The Next Big Arenas of Competition
Overview
The McKinsey Global Institute has identified 18 future arenas of competition that are expected to significantly reshape the global economy by 2040. These arenas are characterized by high growth and dynamism, capturing a substantial portion of the economy's growth and generating between $29 trillion and $48 trillion in revenues by 2040.
Key Characteristics
- High Growth and Dynamism: These arenas are marked by rapid growth and significant market changes, with a revenue compound annual growth rate (CAGR) ranging from $2 trillion to $6 trillion by 2040.
- Market Share Dynamics: Players within these arenas experience frequent shifts in market share, indicating a highly competitive environment.
- Potential Impact: The collective share of global GDP for these arenas could increase from 4% to 10-16% by 2040.
Historical Context
- Arenas of Today: Between 2005 and 2020, 12 arenas showed exceptional growth and dynamism, including e-commerce, biopharmaceuticals, electric vehicles, and cloud services.
- Revenue CAGR: 10%
- Market Capitalization CAGR: 16%
- GDP Share: Tripled from 3% to 9%
Competitive Dynamics
- Profitability: Arenas earn significantly higher profits compared to other industries.
- Global Giants: These arenas spawn a disproportionate number of global giants.
- Opportunities for New Entrants: They offer unique opportunities for new entrants to become dominant players.
Arena-Creation Potion
Three key ingredients are necessary for the formation of an arena:
- Business Model or Technological Step Changes
- Escalatory Investments
- Large and Growing Addressable Market
Future Arenas
The report details 18 potential future arenas, including:
- E-commerce
- Artificial Intelligence Software and Services
- Cloud Services
- Electric Vehicles
- Digital Advertising
- Semiconductors
- Shared Autonomous Vehicles
- Space
- Cybersecurity
- Batteries
- Modular Construction
- Streaming Video
- Video Games
- Robotics
- Industrial and Consumer Biotechnology
- Future Air Mobility
- Drugs for Obesity and Related Conditions
- Nuclear Fission Power Plants
Each of these arenas is expected to drive significant economic growth and transformation over the next two decades.
Conclusion
Understanding these future arenas is crucial for various stakeholders, including entrepreneurs, incumbent companies, investors, job seekers, and policymakers. The report provides detailed insights into the growth factors and competitive dynamics that could shape these industries over the coming decades.
