Facing our digital future

Marketing material

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Today’s world is shaped by powerful structural shifts – from digital disruption & AI to the transition to a low-carbon economy^[1]. These mega forces create themes that create major opportunities – and risks – for investors. A case in point is our digital future. The progress of digital technology is astounding – with generative AI just the most eye-catching recent example. But many of these technologies are still in their infancy – and new technologies are emerging all the time.

By focusing on the digital future, investors can harness some of the forces that are reshaping both our lives.

So what are these forces? At BlackRock, we see seven key themes that are driving our digital future: healthcare, robotics, digitalisation, entertainment, electric vehicles, metaverse, the ‘smart city’ and digital security. Here, as an example, we’ll focus on entertainment and electric vehicles.

Entertainment

Video games have been with us for over 50 years. They’re now seen as a branch of mainstream entertainment, rivalling films and television as options for an evening in. Following the rise of smartphones and mobile apps, video games offer not just home entertainment but a diversion for those on the move.

In recent years, there’s been striking growth in video gaming. Current data shows that some 3.2 billion people play online games – around 40% of the world’s population^[2]. That proportion rises to 50% in Europe and 65% in the US^[3]. That means there’s plenty of room for growth in Asia, which is already the world’s largest gaming market^[4].

But there’s more to digital experiences than games. Today, the average American spends a staggering seven hours a day consuming digital content^[5]. That includes educational material as well as entertainment. The online educational market has a forecast compound annual growth rate of well over 20% in the years to 2030^[6]. And with emerging technologies such as the metaverse offering increasingly immersive online experiences, demand for digital content looks set to deepen. All of this creates a compelling investment case for the companies pioneering these experiences.

Electric vehicles

The increased adoption of electric vehicles (EVs) has accelerated the biggest changes in car design since the automobile’s inception. Road transport currently accounts for a sixth of global carbon emissions^[7]. Against this background, subsidies and emissions regulation are enhancing the attractiveness of EVs among consumers. Already, the growth in EVs has been staggering. Between 2020 and 2022, EVs went from just 4% of global automobile sales to 14% – and that figure is expected to rise to 18% by the end of 2023, according to the International Energy Agency^[8].

Meanwhile, battery technology promises to make EVs a match for their internal-combustion peers in terms of cost. In September 2023, lithium-ion cells – which are used in EVs – fell below the $100/kilowatt-hour level for the first time in two years. For EVs to be truly cost-competitive, the price of battery packs needs to fall to $100/kilowatt hour – which would require lithium-ion cells to fall to $80/kilowatt hour^[9]. This looks realistic, as the supply of lithium is now outstripping demand^[10].

Advances in EVs also have a digital dimension. Progress in advanced driver-assistance systems (ADAS) is reshaping the role of both vehicle and driver. Fully autonomous vehicles are now a real prospect, with enormous implications for efficiency, reliability and safety. In the years to 2020, ADAS systems are expected to grow by 12.5% a year, offering striking investment opportunities in the process^[11].

To find out more about how iShares could help you invest in themes relating to the digital future, search ‘iShares digital future’.

This document is marketing material: Before investing please read the Prospectus and the PRIIPs KID available on www.ishares.com/it, which contain a summary of investors’ rights.

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1. BlackRock Investment Institute, October 2023.
2. Gamer Demographics: Facts About the Most Popular Hobby (dataprot.net).
3. Essential Facts – Entertainment Software Association (theesa.com).
4. Study: Asia Pacific the world’s largest gaming market with significant portion of Gen Alpha and Gen Z users | Marketing-Interactive.
5. Activate Technology and Media Outlook 2023 good (visualcapitalist.com).
6. Global Digital Education Market by Learning Type (Instructor-Led Online Education, Self-Paced Online Education), Course Type (Entrepreneurship & Business Management Courses, Science & Technology Courses), End-User – Forecast 2023-2030 (researchandmarkets.com).
7. Electric vehicles – IEA.
8. Electric vehicles – IEA.
9. Global cell prices fall below $100/kWh for first time in two years | Benchmark Source (benchmarkminerals.com).
10. Lithium price slide deepens as China battery giant bets on cheaper inputs | Reuters.
11. Global ADAS market volume forecast | Statista.