry will need to find more
organic methods of growth.
Cloud computing: Industry has changed much, but challenges

remain
Once dismissed as a fad which, whilst appearing to have the qualities of revolutionary change, would fade with time as
so many others have done, has morphed to become the catalyst for change across much of the economy early
proponents promised.

Now forming a central part of what is commonly referred to as Industry 4.0, hailed as the fourth industrial revolution,
cloud computing will create winners and losers whilst inciting fundamental change in how many businesses operate,
driving forward profits for the leading companies. Yet, just as with every meaningful development, obstacles must be
overcome if the market is to continue its seemingly unstoppable growth development.
Online retail: Different routes to development creating a global

boom
Even in mature economies which have enjoyed the benefits of online retail shopping since its inception in the 1990s
continue to grow at rates most other markets are incapable of. Emerging consumer societies, such as those in China and
India, have forged means of shopping online unique to their societal and geographical features, whilst latecomers such
as Canada are experiencing rapid growth as technology gains influence over consumer habits and companies change
strategies to take advantage of a changing business environment. Online shopping shows little sign of deviating from the
seemingly inevitable future of retail domination around the world.
Music industry: Saved by streaming services helping to

remonetize the music business
th
The way music lovers listen to music has evolved all the way from its birth time in the 15 century when music publishers
began by using machine-printed sheet music to distribute their audio art creations which then moved on to radio
broadcasting, to the creation of record vinyls, to CD-ROMs, to mp4 music downloads from iTunes to now – streaming
music online via the power of the internet. According to data from the Recording Industry Association of America, sales
from streaming fueled the fastest growth in the world’s biggest music market since 1998. While the growth is apparent
globally, American music listeners make up a vast portion of the industry and companies such as Apple and Spotify have
had a lot to do with this growth. For listeners, it works out much cheaper to subscribe to streaming services and listen to
unlimited ad free music, providing the streamer has the licenses to showcase the listeners’ favorite artists. Instead of
paying $0.99 a song or $5.99 for an album off iTunes for example – at the cost of $10 a month, they could instead listen
to all the albums and songs on Apple’s database not having to worry about storage too, seeing as it is all streamed via an
internet connection.
Marijuana: The unusual growth industry displaying just how

much potential it has
This industry is displaying some phenomenal signs of growth and current indicators suggest that, particularly in the US, it
has the potential to be a very large industry. The reality is that globally there are still big disagreements as to how the
drug should be regulated ranging all the way from outright banning and prison sentences through to complete legalization
and many countries see the matter differently. The US example however (in the states where it has been legalized for
recreational use) shows that even with relatively stable levels of consumption, the industry has enormous potential for
growth and those investors and companies not put off by the political arguments, are seeing big returns.

TABLE OF CONTENTS
Executive Summary ............................................................................................................................................................ 2
Construction industry: Springing back into life but concerns over financing are troubling................................................ 2
Cloud computing: Industry has changed much, but challenges remain ........................................................................... 2
Online retail: Different routes to development creating a global boom ........................................................................... 3
Music industry: Saved by streaming services helping to remonetize the music business................................................ 3
Marijuana: The unusual growth industry displaying just how much potential it has ......................................................... 3
Construction industry has sprung back into life ................................................................................................................... 8
US construction appears to be doing very well with a great year in 2016 ........................................................................ 8
Chinese construction industry is still producing double digit growth ................................................................................ 9
UK construction industry shows a very mixed picture .................................................................................................... 11
India has enormous potential for growth in the construction sector ............................................................................... 12
Cloud computing has changed much but challenges remain ............................................................................................ 14
Cloud computing is changing how major manufacturers operate, allowing the creation of new products ..................... 14
Cloud computing has changed how retail companies work, inciting major spending ..................................................... 15
Factory of the future made possible by cloud computing: Major companies now investing in long-term future of the
cloud .............................................................................................................................................................................. 16
Despite the potential gains, cloud computing also comes with problems ...................................................................... 18
Amazon Web Services’ domination of market could stifle long-term innovation ............................................................ 18
Different routes to development create global online retail boom ...................................................................................... 20
Indian online retail growth predicated on mixing cash and cashless economies ........................................................... 20
Prolific online spending ensures healthy growth remains in UK market despite mature economy ................................ 22
Global growth helped by arrival of new countries to the market .................................................................................... 23
Transformed by technology, Chinese online retail underpins global growth .................................................................. 24
Music industry saved by streaming Services..................................................................................................................... 26
Paid subscriber growth in America has surged .............................................................................................................. 26
Renting content has become much more popular than actually buying the content ...................................................... 27
Streaming music works best for chart-toppers but not for the mid-range artist .............................................................. 27
Other distribution methods are still popular amongst less established artists ............................................................ 27
App technology surges, so does the need for music streaming apps ............................................................................ 28
Great for the industry, not so great for the streamer ...................................................................................................... 28
Spotify fails to turn a profit, even to this day it records losses .................................................................................... 28
Sound Cloud has gone through the ups but is now on the down and it is there to stay ............................................. 30
Piracy still a mainstream problem worldwide despite legal methods to stream music ................................................... 31

Marijuana: The unusual growth industry displaying just how much potential it has ........................................................... 32
The cannabis industry is believed to be the fastest growing US industry ...................................................................... 32
Hemp and Marijuana are two very different products and this effects legality ............................................................... 34
Industrializing marijuana production is the main aim for players .................................................................................... 34
The types of opportunities in this market are wide-ranging............................................................................................ 35
Licensing is still unusual and alcohol companies are trying to muscle in ....................................................................... 36
Black market cannabis and heavy regulation is a problem for the market players ........................................................ 37
Trump administration has been adversarial but won’t stop the momentum ................................................................... 37
Canada is about to become a boom market for the cannabis industry .......................................................................... 38
Points of Interest ............................................................................................................................................................... 39
Appendix ........................................................................................................................................................................... 40
Further Reading ............................................................................................................................................................. 40
Sources ......................................................................................................................................................................... 40
Ask the analyst .............................................................................................................................................................. 41
About MarketLine .......................................................................................................................................................... 41
Disclaimer ...................................................................................................................................................................... 41

LIST OF TABLES
Table 1: Largest US Cannabis companies in 2017 ........................................................................................................... 34

LIST OF FIGURES
Figure 1: Key global growth industries 2016, % growth YOY .............................................................................................. 2
Figure 2: Global construction industry world map by market value, 2015 ........................................................................... 8
Figure 3: Global construction industry market value 2011-2021 by region $ millions .......................................................... 9
Figure 4: Chinese Belt and Road program route map ....................................................................................................... 10
Figure 5: UK demand for new homes and average homes built ........................................................................................ 11
Figure 6: UK housing affordability, median house prices to median earnings ratio ........................................................... 12
Figure 7: Economic growth index of Indian cities, 2000-2025, 2010=100 ......................................................................... 13
Figure 8: Value of Global Cloud Computing services 2011-2016 ($bn) ............................................................................ 14
Figure 9: Value of Global Internet Retail 2008-2016 ($bn) ................................................................................................ 16
Figure 10: Nine sections of Industry 4.0 ............................................................................................................................ 17
Figure 11: Revenues of Amazon 2008-2016 ($bn) ........................................................................................................... 19
Figure 12: Indian online retail value ($bn) ......................................................................................................................... 20
Figure 13: Percentage of Indians with internet access 2005-2015 .................................................................................... 21
Figure 14: UK outstanding credit card balances ($bn) ...................................................................................................... 22
Figure 15: Canadian online retail spending 2008-2016 ($bn)............................................................................................ 23
Figure 16: Number of smartphones owned in China 2012-2016 (million) ........................................................................ 25
Figure 17: Music streaming has enjoyed large growth over the last decade ..................................................................... 26
Figure 18: Digital listening shifts from buying to renting .................................................................................................... 27
Figure 19: Spotify financials at the end of 2016 (€’000) .................................................................................................... 29
Figure 20: Spotify growth surges in the space of nine years ............................................................................................. 30
Figure 21: Cannabis legality US, by state ......................................................................................................................... 32
Figure 22: Global legislation towards cannabis use .......................................................................................................... 33
Figure 23: North American legalized cannabis market growth 2016 and CAGR 2017-2021 ............................................. 33
Figure 24: Cannabis oil versus traditional flower products market share 2015 and 2016 ................................................. 35
Figure 25: Marijuana index three year price fluctuations ................................................................................................... 36
Figure 26: Cannabis sales North America, legal, illegal and global estimates ($bn) ......................................................... 37

CONSTRUCTION INDUSTRY HAS SPRUNG BACK
INTO LIFE
The global construction industry has had a difficult period in recent years, after the global recession in 2007, the industry
was directly affected by a huge drop in available investment from banks and financial institutions. It has become
increasingly evident though, that financial institutions have regained their confidence in the industry and such have been
backing big projects. However, there is concern that the levels of growth currently being seen are not going to last much
longer and the primary source of the current investment is not providing the kinds of returns that were expected. The
major factor in the industry, is just how much longer China will continue to bank roll the industry and despite enormous
investment programs such as the Belt and Road program, eventually the construction industry will need to find more
organic methods of growth.
Figure 2: Global construction industry world map by market value, 2015
SOURCE: MarketLine
MARKETLINE
US construction appears to be doing very well with a great

year in 2016
Overall the US construction industry hit year on year growth of 7.7% in 2016, a very substantial amount of growth for a
highly developed industry already worth in the region of $1.1tn. Forbes has concluded that of the top growing industries
in the US currently, seven of them are construction industry segments and that market players have posted substantial
gains for 2016. Since the financial crash of 2007, over 1 million new apartments have been built and much of this has
come through a new-found confidence from the banking sector in the construction industry once more. The banks have
shifted their emphasis away from residential mortgages and instead have been providing liquidity to bigger projects, such
as funding apartment complexes intended for the rental market rather than the private purchase market. This is because
in the US, regulation now more heavily protects the residential market making the sector less tempting for banks.
Commercial properties instead are less heavily regulated for banks to deal with and this segment is thriving as a result.
This has meant that those areas linked to the rental market have been thriving too. Property management services,
engineering works and related industries have all seen a boom period of sorts as a result of the banks’ new emphasis.
This has led the largest property developers to focus on this market as well, meaning there has been a glut of new
apartment blocks built in major cities.
However, the picture is not entirely rosy for the US construction industry, despite some excellent growth in 2016 and
parts of 2017, the industry is seeing some troubling signs in 2017.

