Carmakers are expected to invest heavily in in-car entertainment in 2023 to curb the losses from the volatile market, according to analysts.
“This is mainly driven by rising inflation, which will reduce the opportunity for consumers to access the electric vehicles market,” Amalia Maiden, analyst at GlobalData, said in a new podcast from the research firm.
At the same time, she predicted that autonomous vehicles will also suffer from the harsh market conditions. With carmakers focusing on funding entertainment rather than self-driving cars, the dream of having totally autonomous vehicles has grown even further away.
The carmakers’ renewed focus on entertainment hasn’t come in isolation. GlobalData estimates that the global entertainment market will grow to reach nearly $50bn of revenue by the end of 2030, up from 29.7bn in 2021.
“So that’s quite a big growth,” Maiden said. “In 2023, car manufacturers should be looking to capitalise on this territory with the option for subscription services, which will offer opportunity to generate continued revenue throughout the lifetime of a vehicle.”
The news about carmakers begin expected to focus more on entertainment in 2023 comes at capital raises into the tech segment of the auto market has plummeted in 2022.
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In 2018, investors injected $28.1bn into the industry across 374 venture financing, debt offering, equity offering and private equity deals. The amount raised by the industry steadily rose over the following years, hitting its peak in 2021 when the industry raised over $124.8bn across 445 deals.
However, the amount raised has dramatically dropped in 2022. With less than a month to go of the year, the industry has secured $17.5bn across 249 deals so far.
This echoes a similar trend in the wider tech industry as a whole, where funding has also plummeted in 2022.
GlobalData is the parent company of Verdict and its sister publications.