Digital Economy:
Prepared by TMB AnalyticsDate: 7 Feb 2017
HOW DIGITAL TRANSFORMED AN INDUSTRY
Example
2
What did they see?
3Source: http://s3.amazonaws.com/fromus/blog_posts/photos_taken_by_year.png/
Photography Industry stays, but not all players survive
4
• For nearly a century, no company commercialised the camera as successfully as Kodak
• The advent of digital photography led to 2 distinct but related disruptions –commoditisation of digital cameras and dramatically reduced physical printing
• The company filed for chapter 11 in January 2012
Source: Bloomberg, press articles, Strategy& analysis
0
20
40
60
80
100
2005199519901980 201020001985
-100%
Eastman Kodak Share Price (US$)
“Kodak executives couldn't foresee a future in which film had no role in image capture at
all, nor come to grips with the lower profit margins or faster competitive pace of high-
tech industries” (LA Times, December 2011)
“That’s cute – but don’t tell anyone about it.”
Pictures that Kodak couldn’t see… Photography remains strong!
5Source: http://resourcemagonline.com/2014/12/infographic-there-will-be-one-trillion-photos-taken-in-2015/45332/
HOW DIGITAL TRANSFORMED ANOTHER INDUSTRY
Example 2
6
What did they see?
7Source: http://static5.businessinsider.com/image/4b9021b17f8b9ae65e850400/digital-entertainment-sai-chart.gif/
Movie rental industry is still booming, just not with Blockbuster.
8
5,933 5,722 5,522 5,300 5,100
4,000
501 682 997 1,205 1,365
1,670
2,163
2004 2005 2006 2007 2008 2009 2010
2004-2010 (USD$ Mn)
• Blockbuster was the largest provider of video rentals in America, with a company value of $8.4 Bn 1990s
• Availability of on-demand movie / TV content from players, including Netflix, significantly reduced the need to endure trips to brick and mortar video rentals stores
– 2000: Blockbuster turned down a chance to acquire Netflix for only $50 Mn
– 2010: Blockbuster filed for bankruptcy, with a company valuation of only $24 Mn
Blockbuster refused to cannibalise…
Source: Press articles, Strategy& analysis
Bankruptcy
“ We have not seen a business model that’s financially viable long-term in this arena. Online rental services are
‘serving a niche market.”
Stories that Blockbuster didn’t lived to see… Movies rental thrives
9Source: https://pmcvariety.files.wordpress.com/2016/02/annual-us-filmed-entertainment-revenue.jpg?w=670
ASK WHAT YOU CAN DO IN DIGITAL ECONOMY
Ask not what Digital Economy can do for you…
10
8 Success Factors to Digital Economy
-11-
Infrastructure Affordability
Ease of Doing BusinessConsumer/Business Usage
Government Electronics ServicesAdvanced Technical Skills
Innovative Products
Myanmar Cambodia Lao PDR
Argentina India Kenya Vietnam
Brazil Indonesia
Emerging Transitional AdvancedPhilippines
Thailand
South Africa Mexico
China Italy
Russia Spain Malaysia
Singapore Finland Sweden Netherlands US UK Japan South Korea Germany France
12
34
56
78
Policy and Regulation
2016
2021
Source: World Economic Forum and TMB Analytics
-12-
Internet and Social Network Will Soon Become Key Channels to Economy
21 23 26 2838 45 48
39
5659
70
18
25
33
5054
64
32 3541 43 46
55
-140-130-120-110-100-90-80-70-60-50-40-30-20-10
01020304050
2011 2012 2013 2014 2015 2016E 2021F
Global Internet Penetration (%)
Thailand’s Internet Penetration (%)
Thailand’s Social Network User Penetration (%)