US construction spending unexpectedly fell in June 2017 as public project spending has been reduced dramatically.
Furthermore, analysts worry about the banks focusing on the apartment and rental market. Over time commercial
property has been shown to be a riskier investment than many of the other construction sectors causing significant
problems for lenders, because of delinquencies due to more fluid users of this type of property in general. Perhaps most
concerning though is that there are some signs that there has been too much construction in this segment. Developers
and their bank investors, work on the principle that over time rental incomes will increase per property as the value of that
property grows and the demand for rental property grows too. In a sense, this is exactly the same bet that banks made
before the last financial crisis-namely that the value of housing and property would grow indefinitely. Rental incomes are
not growing in the way investors were hoping however and rental incomes from US apartments has actually been falling
overall since 2010.
Figure 3: Global construction industry market value 2011-2021 by region $ millions
SOURCE: MarketLine
MARKETLINE
Chinese construction industry is still producing double digit

growth
Despite the inevitable slowdown of the leviathan Chinese construction industry, the country is still producing 10% plus
year on year growth and is expected to continue to do so until the end of the decade. What makes the Chinese industry
unique however is that the government is determined to continue to pump money into the industry despite all the risks.
Local authorities through to national banks have continued to invest billions in construction despite the enormous amount
of debt that has been racking up. This investment too is not limited to mainland China, the money has been pouring into
construction across the globe, funding apartment construction, engineering projects and power plants all with the aim of
producing more growth for China and maintaining its economic momentum. The construction industry worldwide depends
on the continued existence of this funding. There are big worries worldwide though that this simply cannot continue
forever and eventually the enormous amount of debt that China has been willing to accumulate in the pursuit of growth
will cause a crash at some point. Non-performing loans are a huge issue in the Chinese banking industry and
construction is one of the worst offending industries, showing that Chinese banks do need to rein in spending in this area
to avoid financial calamity.

Figure 4: Chinese Belt and Road program route map
SOURCE: Belt and Road

MARKETLINE
The new Silk Road or “Belt and Road” program is an example of how Chinese investment programs are spurring on the
global construction industry significantly. The Belt and Road scheme was first capitalized in 2014 with $40bn and has
subsequently been topped up with another $62bn that is being held by multiple Chinese banks as they ready to provide
huge loans for the countless projects. Estimates currently vary but some sources suggest that currently the plan is for
China to invest $150bn a year into the project and that of that, some $900bn has been allocated to projects. Effectively
this money is to come from multiple sources but the whole scheme is being heavily propped up by the Chinese state,
which is making very large commitments indeed. It is suggested that the plan has the potential to become larger than the
Marshall Reconstruction plan after the Second World War. The scope of the scheme currently planned is involving 65%
of the world’s population, around 1/3 of its GDP and could be the route that a quarter of its goods and services take.
More than 60 countries are involved in the project and the various routes will require significant forms of infrastructure
construction in order for the route to work.

Figure 5: UK demand for new homes and average homes built
SOURCE: ONS
MARKETLINE
UK construction industry shows a very mixed picture

The UK is in the unique position of having to deal with the outcomes and expected economic downturn that Brexit will
produce. But despite that the industry has been producing good growth with a CAGR of 5% for 2012-2016. The United
Kingdom construction market should have a very positive outlook even despite Brexit because of a large number of
public funded projects incoming that will last for number of years, such as HS2, Hinckley Point C and the Thames
Tideway Tunnel. But also on top of this, the UK’s need for new housing stock is fairly substantial. For a number of years
the country has been failing to produce enough residential homes to meet the demand and this should provide the
industry with plenty of opportunity for growth. Even with Brexit beginning to reduce the number of new migrants to the
country, the demand for housing, particularly in areas such as London should sustain the industry for a number of years
to come. In 2017 a new government investment arm was created to attempt to both satisfy the needs for new housing
and to profit from rising house prices. PRS Reit is a real estate investment trust of which the UK government now owns
10% and aims to fund both homes for sales and for the private rental market. The government expects investors in the
UK that previously were involved in the buy to let market and who are now being forced out of that market by new
regulations aimed at freeing up housing stock for purchase, to invest heavily in this trust, providing capital for
construction. This should provide the industry with substantial backing moving forward over the next decade. It is
expected that between 2017 and 2030 the country will spend $6tn on construction.
Despite these aspects though there are also worrying signs in the industry too, growth has been dropping and a variety
of factors such as falls in real earnings and consumer confidence are effecting the uptake of mortgages and therefore
growth in the private housing sector has been more sluggish than expected in 2017. A further problem is that with
housing prices so high in the UK, around eight times the average wage and the UK has the worst affordability for housing
in the 36 countries in the OECD, buyers have been increasingly relying on the help to buy scheme. This is the
government program which helps first time buyers with various aspects of the purchasing process, such as saving with
good interest rates and help for those with smaller deposits. This scheme is currently supporting one third of all new
house building and it is expected to come to an end in 2021, making the construction industry nervous.

Analysts are worried that if the UK economy continues to move on a downward trajectory, then the construction industry
will eventually react and reduce the amount of additional projects aside from the major publically funded works.
The UK construction industry then has all the right conditions to support a potential boom, such as very large demand for
new property development and financial institutions willing to invest, but should the economy continue to slide as it is in
late 2017, there are concerns that construction industry players may act very cautiously in the coming years.
Figure 6: UK housing affordability, median house prices to median earnings ratio
SOURCE: ONS
MARKETLINE
India has enormous potential for growth in the construction

sector
Of all the global markets India has the most staggering demand for construction. At current population and migration
rates 31,000 homes need to be built every day in order for India to keep up with its current demand for homes and
housing. Construction is one of the very largest industries in the country and on top of this is the second highest industry
for foreign direct investment in India. Estimates vary but population density in a typical Indian city is somewhere between
11,000-14,000 people per square kilometer, has reached 37,000 people per square kilometer in some areas of the
largest growing cities such as Delhi. This is over ten thousand more than Manhattan in New York for instance. The reality
is that the vast majority of the population living in these areas has little choice but to live in slums, some illegal, and have
zero access to the most basic sanitation such as piped water or toilets. This then further exacerbates any existing health
problems in the area. The problem of urbanization is that impoverished people are tempted to move towards the city
looking for better work, but largely this ideal merely produces populations of people that are living on top of each other.
The temptation for industries and manufacturing to base themselves within a city of stature or capital means that this
trend is going to continue and certainly it shows no signs of slowing down in Delhi for instance, where the population is
expected to continue to grow by around 10% every year through to 2025. So the need for construction is unlikely to relax
within the next two or even three decades.
However, there are multiple barriers for the construction industry to navigate, not least the myriad stalls and hold ups
along the route to approval that can occur in India. The worst problems are regulation however and entirely fixable.

Rules around capital gains tax mean that investors can be put off due to the holding period of 36 months which is applied
to profits made from investments in the construction industry and real estate. There are also significant blockages from
specific area requirements and the time period demanded for finishing a project, which again can serve to put off
investors.
A further issue is that land allocated for development is scarce and that which is available needs significant infrastructure
funding before developers can move in. Real estate titles too are vague in India and this is leading to court disputes over
land ownership causing delays in building projects. Funding too is very poor from Indian banks, with relatively few
projects being funded. If the country can find ways to solve some of these problems, the country’s construction industry
could be the most significant in the world and because of its long term potential its represents one of the most important
growth industries today.
Figure 7: Economic growth index of Indian cities, 2000-2025, 2010=100
SOURCE: Rakshak Foundation

MARKETLINE

CLOUD COMPUTING HAS CHANGED MUCH BUT
CHALLENGES REMAIN
Once dismissed as a fad which, whilst appearing to have the qualities of revolutionary change, would fade with time as
so many others have done, has morphed to become the catalyst for change across much of the economy early
proponents promised. Now forming a central part of what is commonly referred to as Industry 4.0, hailed as the fourth
industrial revolution, cloud computing will create winners and losers whilst inciting fundamental change in how many
businesses operate, driving forward profits for the leading companies. Yet, just as with every meaningful development,
obstacles must be overcome if the market is to continue its seemingly unstoppable growth development.
Cloud computing is changing how major manufacturers

operate, allowing the creation of new products
Such is the pace of change in how major businesses now use cloud computing as a means of improving efficiency and
dealing with fantastically complex flows of information, General Electric claim by 2020 over 50 billion devices globally will
be connecting to the internet. Generating copious quantities of data, the concept of cloud computing is essential simply to
make sense of all the data and put it to meaningful use. The major development is speed. Speed cuts down costs,
improves efficiency and allows a company to keep pace with ever developing consumer demands. Spending on cloud
computing has ballooned, and will continue to do so, thanks to initial success generating the need for almost every
business, from small businesses to major multi-national corporations, to become involved in the cloud to some degree.
Rapid growth has been the result and there appears little sign of the market slowing any time soon.
Figure 8: Value of Global Cloud Computing services 2011-2016 ($bn)
100
89.3
90
80
70 66.2
60
49.4
50
40 36.8
27.6
30
20.7
20
10
0
2011 2012 2013 2014 2015 2016
SOURCE: MarketLine
MARKETLINE
Perhaps the full power of cloud computing, and the reason behind its swift assent, is the riches available through big
data. Vast amounts of data can now be pooled and solutions extracted in a way few ever thought feasible. This has
granted cloud computing a home in cutting edge technology. The cloud is essential to future industries which are
attracting major attention. Driverless cars, for instance, are at the vanguard of massive cloud computing services. The
Automotive Edge Computing Consortium, a group of major industry players in car and technology manufacturing, reveals
why computing power and information exchange through the cloud is deemed worthy of hefty investments. Intelligent
driving, map creation with real-time data and driving assistance will depend upon the cloud.

Data generated from these cars will be gargantuan; by 2025 Toyota estimates data between the cloud and vehicles will
reach 10 exabytes, around 10,000 times the present level. Cloud computing will play a vital role in processing all the
information coming from the driverless fleet, propelling forward market value expansion. As the products requiring cloud
computing become increasingly sophisticated, so must the cloud systems upon which they rely. More investment into
such services will flow, generating more growth in market value.
Clouds will also work in the other direction. Nervana, a San Diego based company developing deep learning
technologies that will be integrated into Intel computer server systems, will utilize cloud technology to communicate with
driverless cars produced by German manufacturer BMW. Other efforts from tech companies such as Apple and Google
will be using similar means. Without cloud computing the concept of the driverless car would be hard to imagine. Speed
of development and the ability to process data on a previously inconceivable scale have been critical developments.
Consequently, the leading automotive manufacturers in the world have seen cloud computing as essential to future
success, ploughing in what is rumored to be vast sums of money. Volkswagen completed a proof of concept for the
Cloud Foundry in June 2016. Previously, Volkswagen claims, applications had two release cycles a year. Now reduced
to one week, the capacity for product development through the cloud is massively enhanced. Compared to traditional
infrastructure and development, costs have reduced by approximately half, maybe even more in some cases.
Cloud computing has changed how retail companies work,

inciting major spending
Not so long ago physical stores were declared to be running short of time and would eventually disappear altogether.
Many suffered from what was termed ‘show rooming’ where consumers would view an item in a physical store before
electing to buy it online, frequently from a different retailer. But now there is resistance and the trend is said by some to
be reversing. Big data analytics combined with cloud computing now allows greater knowledge about consumer behavior
to be realized, particularly regarding how tiny and seemingly unimportant factors can have an important effect on buying
choices. Some companies track customers as they move about the shop, recording how consumers interact with
products and what strategies prove most useful in causing someone to stop at a certain product. The massive amounts
of data generated are all but impossible to process using conventional IT systems. Cost was previously one inhibiting
factor. Most retailers record seasonal spikes in sales. Recording copious amounts of data would previously have required
IT systems capable of accepting the workload generated during a spike all year round – an unacceptably excessive cost.
The cloud gets around this problem through the use of virtual servers, dissolving much of the expense which would have
been required. Such systems in the cloud allow retailers to only pay for what is actually used. Given the thin margins
retailers, especially those engaged in clothing and food, operate on large reductions in IT costs whilst gaining vital
information about customer behavior is of notable importance.

Figure 9: Value of Global Internet Retail 2008-2016 ($bn)
1000
893.5
900
774.0
800
700 671.1
600 563.4
474.7
500
403.7
400 350.3
299.3
300 268.0
200
100
0
2008 2009 2010 2011 2012 2013 2014 2015 2016
SOURCE: MarketLine
MARKETLINE
For customers, the impact is visible through the existence of offers for products they didn’t know they already wanted.
Food retailers began this focus on predicting what a specific consumer may buy next through the creation of ‘club card’
schemes. Since the early days of big data, predicting consumer behavior has come a long way. Not only have cloud
computing techniques allowed significant improvements in accuracy, but speed has become essential to retailers as well.
Predictions are for customer experiences to be enhanced further by the application of results yielded through big data
and processed by cloud computing. The future clothing store is predicted to include a salesperson in possession of a
device able to reveal how well a garment will fit without the need for changing rooms. Given modern emphasis on the
shopping experience, developments like this will enable retailers to not only better learn the tastes of individual
customers but increase the range of clothing any one person is likely to consider by speeding up the selection process.
Furthermore, consumers put off by lengthy queues are less likely to stay and spend money.
This and other technology dependent upon cloud computing is important for the future of retailing given the extensive use
of mobile technology in purchasing decisions. According to one survey, in the United States, over 80% of consumers will
use a mobile device or app to inform decisions on spending money. Roughly 30% of all commerce will occur on a mobile
device. Retailers, keen to improve the customer experience, have taken to cloud computing to make the process of
viewing and ordering online to collection and review smooth. Pumped into this is information about what a customer may
buy. Data collected from e-retailers, search engines, customer histories and social media is collated to inform business
decisions. Removing risk for leading companies by aligning items on shelves much closer with moving fashion trends is
critical to future planning. Combined with supply chain processes which allow retailers specializing in ‘fast fashion’, a
major retailer can today, through the use of cloud computing, create shops which cater closely to the target audience.
Not only does risk decline but costs are reduced and consumers are more likely to spend money on what they most
desire, providing more reasons to return to a certain shop.
Factory of the future made possible by cloud computing: Major

companies now investing in long-term future of the cloud
Central to the concept of Industry 4.0, the much vaunted fourth industrial revolution, is the factory of the future. Garnering
the full range of benefits provided by big data and cloud computing, as well as a fleet of other technologies, new
technically advanced factories will depend upon sophisticated cloud computing. For major players in major manufacturing
industries, investment into cloud computing has become essential, driving forward development as well as increasing the
value of the cloud.

Most leading companies in product manufacture, according to one survey, plan to implement ‘factory of the future’
initiatives within the next five years.
Some of the major benefits are to be had in predictive maintenance. According to a US Department of Energy study,
maintenance techniques targeting energy efficiency can result in annual savings of up to 20%. For power networks, the
saving of energy is important and will have a significant impact upon infrastructure planning – hence why governments
are publically keen on the potential business impact of cloud computing. Underperforming equipment has been cited as a
leading reason behind excessive energy consumption. The problem has been when to replace aging equipment.
Typically, machines used in factories constitute major one-off expenses, causing companies to only replace when
absolutely necessary. Cloud computing now provides the ability to track performance and anticipate the ideal time for
what is frequently costly maintenance or complete replacement. Central to this is the tracking of context data, allowing
gathered information to be used according to certain scenarios rather than arbitrarily. The advantage of the cloud is the
ability to track many pieces of equipment from different factories, comparing performance and developing the means of
gaining the best result. Attempting to complete these tasks on a conventional IT system would be prohibitively expensive,
possibly costing more than the potential gains to implement.
Figure 10: Nine sections of Industry 4.0
Artificial
Virtual Reality Intelligence
Network Security Industrial Internet
Industrial Cloud
Automation
Computing
3D Printing
Industrial Big Data
Industrial Robot
SOURCE: Mainiway
MARKETLINE
The factory of the future concept is predicated upon seamless interaction of various technologies - advanced robotics,
real-time analytics and machine learning. Without the benefits of cloud computing, these processes could not interact
with sufficient ease to realize the full benefits the next generations of factories have to offer. Some industry observers
note that with machines capable of learning and advances in robotic technology, the speed at which a new product could
hit the shop floor in the years to come should be radically reduced. For manufacturers this is good news. Costs
associated with simply making a product, let alone developing it, are major considerations regarding the development of
a product line or a company. Potential gains such as these promote the incentive to invest into advanced cloud
computing technology. Rivalry between companies also propels spending in this area. If one business were to gain a
competitive advantage through improved manufacturing or reduced manufacturing costs, the time and resources needed
to make up lost ground would likely be huge – and that is before the adverse impact to brand image is taken into
account.

For large companies with many factories around the world, the benefits in terms of economies of scale can be massive.
Even for sophisticated company structures, translating what works well in one environment to another can often turn into
a failed undertaking. Seemingly there are just too many variable factors to take into consideration when large numbers of
people are employed across a range of sites. Despite the vast complexity, data gathering combined with the agility of the
cloud enable analysts to pinpoint the influence of tiny changes and implement them elsewhere. Not only is consistency
helped but a major business can now have the capacity to learn about itself to a degree never previously possible.
Consequently, for the immediate future at least, powerful incentives to invest in cloud computing exist, conjuring
substantial growth figures and future forecasts.
Despite the potential gains, cloud computing also comes with

problems
A longstanding problem in IT is high switching costs. After a company or a consumer had settled on a system, changing
could only be done sensibly as the next generation of systems came online, or through accepting major additional
expenses and switching earlier. Critics say the ‘lock-in’ is even worse in cloud computing, potentially deterring smaller
businesses with much more limited buyer power than their international counterparts from seeking the gains on offer
through the cloud. Cloud services, by their very nature, build up vast quantities of data very quickly, but moving data to
another service has so far been troublesome. In response, some companies have taken to using more than one provider,
but to make this work efficiently management of data has to be precise – having to patch together data from two different
clouds could easily prove counterproductive.
For many businesses seeking to use the cloud, this is a very real problem. One survey revealed 78% of IT decision
makers believe that concerns about vendor lock-in prevent their organization from maximizing the benefits of cloud
resources. The results are in-line with other similar surveys which cite the dominance of Amazon Web Services as a
major source of concern. Even some large companies have refrained from using any services other than the basic
compute, network and storage. Overcoming this problem is essential for the continued growth of the cloud computing
market. Eventually growth will begin to slow if businesses cannot be assuaged of their present concerns about being
locked into systems from which extraction would be very costly.
Amazon Web Services’ domination of market could stifle long-

term innovation
At present Amazon Web Services (AWS) dominates the market. The company has features congruent with a monopoly:
it is a huge company, accounting for much of the profits of Amazon despite only accounting for a minority of revenues,
and is growing; the economies of scale easily outstrip rivals such as Microsoft; policy decisions from AWS will influence
the entirety of the available market. Reported operating margin has doubled over the past two years to reach 25%. Whilst
not a true monopoly, there is concern among many businesses about being locked into AWS due to a lack of viable
competition. Odds are that competition authorities will get involved at some stage if the market does not change –
certainly the likes of Microsoft and Alphabet (Google) have the financial clout to engage in any legal action to force action
regarding competition in the market.