Thailand’s Internet Users (million)
Source: Statista, NECTEC, and TMB Analytics
Rising Market Access
Retail e-Commerce Market
-13-
4%
Thailand340bn USD
US4,700
bn USD
China4,200
bn USD
16% 8%
e-Commerce share (B2C)
Retail Trade
Source: ETDA and TMB Analytics
Thailand e-Commerce Sales by sectors
-14-
B2G19%
IT&Telco13% Transportation
3%
19
2
2
4
4
7
12
16
17
17
Others Trade
Sport&Toy
Food&Beverages
Online Store
Furniture
Transport&Telco
Fashion Products
Cosmetic Products
Computers&Parts
Hospitality
e-Commerce 2.1 Tn Baht*
*Data as of 2015 Source: 2015 ETDA and TMB Analytics
B2C22%
B2B59%
e-Auction &Procurement
19%
Hospitality28%
Manufacturing15%
e-Commerce Will Expand 2.9X in 6 Years
-15-
1.2 1.2 1.4 1.6 1.92.2
2.7
3.60.4
0.50.5
0.6
0.7
0.9
1.1
0.50.5
0.6
0.7
0.9
1.0
1.4
2.42.7
3.23.9
4.6
6.0
2014 2015 2016F 2017F 2018F 2019F 2020F 2021F
2.0 2.1B2B
B2G
B2C
Tn Baht
+19%2.9X
represents compound annual growth rate (CAGR)
+20%
+19%
+21%
*Note
Source: ETDA and TMB Analytics
72% 70%
47%
28% 30%
53%
2010 . . 2015 . . 2025F
Source : McKinsey, PwC, BOT, and TMB Analytics
4%
+6%
1%
+11%
193 315151
Value of Thailand’s Payments (Tn Baht)
*Note represents compound annual growth rate (CAGR)
e-Payment
Cash
e-Commerce Will Boost e-Payment, Reduced Cash Usage
17
Brick-and-Mortar Channel Will Soon Be Replaced by Digital, Even Banks
-17-
2005 2010 2015
0.3 0.3 0.4 0.4 0.4 0.4 0.40.1 0.1
0.2 0.20.3
0.40.6
'10 '11 '12 '13 '14 '15 2016E
60%25%
Internet & Mobile Phone
ATM & Branch
Compound Annual
Growth Rate‘10-’16
+37%
+8%
+3%
+8%4,200
6,0007,000
+8%
+4% +5%
0%+7%
+5% Small Banks
Medium Banks
Large Banks
Branches Grew at A Slower Pace, Especially in Medium-sized Banks…
… While Transactions via Internet & Mobile Phone Surged Up
Unit: Number of Branches Unit: Number of Transactions (Billion)
2.4X% Digital channel increased
to 60% in 6 Years
1 2
Banks are trying to embrace changes given recent disruptive technology
Digital surged exponentially
Source: BOT and TMB Analytics
Thailand’s Journey to Digital bankingStill high potential to increase digital banking penetration
Digital banking in Asia(1) (2014)Percent (%)
Digital consumers” represent more than 700 million customers across Asia
(1)“Digital banking” penetration is defined as the number of users of internet or smartphone banking divided by total banking consumers in each country; only urban consumers are includedSOURCE: McKinsey Asia Personal Financial Services Survey, 2014 18
Big rooms to increase
-19-Source: World Economic Forum and TMB Analytics
38mn
CAGR +4%
Greater accessibility to the Internet with enhanced usage
2.1tn
6 tn
High growth prospects over the medium-term
CAGR +19%
58tn
109 tn
Increasing Popularity of e-Commerce Induces e-Payment Adoption Over Cash
CAGR +11%
Internet Users
Internet Userse-Commerce
e-Payment
48 mn
2015 2021F
*Note: CAGR represents compound annual growth rate
Accessibility, e-Commerce, e-Payment Are Key Factors Driving Digitization Forward
Physical to Digital: Are You Ready for Disruption?
-20-Source: Company Websites and TMB Analytics
Digitization reshapes industries to the Better Customer Satisfaction
21
“When change is imminent, the best way to change is to
Lead the change ourselves.”
“เมื่อเราไมสามารถหนีการเปลี่ยนแปลง การนําการเปลี่ยนแปลงดวยตัวเองเปนวิธีเปลี่ยนแปลงที่ดีที่สุด”