Figure 11: Revenues of Amazon 2008-2016 ($bn)
160
136.0
140
120 107.0
100 89.0
80 74.5
61.1
60 48.1
40 34.2
24.5
19.2
20
0
2008 2009 2010 2011 2012 2013 2014 2015 2016
SOURCE: Amazon
MARKETLINE
Dangerously for the market, if reticence among sections of the business community continues, rivals to AWS will not gain
the required level of custom to make it worthwhile to develop products capable of posing problems to Amazon. A single
dominant player in any market is traditionally unwelcome news for innovation, and unless rivals are able to gain market
share, even big hitting technology companies may be unwilling to invest to create a market changing product. A rival
eating into the market share of AWS is the preferable solution compared to competition authorities becoming involved
because it would move the market forward according to the demands of consumers.
Prospects of such an eventuality occurring soon appear slim. AWS has become the first provider to add artificial
intelligence to its cloud offering. Branded Amazon Macie, the AI system uses machine learning to identify risks, assess
the threat and act to protect stored data placed in the cloud. Most pertinent to businesses storing sensitive information on
the cloud is the capacity to examine usage patterns and provide warnings about the most valuable information. Whilst
many observers would point to such a development as evidence that the market is innovating despite the dominance of
Amazon, the concern for long-term innovation remains. Amazon will have easily sufficient resources to make the
business case for developing its own version of any new product a rival may create. Even for their rivals who are
exceptionally commercially successful in other areas of business, ploughing vast sums into new developments whilst
only occupying a small share of the market is not likely to form a compelling business case. For the time being, the lead
AWS has is unlikely to be eroded, leaving new consumers with little viable choice and potentially slowing the market in
the long-term.

DIFFERENT ROUTES TO DEVELOPMENT CREATE
GLOBAL ONLINE RETAIL BOOM
Even in mature economies which have enjoyed the benefits of online retail shopping since its inception in the 1990s, it
continue to grow at rates most other markets are incapable of. Emerging consumer societies, such as those in China and
India, have forged means of shopping online unique to their societal and geographical features, whilst latecomers such
as Canada are experiencing rapid growth as technology gains influence over consumer habits and companies change
strategies to take advantage of a changing business environment. Online shopping shows little sign of deviating from the
seemingly inevitable future of retail domination around the world.
Indian online retail growth predicated on mixing cash and

cashless economies
Growth in online retail has been eye wateringly fast; in 2016 alone the market grew by 56.9% to reach a value of nearly
$8.5bn. The erosion of cultures predicated on the use of cash transactions has allowed online retail to expand very
quickly, albeit from a low base. Predictions are for the rate of growth to continue in much the same vein for the immediate
future. Developments to suit the culture online retail wishes to replace can be credited as being the primary reason
behind market growth. Laws in India demand consumers use a two-stage authentication process for every online
purchase. But the creation of an online wallet on Amazon in India is smoothing out what has been described as a clunky
and inefficient means of spending digital money. The new service allows customers to spend pre-paid money and to top-
up for future purchases. Furthermore, cashback offers can now be made, faster refunds can be provided and returns are
made easier. Other homegrown equivalent digital wallets, such as Paytm, lets customers top up a mobile phone, lend
money to a friend, pay a bill or use a service. So far Paytm has gained approximately 120 million subscribers, nearly six
times the number of credit card holders in the country.
Figure 12: Indian online retail value ($bn)
9.0 8.4
8.0
7.0
6.0 5.4
5.0
4.0 3.4
3.0
2.1
2.0 1.3
0.8
1.0 0.3 0.5
0.2
-
2008 2009 2010 2011 2012 2013 2014 2015 2016
SOURCE: MarketLine
MARKETLINE
Such has been the rise of online retail but in a manor unique to Indian culture that what was considered to be an
exceptionally tough environment for e-commerce to take root is gaining an appetite for cashless retail. Rising incomes
are helping to create change. In 2014 average income was only $1,570 but could be twice that figure by 2025. Most
Indians are under the age of 35, among which ownership of mobile phones with access to the internet is soaring.

The ability for even pre-smartphone era devices to now access services such as banking is helping to shape society
towards fully accepting the concept of shopping online, creating fantastically fast growth.
India was once considered to be a very difficult market for online retailers due to the grip of the cash economy on the
everyday lives of ordinary people. Changing that requires systems which can work alongside existing means of moving
money around. To that end the creation of the BHIM-Aadhaar app marks an important step. Using the app, every Indian
citizen will gain the capacity to pay digitally using their biometric data such as a thumb print which could be used on a
smartphone biometric reader. Any citizen without access to smartphones, internet, debit or credit cards can now make
digital transactions. Not only is this important regarding changing attitudes among many towards digital money, but it
marks a major breakthrough in allowing access to online retail for people who have no permanent means of access to
the internet. With biometric access to digital money, consumers now only need to have internet access for a short period
through a device to make online purchases, and this means they could do so through a smartphone which belongs to
another person.
Figure 13: Percentage of Indians with internet access 2005-2015
30%
26.0%
25%
21.0%
20%
15.1%
15% 12.6%
10.1%
10% 7.5%
5.1%
5% 4.0% 4.4%
2.4% 2.8%
0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
SOURCE: MarketLine
MARKETLINE
Government approval of companies such as Amazon by allowing 100% foreign direct investment in online retail of goods
and services under the ‘marketplace model’ not only legitimizes existing e-commerce businesses but allows for the entry
of more companies. The government has come under pressure to do much more to limit foreign investment into online
retail as critics claimed physical stores were being placed under too much pressure from new rivals. New trading rules
bring some good news for e-commerce consumers; restrictions on the proportion of revenues a company can make from
online retail through goods belonging to one group or vendor to 25% should restrict the ability of one company to
dominate. Discount wars could potentially end, reducing the downward pressure on prices consumers have been
exerting, putting the brakes on growth over the long-term. Yet with rising wages and multi-billion-dollar investment from
Amazon and indigenous companies such as Flipkart, efficiencies in delivery and processing should propel the market to
speedy growth. Changes in how the ordinary person perceives digital money appear set for permanent change, heralding
the gradual conversion to online commerce as a routine activity for most people.

Prolific online spending ensures healthy growth remains in UK
market despite mature economy
Among major economies, the United Kingdom stands out as being a heavy consumer of online retail. So much money
gets spent each year that phrases such as ‘Cyber Monday’ – used to describe the day when many people get paid
before Christmas – has entered the national parlance. Increased spending exhibits few signs of slowing down.
Boohoo and Asos, both online specialists, experienced surging growth during 2016. Established high-street brands such
as Debenhams saw internet sales rise from 9% of revenues in 2015 to 15% in 2016. Even though companies with
physical stores have gone to great lengths to persuade online consumers to come to the high-street, the movement
towards online through improved delivery capabilities, and continued downward pressure on prices, will serve as greater
incentives for consumers to move online.
Growth in the market has been helped by consumer demands for delivery systems which cater for the modern working
life of the average consumer. Online retail companies increasingly depend upon slick and efficient delivery to gain a
competitive advantage. Amazon Prime Now, for instance, has proved enormously successful in exploiting a competitive
advantage gained from economies of scale over smaller rivals. Ultra-fast delivery times provide a unique selling point,
directing more traffic towards Amazon products, driving the market forwards. There are a relatively small but growing
number of online shoppers who will not buy a product from a company if they use a delivery service with a poor
reputation. One website lists companies which use the services of Yodel – such has been the growth of discontent
among consumers. For leading companies this is of growing importance. In the first nine months of 2016 the number of
packages dispatched in the United Kingdom climbed by 13%, but there could be brakes on the move towards online
retail. Warehouse rents are rising – 17% over the past six years in London and 11% in the South-East – squeezing the
margins of online retailers. Dealing with returns in ever shrinking timescales is also eating into the profitability of online
retail, potentially reducing the critical competitive advantage online has over physical retail – price.
Figure 14: UK outstanding credit card balances ($bn)
90
85 83.8
79.8
80
76.8
75 73.6
71.7
70.1 69.5
70
65
60
2010 2011 2012 2013 2014 2015 2016
SOURCE: MarketLine
MARKETLINE
Whilst internet shopping is frequently associated with physical items which are delivered to a household, the scope of
online retail has driven the market forwards by expanding into seemingly every area of retail. One in four online card
payments were for entertainment events, fast food takeaways and music downloads. Approximately two thirds of
spending on theatre and cinemas tickets was purchased online during 2016. Extensive use of smartphones has helped
the expansion in these areas.

Entertainment events are commonly purchased in group activity, and given how connected through smartphones many
people are, the ability to spend money online through such devices makes it easier for informal conservation about an
event to turn into ticket sales.
Curiously, spending online has failed to takeoff in similar fashion in food retail. Some 41% of in-store card purchases
were on food and drink, compared with only 7% via the internet. Yet with even financial services reporting substantial
growth in online spending, expansion in total online retail will continue..
Financial pressure could, however, impact the market although less than the physical store counterparts. With average
savings at an all-time low, spending online declined for the first time since September 2013 during April 2017 according
to data from Visa. Overall, consumer spending growth was weak. Rising prices amid stagnant wage growth is the primary
culprit. Unless wages begin to rise, prospects of growth in online retail will begin to dim.
Furthermore, retail spending in the United Kingdom has frequently been cited as being too reliant upon consumer debt,
which is alarmingly high. A meaningful economic shock could cause many people to halt spending at current levels,
causing retailers to squeeze margins online to protect customer bases. For online retail markets in mature economies,
such events must be considered as a rising threat to future growth.
Global growth helped by arrival of new countries to the market

A common assumption is that all developed countries, to varying degrees, have indulged in the development of online
retail, propelling the global market to impressive growth figures. But some countries have been much slower in
development than is often presumed. Canada, for instance, only recently began to get the bug of online retail and is now
experiencing rapid and significant changes in consumer culture. Trends which were recorded in the United Kingdom or
the United States years ago are only now being seen in Canada.
In 2013 only 13% of Canadian businesses sold goods online but as of March 2016, 95% of small businesses reported
making online purchases, cementing the reputation of the domestic market as being slow to accept new technology.
Typically this takes the form of buying travel, clothing, tickets to entertainment events, and electronics. There is a growing
culture of buying goods via a smartphone. 22% of 18-34 year old people report having used a smartphone for an online
purchase. In contrast, during the Christmas holiday season in the United Kingdom, roughly a third of online purchases
came from smartphone users. Clearly, the Canadian market has much space to grow into.
Figure 15: Canadian online retail spending 2008-2016 ($bn)
9
7.9
8
7.0
7
6.2
6 5.6
4.9
5 4.3
4 3.7
3.2
2.9
3
-
2008 2009 2010 2011 2012 2013 2014 2015 2016
SOURCE: MarketLine
MARKETLINE

But now the online retail market is innovating and is forecast to capture 10% of the entire retail market by 2019, up from
6% in 2014. Whilst Canada may have had a slow start, if predictions are realized the percentage of spending online will
be approximately equal to the level recorded in the United States. Growth in the Canadian market should be easier now
consumers and businesses are increasingly realizing the opportunities available through e-commerce.
Retailers are now importing online business practices from abroad where the art of e-commerce has been refined.
Solutions addressing basic barriers to online sales such as shipping costs, returns, and digital payments, and improving
the shopping experience are now being implemented. Moreover, the number of products available online is ballooning. A
common customer complaint when buying online has been to find the required item on a company website, only to
discover that transportation to Canada is unavailable and Canadian retailers do not offer the item in question. Even
today, the US websites of retailers doing business in both countries have product assortments up to ten times greater in
some categories than their Canadian sites.
The contribution, however, that the emergence of Canada as a nation of online shoppers will provide is limited by the
scale of the country compared to the population. Speedy delivery has been possible in the United Kingdom due to a
concentrated population residing close to major transport infrastructure. Even in the United States fast delivery has been
possible due to a large number of cities. Furthermore, the shopping-mall square footage per capita of Canada is roughly
30% less than is the case in the United States. Even though growth, now it has got going, has been speedy by the
standards set by other mature economies, having less physical retail space suggests the extent of growth in online retail
possible is weaker than in foreign markets.
Transformed by technology, Chinese online retail underpins

global growth
Most consumers in developed western states use laptops or PCs to make the majority of online purchases. But in
countries such as China, the personal computer era has been skipped due to the cost, ease and convenience provided
by smartphones. Sophisticated mobile phone networks have been established across all major cities, enabling seemingly
continuous and rapid growth in online retail to take place. Growth in using smartphones to pay for everyday items has
been sufficiently strong that in some cases the government erected signs reminding street vendors hard cash is an
acceptable means of payment. (Such was the take-up of smartphones for online shopping, Samsung smartphones with
larger screens yielded high sales before they took off in western markets.) According to one industry estimate, online
purchases made with smartphones will account for 74% online purchases by 2020, compared to 46% in the United
States. Consequently, in 15 categories e-commerce accounts for over 40% of spending. In the United States only five
categories achieve that mark.

Figure 16: Number of smartphones owned in China 2012-2016 (million)
500
452.8
450 427.8
408.1
400
350 328.8
300
250 223.2
200
150
100
2012 2013 2014 2015 2016
SOURCE: MarketLine
MARKETLINE
Sophisticated mobile payment apps are helping to propel the market forwards. Purchases are remarkably smooth and
can be completed through one click. Competition between gigantic WeChat Pay and Alibaba created Alipay is fueling
innovation in the market. Massive distribution networks have the capacity to transport goods to customers in one day,
rivaling the delivery times achieved in the United States. Competition has had such an impact on innovation that Alibaba
is investing seriously in drone technology. The company piloted a tea delivery service using drones in 2015. For online
retail, this and other developments are likely to play an increasingly important role in meeting consumer expectations.
Expansion in China has been made easier due to the popularity of QR Codes in the country relative to much of the rest
of the world. Companies frequently place them in advertising across a range of media platforms, allowing consumers to
use them to access various offers and buy products using their smartphone. Buying goods in this way has become
common practice, improving the shopping experience and removing the need to visit a physical store. With highly
advanced distribution systems, this means of buying items has gained widespread appeal, particularly among younger
age groups and time poor people. Rising wages combined with expanding access to technology will serve as the
foundations for future growth.
Improved security is aiding the luxury section of the market. Previously, expensive items were almost exclusively
purchased in physical stores because the risk of buying a counterfeit product was so strong. Tmall, owned by Alibaba,
and JD.com has been competing aggressively to court luxury brands with promises of protection from counterfeits which
have previously blighted any serious attempts to sell online. Given the dominance of Chinese consumers in the luxury
items market, such developments are useful to future market expansion. The move online has been helped by efforts
directed towards targeting the ‘grey market’. Rather than buying in China, some consumers would pay for a person to
buy an item outside of China and then bring it into the country, circumventing tax rules. Tighter controls have allowed the
likes of Alibaba to move into the market, and luxury brands now have a powerful reason to work with established online
companies. Potentially the impact of luxury brands becoming available online in China could spread to the wider market
as more people become increasingly confident about buying products where brand is important.

MUSIC INDUSTRY SAVED BY STREAMING SERVICES
th
The way music lovers listen to music has evolved all the way from its birth time in the 15 century when music publishers
began by using machine-printed sheet music to distribute their audio art creations, to radio broadcasting, to the creation
of record vinyls, to CD-ROMs, to mp4 music downloads from iTunes to now – streaming music online via the power of
the internet.
According to data from the Recording Industry Association of America, sales from streaming fueled the fastest growth in
the world’s biggest music market since 1998. While the growth is apparent globally, American music listeners make up a
vast portion of the industry and companies such as Apple and Spotify have had a lot to do with this growth. For listeners,
it works out much cheaper to subscribe to streaming services and listen to unlimited ad free music, providing the
streamer has the licenses to showcase the listeners’ favorite artists. Instead of paying $0.99 a song or $5.99 for an
album off iTunes for example – at the cost of $10 a month, they could instead listen to all the albums and songs on
Apples database not having to worry about storage too, seeing as it is all streamed via an internet connection.
Paid subscriber growth in America has surged

In America, the growth from 2008 to 2016 in revenue terms has been dramatic at 423%.
Figure 17: Music streaming has enjoyed large growth over the last decade
$1,400.00
$1,200.00 $1,158.80
$1,000.00 $914.30
$778.80
$800.00
$643.30
$600.00
$399.90
$400.00
$221.40 $212.40 $247.80
$206.20
$200.00
$0.00
2008 2009 2010 2011 2012 2013 2014 2015 2016
SOURCE: RIAA
MARKETLINE
Music streaming is winning because of convenience. To put this into perspective, Americans logged 284.7 billion on-
demand music streams (be it audio or video) in the first six months of 2017, according to recent Nielsen data. Nielsen
assumes that 1,500 streams is the equivalent of one album, if this is the case – then streaming is selling far more
“albums” than traditional music sales channels.
The big labels, the likes of Universal Music, Sony Music and Warner Music, are reaping the benefits as they collect
royalties each time a subscriber streams songs from artists such as Drake, Adele and Beyoncé. Warner has recently
signed a new deal with Spotify which will surely persuade others to follow, showing signs of further longevity and mass
growth to still come in the music streaming industry.
Streaming has also largely replaced purchases of individual tracks and albums. For example, the figure below shows that
in 2012, downloads accounted for 70% of global digital music revenues while streaming only made up 18%. That ratio
has now flipped with streaming forecast to reach 73% in 2017 as downloads shrink to just 23%.

Figure 18: Digital listening shifts from buying to renting
2012 2017
12.00% 4.00%
Streaming
18%
23% Streaming
Downloading
Downloading
Mobile 73% Mobile Ringtones

70%
Ringtones
SOURCE: PWC
MARKETLINE
Renting content has become much more popular than actually

buying the content
Within this shift in consumers’ preferences from ownership to subscription, the music industry is not alone. PwC has
predicted that global internet video revenue will overtake DVD and Blu-ray sales for the first time this year, video
subscription services such as Netflix, Hulu and Amazon Prime making up the majority of a projected $24.7bn in revenue.
The general habit of renting entertainment content rather than one off purchasing has very quickly caught on and so the
digital companies that pioneered persuading consumers to pay recurring fees to access online entertainment are
positioned powerfully.
Streaming music works best for chart-toppers but not for the
mid-range artist
Not everyone wins when it comes to listeners streaming music instead of purchasing. If the artist is signed to a label
(which usually is the case), it is down to the artist’s contract with the record label as to how they get paid in the end. For
example, it is clear that an artist will get a proportion of the sales revenue from hard copies and digital downloads. For
example, on average – an album costs around £8 to purchase and around 13% of that goes to the artist, 30% goes to the
label and around 17% goes to the government in the form of VAT (1/6 of purchase price). The retailer who sold the
album gets around 17% and the rest goes to manufacturers, distributors and the spend on administering copyright. Of
course, these are rough estimations taken from the BBC but it gives a rough perspective on how costs are distributed
from the sale of hard copy music.
It is said that on average, Spotify pays its Artists $5.50 for every 1,000 streams. The actual breakdown is actually paid
out per individual stream, but in monetary terms, this is easier to understand. This value for every thousand plays is great
if you are an award winning, chart-topper artist such as Drake or Adele (who average around 32,000,000 monthly
listeners) who would make up to $176,000 a month based on the amount of listeners they get on Spotify. However, for
everyone else from your mid-range music artists to low – it might be quite a challenge making good money via Spotify.
Other distribution methods are still popular amongst less established artists
Spotify still offers great exposure for the artists who are not as established but they may seek other methods of
distribution in order for their music to reach their target market. For example, HMV is still a well-known UK retailer for the
sale of singles and albums in terms of regular CD sales and artists may thrive better by selling single copy versions of
their music but the problem is, the industry seems to be moving in the opposite direction where CD sales are on a mass
decline and streaming music simply keeps on growing.

That’s not to say labels are not doing both but it requires careful thought as there are many costs incurred for selling hard
copies for music such as distribution, packaging, marketing and more. Uploading content to Apple’s or Spotify’s database
seems to be much more cost friendly and cuts out much of the effort. Of course, the chance of that artist’s song being
streamed depends on other contributing factors such as the popularity of the artist, the amount of radio plays he/she is
getting to help with the exposure online and whether the artists demographic is using an online streaming service or not
alongside any further marketing of the content. The charts are generally a good guide to see what type of artist is likely to
be streamed online.
App technology surges, so does the need for music streaming

apps
As desktop platforms only, it is no good for streaming music on the go. The smartphone boom meant that developers
could create code for Android/Apple to host apps for the likes of Spotify and SoundCloud. This made it much more user
friendly and effective for listeners to listen to music wherever they were. After this initial surge in App technology, came
greater 3G and 4G connectivity deals with contracts from network providers. Vodafone to this day still offers a Spotify
subscription free of charge for some of its packages. As more and more people started to use smartphones and became
familiar with mobile applications, the days of walking around with a portable CD player were to be long gone. Even digital
downloads would end up taking up too much memory on lower spec 16gb or 32gb phones and the need for streaming
became more apparent. Hence the growth in the music streaming industry.
Great for the industry, not so great for the streamer

It is apparent that the music industry, the labels and the artists have all benefited from the introduction of music
streaming on top of the sale of digital downloads and CDs. Music streaming has no way destroyed the habit of listening
to music, but has changed the way listeners access their music and also pay for it. There have been some major players
that have risen throughout this growth period, such as Spotify and SoundCloud while Apple has always had a prominent
presence in the music industry since its introduction of iTunes and its store in the very early 2000s. But life as an audio
streamer has not been easy.
Spotify fails to turn a profit, even to this day it records losses

For music streaming services that solely turn revenue through paid subscribers and ads, life is challenging. Take Spotify,
all of the content record labels and artists upload to its server is initially hosted free of charge from Spotify’s position. It is
only when listeners start streaming the music, Spotify pays out (in royalty terms) to the artists/labels. This generally
means that there is no cap as to what Spotify has agreed to pay out and the cost of revenue is colossal for the company.
Regardless of the subscriber amount, the more these subscribers actually use the service, the more Spotify must pay
out. It is usually the other way round whereby the more a user uses a service (take YouTube), the more the service reaps
in for example, ad revenue. Where Spotify also has ads on its free version, these adverts discontinue on the paid version
as a benefit to the user, thus swiping the ad revenue severely as a lot of Spotify users are paid subscribers (over 50
million of its subscribers, pay for the service).
This has led to Spotify premium users paying a larger monthly subscription fee of around $10 a month, at first sighting
this seemed heavily expensive but when a listener can listen to unlimited ad free music at this price – it isn’t an awful lot
and is more cost-effective than individual purchases.

Figure 19: Spotify financials at the end of 2016 (€’000)
SOURCE: Company Filings

MARKETLINE
According to Spotify’s latest financials, it seems it is turning more revenue over than paying out royalties. Assuming cost
of revenue is what Spotify is paying the labels and artists – it still manages to make money. However, once factoring
product development, sales and marketing costs and general expenses – evidence agrees with the fact that Spotify has
never made money and is always operating at a loss (2016 shows a net loss of €539.7m ($636.2m).
Spotify argues that at scale, its business can be profitable. Hence the increased marketing costs year on year to push for
a higher volume of subscribers. There is no doubt in what it is saying is probably true, the argument has been made
before from Amazon creator, Jeff Bezos as Amazon was consistently making a loss each year. With low margins on
products it meant Amazon had to sell a very large amount in order to turn a profit and surely enough it ended up doing
just that. Granted Amazon has a large array of revenue streams which definitely helped towards achieving its targets.
Perhaps Spotify should simply admit that its intentions were to enter the market as a loss-leader so it can grab as much
of the music streaming share as possible, which is exactly what it has done. However, investors have been uncertain
with the Spotify movement since it went public as the growth has slowed in recent years compared to its initial spurt. Also
noteworthy: Spotify’s recent licensing renewal deals with major labels and publishers included minimum guarantee
commitments of around €2bn over the next two years. So far, it has renewed with Universal Music, Warner and Merlin on
the label side.

Figure 20: Spotify growth surges in the space of nine years
SOURCE: Company announcements & various news reports

MARKETLINE
Sound Cloud has gone through the ups but is now on the down and it is there to
stay
SoundCloud, a music streaming website and app which was around before the Spotify days, has experienced many
problems recently. Earlier last month (July 2017), the popular music streaming service announced it was laying off 40%
of its workforce and reports claimed that the Berlin-based company only had enough money to survive the next few
months. We are still within that time-frame at the time of writing so it remains to be seen if that is true. The mainstream
interest in SoundCloud’s balance sheet is new, but the tension at the core of its business is not. Launched in 2008,
SoundCloud caught on as a free “YouTube for audio” where under-the-radar artists could easily share their music.
SoundCloud stood out as a lawless platform where DJs could share their mixes without concerns of copyright
takedowns.
The site began raising millions in high-profile investments based on its potential of the market. By accepting all that
money, SoundCloud’s founders may have sealed its fate: It wouldn’t be enough to serve a small but passionate
community anymore. To justify a $700m valuation, the company would have to grow much bigger—a challenge Ljung
(Soundcloud CEO) seemed to embrace. Eventually SoundCloud would have to take on Spotify.
With the major labels owning a part of Spotify, this was a certain challenge for SoundCloud. Soon enough, these added
objectives steered SoundCloud away from its core culture which is what made it popular in the first place i.e. a free
platform for DJs to share their creations. SoundCloud then attempted to adopt Spotify’s method of charging customers,
however seeing as they did not charge customers in the first place, this was bound to backfire as it went against what
made it popular to its customers in the first place.
SoundCloud is far from the first digital music service to run into choppy financial waters. Rdio, a streaming service that
arrived in America before Spotify, declared bankruptcy in 2015, when it was losing a mere $2 million a month. Pandora,
which picked up Rdio’s scraps, has fallen into the fiscal embrace of SiriusXM. Looking at other sites where, like
SoundCloud, artists can upload their own songs, survivors are all too rare. YouTube, still going strong as the most-visited
streaming site overall a dozen years after its purchase by Google, is an exception.

Piracy still a mainstream problem worldwide despite legal
methods to stream music
With the recent growth in the music streaming industry, it was to be expected that perhaps people that were used to
downloading music illegally would have a change in heart being that there were dedicated platforms to fulfill their music
listening needs. There is certainly more ‘effort’ needed to go out of your way and download music illegally, ahead of
course the risk in doing so, it often leads to third party unsafe websites which can prompt viruses to enter the users’
devices. This is why in some senses, websites like Spotify have helped the piracy world in some respects as it is a gifted
platform making it very usable and easy to use.
Data from City AM shows that the main trend of 2015 was a shift towards music web downloads and streaming as
opposed to torrenting (an illegal method of downloading music from other third party hosted servers). With a decline of
20% for the torrents, music piracy downloads showed a rise of approximately 16.5% - not good. This increased in 2016,
as legal streaming options such as Spotify had gained more awareness within developing countries.
Piracy will continuously be a massive issue, yet with the roll out and heightened awareness of legal streaming channels
globally, we may see an exodus towards higher-quality streaming options. So as the music industry attempts to combat
the illegal side of streaming, with the surge in legal music streaming comes more illegal websites also offering its
services. However, streaming illegally will never be the same as its legal method as music quality is a lot poorer and it is
unfair to the smaller artists and labels that go through tremendous effort to put its music out there to the world to then
receive no financial reward. Of course these artists still have the great potential to make a good living with the prospects
of tours and gigs where ticket prices are a definite purchase and cannot be purchased through fraudulent methods.

MARIJUANA: THE UNUSUAL GROWTH INDUSTRY
DISPLAYING JUST HOW MUCH POTENTIAL IT HAS
This market is displaying some phenomenal signs of growth and current indicators suggest that, particularly in the US, it
has the potential to be a very large industry. The reality is that globally there are still big disagreements as to how the
drug should be regulated ranging all the way from outright banning and prison sentences through to complete legalization
and many countries see the matter differently. The US example however (in the states where it has been legalized for
recreational use) shows that even with relatively stable levels of consumption, the industry has enormous potential for
growth and those investors and companies not put off by the political arguments, are seeing big returns.
Figure 21: Cannabis legality US, by state
SOURCE: Cannabis Industry

MARKETLINE
The cannabis industry is believed to be the fastest growing US

industry
The cannabis industry in the US has spawned from the political argument that decriminalization, legalization and
medicinal use exceptions might be the best way to handle public consumption of this drug. Whilst arguments remain over
whether or not to allowing recreational use, the medicinal benefits are largely accepted in 2017. The process started as
multiple states began to allow medical usage of the drug and the first dispensaries and legal production of cannabis
began under strict control and against the wishes of many in the country initially. In 2017, 29 States have already
legalized medical marijuana, and voters in four states approved measures to legalize recreational marijuana in 2016.
Broadening acceptance of recreational marijuana has pushed a total of eight states to legalize adult use, and efforts are
already underway for a 2018 ballot initiative in Michigan. The argument has effectively already been won with regards to
this fledgling industry and public opinion and that of physicians is heavily in favor of further legalization throughout the
US. Many other states are expected to undergo ballots of their own to discuss the issue in future and many other
countries worldwide have been introducing steps towards decriminalization of the drug, such as Portugal, Spain, Canada
and Uruguay.

Of those countries which still treat the drug as an illegal narcotic, many have unofficial policies of non-enforcement,
treating misdemeanors leniently and ignoring usage hotspots. Globally, 3.8% of the population is believed to have used
the drug, making it the commonly used drug worldwide according to the UN. Over 94 million people in the US have self-
reported using marijuana at least once. This market has staggering potential for growth worldwide and in the US states
that allow it; the market is growing at around 30% year on year.
Figure 22: Global legislation towards cannabis use
SOURCE: CGTN America

MARKETLINE
Figure 23: North American legalized cannabis market growth 2016 and CAGR 2017-2021

MARKETLINE

Hemp and Marijuana are two very different products and this
effects legality
The market is effectively split down the lines of two different products, hemp and marijuana. Both types of cannabis offer
varying degrees of what are called cannabinoids, chemical compounds unique to the plant. Marijuana tends to contain
much higher levels of Tetrahydrocannabinol (THC), which is the drug that recreational users would be buying the product
for, whilst hemp contains higher levels of Cannabidiol (CBD) which is the compound that has multiple medicinal uses.
This means that in depth understanding of the chemistry of the plant is absolutely crucial for the players to be successful
in this industry and currently the best performing products come from years of development in their crops, creating
patented varieties and strains that can be branded effectively. On a federal level, it is illegal to grow cannabis in the
United States and it is the state level endorsements and permission which allow the process in certain areas.
Compounds from cannabis, whether they come from hemp or marijuana, are considered schedule 1 drugs, which means
the government believes these cannabinoids have no official medical use. However many companies instead grow their
products outside of the US and are instead allowed to export them to the US legally. Products designed for medicinal use
have been treated much more favorably than those which are developed for the now burgeoning recreational market.
However there is increasingly a blurring of the lines between the two as consumers that use the product for its health
benefits, also use recreational products and vice versa.
Industrializing marijuana production is the main aim for

players
As the industry transitions from “medical dispensaries” to catering as well for recreational use, the players are changing.
Players are starting to automate, moving from smaller boutique type premises and operations, to introducing economies
of scale. Whilst the medical use market has been doing very well and legislation allowing medical use only has been
much easier to swallow for critics of the cannabis industry, things are now moving to the inevitable second stage process
of legalizing recreational use. This step is effectively turbo charging the players. So far in 2017 seven US states have
declared recreational use as legal and this has the effect of dramatically increasing demand. Many of the largest
cannabis growers have been preparing for this, by purchasing machinery, land, premises and crucially standardizing their
product in order to roll it out in much bigger quantities. For the players though it is a delicate balancing act. Over-
committing too early could cause financial disaster, whilst at the same time predicting what states might declare
legalization next and with what specific conditions attached, is very difficult. A further problem too has been that many
companies do not want to be involved with cannabis companies. Indeed, in the early days, banking was very difficult and
today many of the major automation and machinery companies do not want to do business with the cannabis industry.
The market is growing so quickly that players have to be aggressive in order to secure their market position.
Table 1: Largest US Cannabis companies in 2017
Company Type Operations

GW Pharmaceutical cannabinoid company,
Publically traded, UK HQ, US operating
Pharmaceuticals making FDA approved Sativex
Dispensary and grower,
The Green Solution Privately held, with outside funding, US
over 14 retail establishments
Maker of vaping products and edibles,
Organa Brands Privately held, with outside funding, US
sold in over 1200 dispensaries
17 dispensary locations, 59 licences,
Native Roots Privately held, US
largest indoor grow in Colorado
SOURCE: Moody’s, S&P+ Fitch MARKETLINE

The types of opportunities in this market are wide-ranging
Apart from traditional cannabis smoking for recreational purposes there are multiple segments emerging in this market
and many different types of opportunities for market players. Plus the process of legalization has revealed that actually
some traditional methods of using the product which were popular when it was illegal don’t actually make practical sense
now that it is legal so habits are changing too and players need to be aware of this. For instance, the developments in
vaping technology and the subsequent development of cannabis oils for use with them have shown that vaping is
actually taking a much larger percentage of the market than expected. Where traditional products such as rolled
cannabis cigarettes or smoking pipe devices used to be the primary method of consumption, consumers are increasingly
choosing vaping products for discretion and ease of use. Consumers are not able to simply smoke the traditional flower
methods wherever they want as is largely the case with vaping and this is the primary growth segment in the recreational
space, despite flower based products still outweighing vaping for the time being. But new opportunities exist in edible
products, oil products, clothing, and recreational smoking and perhaps the most lucrative of all, FDA approved
pharmaceutical products.
Figure 24: Cannabis oil versus traditional flower products market share 2015 and 2016

MARKETLINE

Figure 25: Marijuana index three year price fluctuations
SOURCE: Marijuana Index

MARKETLINE
Licensing is still unusual and alcohol companies are trying to

muscle in
In the states where full legalization has been allowed, such as Nevada, there are still specific rules preventing some
types of use. For instance in Nevada, it is only legal to smoke in private residences currently, advertising of the new rules
is banned and perhaps most curiously only alcohol sellers hold the rights to sell the product currently, during the initial 18
months of the regulation. When the recreational marijuana statute was approved by voters, it gave alcohol wholesalers
exclusive rights to the distribution licenses and this is the only state where this has been done and effectively gives the
wholesalers distribution rights. This is particularly odd, because there are already cannabis dispensaries in the state and
they have been told that they can sell their existing product as recreational, but then must switch to the new alcohol
distributors and the alcohol industry will take a large cut of the cannabis profits. On top of this, another side effect of
choosing the alcohol industry as the distributor is that alcohol licenses are federal and the federal government still
considers cannabis to be illegal meaning that the cannabis products they distribute are not allowed to be consumed in
casinos and bars, part of the draw of for a state like Nevada and the city of Las Vegas to approve recreational usage.
Entrants into the industry still have very unusual regulatory problems such as this to deal with. Overall however, issues
such as this are expected to be temporary hiccups as the industry fires up and regulators work out new ways to fix the
problems of disagreement between federal and state government.

Figure 26: Cannabis sales North America, legal, illegal and global estimates ($bn)
SOURCE: Vice, Bloomberg

MARKETLINE
Black market cannabis and heavy regulation is a problem for

the market players
In states such as Oregon where the process of decriminalization and eventually legalization started much sooner than
the rest of the US, there is an increasing problem with cannabis products being moved across state borders into non-
legalized states. This type of action, whilst certainly very attractive for growers due to the much higher prices that can be
achieved in non-cannabis states is illegal. The cannabis industry is working to make sure that its image is clean, because
there are many detractors in the US that would prefer to see the states that have experimented with legalization fail and
being caught shipping the product in to non-legal areas would very much damage the fledgling industry’s image. But this
action is causing additional strain on the industry too, because regulators are trying to monitor each individual plant from
field through to retail establishments with modern tracking and labelling systems and this addition regulation certainly
puts some extra strain on these new businesses.
Trump administration has been adversarial but won’t stop the

momentum
While President Donald Trump has changed his mind multiple times on legal marijuana, Attorney General Jeff Sessions
is an opponent of the legalization legislation and has vowed to enforce laws against drug use. A crackdown is unlikely
though because of the popularity of the movement towards legalization and the funds it would take to renew the crack
down on this drug. Many in the US are weary and critical of the continued war on drugs and many see this type of
legislation as being a much better way to manage the situation, absorbing less tax dollars and doing less societal
damage through incarceration of drug users and suppliers. About 71% of US voters agree that “the government should
not enforce federal laws against marijuana in states that have legalized medical or recreational use,” according to a
recent poll and very much the tide of this argument is against the Trump administration. The likely outcome is that more
and more states will follow suit of those that have already legalized recreational use because those that would prefer not
to legalize can still see the tax income benefits from a new burgeoning industry that will continue to exist legal or not.
However, this inevitability of progress in the industry is not preventing Sessions from causing problems for the industry.
In particular the justice department is delaying on applications to produce cannabis for research studies causing friction
between it and the Drug Enforcement Agency. This is a concerning sign for the industry in the short term, but long term
will be less of a problem and those that commit to the industry currently will reap the benefits later on.

Canada is about to become a boom market for the cannabis
industry
Canada currently has legalized medical use and intends to move to full legalization. The Canadian government intends to
legalize recreational cannabis by July, 2018 and this move is not going to be province by province or state by state as in
the US, the move is going to introduce cannabis legality across the entire country at once. This will be an enormous
opportunity for the market players and many are already gearing up for the move, taking on extra capacity, workforce and
loans in order to try to take advantage when it happens. Canada has a big cannabis smoking culture and there will
undoubtedly be a substantial market ready almost from day one. The players that are publicly listed have experienced
mixed fortunes, with large spikes and drops in their stock price since listing. Much of this is because although the players
are growing well and posting good financials, the market is still a controversial one. Since Trump’s election there has
been pressure on producers and retailers which have held up the market and if this continues then it is very likely that US
producers will heavily target Canada ready for the change in legislation. Over the coming years however we will see
other countries moving towards a similar approach and these companies that are trailblazing in the US currently, will be
in an excellent position to move in when other countries’ markets open up. The problem is identifying when and where
this might happen. Public opinion globally is behind legalization, but regulators and governments are not.

POINTS OF INTEREST
In the construction industry, demand from consumers does not govern how well the industry is doing, as it might in other
industries. Instead the main barrier to growth in the industry comes from all manner of other inputs into the industry, such
as regulation, fuel prices, economic outlooks and government policy. The reduction of some of these barriers would see
a boom in a number of geographical areas particularly the UK and India.
Cloud computing is here to stay and more and more processes are being moved into the cloud in order to make
processes more efficient and safe and allow companies to learn all kinds of new insights into consumer behavior.
Currently though, the domination of the cloud market from one particular provider may service to stifle innovation and
competition.
The growth of online retail seems to be endless with countries from developed through to developing all experiencing
significant growth regardless of their stage of online development. More and more types of products become available
online each year and there appears to be very few products that cannot work as sold through online retail, meaning that
there truly are not bounds the long term potential of it.
Music streaming services are proving to be very useful for the record labels and artists, finding new ways to monetize
their product when other methods of music sales have been in constant decline. However despite remarkable growth in
this industry, life is not easy for the streaming companies and they experience substantial overheads from the vast
royalties made payable to artists and labels.
The development of the Marijuana industry in the US is down to a fundamental change in attitudes towards the drugs and
a complete reversal of previous policies. The market is showing that it has tremendous future potential for growth as
more and more countries begin to follow the lead of the US.

APPENDIX
Further Reading
Global Construction (2017) Industry Profile, MarketLine
Global Music Steaming (2016) Industry Profile, MarketLine
Global Online Retail (2016) Industry Profile, MarketLine
Global Cloud Computing (2016) Industry Profile, MarketLine
Sources
Cannabis Industry, Bloomberg 2017
https://www.bloomberg.com/news/articles/2017-03-23/u-s-cannabis-industry-expected-to-maintain-growth-despite-trump
Cannabis Producers, Vice 2017
https://news.vice.com/story/canadian-weed-producers-will-dominate-the-global-marijuana-market
Medicinal Marijuana Market Industry overview 2017
http://www.medicalmarijuanainc.com/industry-overview/
NBC News, Nevada Announces Recreational Marijuana 2017
http://www.nbcnews.com/news/us-news/nevada-goes-green-recreational-marijuana-alcohol-industry-wants-piece-pot-
n778261
UK Construction industry slows, FT 2017
https://www.ft.com/content/5d50e1a2-609d-11e7-91a7-502f7ee26895
10 Fastest growing industries in the US 2017
https://www.forbes.com/sites/sageworks/2017/04/09/the-10-fastest-growing-industries-in-the-u-s/#33e9cd241ef2
Help from relative buying homes in the UK 2017
https://www.ft.com/content/0bd5e826-2e49-11e7-9555-23ef563ecf9a

Ask the analyst
We hope that the data and analysis in this brief will help you make informed and imaginative business decisions. If you
have any questions or further requirements, MarketLine's research team may be able to help you. The MarketLine
Research team can be contacted at ReachUs@MarketLine.com.
About MarketLine
At MarketLine, we deliver accurate, up-to-date insights on over 30,000 companies, 300 industries, and 215 countries, as
well as the latest news and financial deal information from within your market and across the globe.
Established in 1997 when the Internet was in its infancy, we recognized the need for a convenient and reliable data
service to help our clients understand local and global markets and the companies operating within them.
In today’s information-rich world, sifting fact from fiction to pick out what’s relevant and what’s up to date has become the
new ‘holy grail’ in business information provision.
Our 170 dedicated research professionals aggregate, analyze, and cross-check facts in line with our strict research
methodology, ensuring a constant stream of new and accurate information is added to MarketLine every day.
Disclaimer
All Rights Reserved.
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means,
electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, MarketLine.
The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that
the findings, conclusions and recommendations that MarketLine delivers will be based on information gathered in good
faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such
MarketLine can accept no liability whatever for actions taken based on any information that may subsequently prove to
be incorrect.

MarketLine | John Carpenter House, John Carpenter Street |
London, United Kingdom, EC4Y 0AN
T: +44(0)203 377 3042, F: +44 (0) 870 134 4371
E: REACHUS@MARKETLINE.COM
WWW.MARKETLINE.COM

Top 5 Global Growth Industries in 2017: Examining The Market Drivers, Opportunities and Risks

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Top 5 Global Growth Industries in 2017: Examining The Market Drivers, Opportunities and Risks

Uploaded by

Copyright:

Available Formats

MarketLine Theme Report

Top 5 Global Growth

Publication Date: August 2017

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 1

Figure 1: Key global growth industries 2016, % growth YOY

Construction industry: Springing back into life but concerns

Cloud computing: Industry has changed much, but challenges

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 2

Online retail: Different routes to development creating a global

Music industry: Saved by streaming services helping to

Marijuana: The unusual growth industry displaying just how

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 3

Online retail: Different routes to development creating a global boom ........................................................................... 3

Construction industry has sprung back into life ................................................................................................................... 8

Chinese construction industry is still producing double digit growth ................................................................................ 9

UK construction industry shows a very mixed picture .................................................................................................... 11

Cloud computing has changed much but challenges remain ............................................................................................ 14

Different routes to development create global online retail boom ...................................................................................... 20

Global growth helped by arrival of new countries to the market .................................................................................... 23

Transformed by technology, Chinese online retail underpins global growth .................................................................. 24

Music industry saved by streaming Services..................................................................................................................... 26

Paid subscriber growth in America has surged .............................................................................................................. 26

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 4

The cannabis industry is believed to be the fastest growing US industry ...................................................................... 32

Industrializing marijuana production is the main aim for players .................................................................................... 34

The types of opportunities in this market are wide-ranging............................................................................................ 35

Points of Interest ............................................................................................................................................................... 39

Further Reading ............................................................................................................................................................. 40

Ask the analyst .............................................................................................................................................................. 41

About MarketLine .......................................................................................................................................................... 41

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 5

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 6

Figure 4: Chinese Belt and Road program route map ....................................................................................................... 10

Figure 7: Economic growth index of Indian cities, 2000-2025, 2010=100 ......................................................................... 13

Figure 8: Value of Global Cloud Computing services 2011-2016 ($bn) ............................................................................ 14

Figure 9: Value of Global Internet Retail 2008-2016 ($bn) ................................................................................................ 16

Figure 10: Nine sections of Industry 4.0 ............................................................................................................................ 17

Figure 11: Revenues of Amazon 2008-2016 ($bn) ........................................................................................................... 19

Figure 12: Indian online retail value ($bn) ......................................................................................................................... 20

Figure 13: Percentage of Indians with internet access 2005-2015 .................................................................................... 21

Figure 14: UK outstanding credit card balances ($bn) ...................................................................................................... 22

Figure 15: Canadian online retail spending 2008-2016 ($bn)............................................................................................ 23

Figure 16: Number of smartphones owned in China 2012-2016 (million) ........................................................................ 25

Figure 18: Digital listening shifts from buying to renting .................................................................................................... 27

Figure 19: Spotify financials at the end of 2016 (€’000) .................................................................................................... 29

Figure 21: Cannabis legality US, by state ......................................................................................................................... 32

Figure 22: Global legislation towards cannabis use .......................................................................................................... 33

Figure 25: Marijuana index three year price fluctuations ................................................................................................... 36

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 7

Figure 2: Global construction industry world map by market value, 2015

US construction appears to be doing very well with a great

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 8

Figure 3: Global construction industry market value 2011-2021 by region $ millions

Chinese construction industry is still producing double digit

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 9

SOURCE: Belt and Road

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 10

UK construction industry shows a very mixed picture

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 11

Figure 6: UK housing affordability, median house prices to median earnings ratio

India has enormous potential for growth in the construction

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 12

Figure 7: Economic growth index of Indian cities, 2000-2025, 2010=100