platform. Repeating this process forms new markets at multiple tiers (Figure 1-2-4-1).

This cycle has been accelerated by the prevalence of smartphones, social media, and the cloud. On the downside, ICT-related goods and services are subject to sudden fluctuations. Finding ways to continually stimulate demand, including collaborations across industries and fields, will be required in the future.

### b. Examples of ICT-derived goods, services, and businesses

Transformative mechanisms such as IoT, big data, and AI, which can be termed background technologies, are expected to have profound implications for industry as they reach markets. Here, we focus on examples of new ICT-derived goods, services, and businesses in the automotive, housing, and entertainment fields that are expected to have social impacts as well as make significant contributions to economic growth from the demand side.

## I nsurance telematics

Insurance telematics is integrated with communications systems on cars and other vehicles and collects and analyzes driving distances, behavior, and other data on individual drivers. These data are used to calculate the driver's auto insurance rates. Since insurance rates will be set to reflect precisely the relative riskiness of the driver's behavior, insurance telematics is expected to encourage safer driving and reduce accidents. Automakers and insurance companies are already working on insurance telematics services in Japan.

## Connected cars

Connected cars have the functions of ICT devices, such as Internet connectivity. Road-to-car and car-to-car wireless communications facilitate advanced driving assistance functions, such as automated driving, and provide many kinds of data, such as the car's operational status and the surrounding road conditions. Aggregating and analyzing these data is expected to create new services and value. Development of connected cars in Japan is proceeding under a Strategic Innovation Promotion (SIP) program, which assists cutting-edge research. Automakers and others are moving ahead with developing technologies and testing connected cars.

## Smart homes

Smart homes, which integrate ICT with houses, can provide more comfortable living conditions for people. Smart homes boost energy efficiency and conserve electricity by adjusting the supply and demand of energy as well as monitor the home and prevent crime with sensor arrays and enable remote control of household appliances. Communications carriers and homebuilders in Japan are collaborating on various smart home projects.

### c. Benefits from ICT's economic contributions

What levels of demand generation benefits can be expected from ICT advancement? Focusing on new services and applications anticipated to appear by around 2020 in all ICT areas, not just the examples given above, we measured and estimated the intention of consumers to use paid services and applications and how much they are willing to pay based on the results of a survey given to consumers. From this survey, we estimated the demand generation effects to total approximately 1.8 trillion yen in direct annual contributions across all markets (Figure 1-2-4-2).

Further analysis based on the ICT industry’s input-output table found the induced production value to be approximately 4.1 trillion yen and the added value total to be approximately 2.0 trillion yen, when secondary spillover effects, including income effects, are accounted for.

Figure 1-2-4-1 Development of ICT services

(Source) “Study Report on a Structural Analysis of the ICT Industry in the IoT Era and Verification of ICT’s Multifaceted Contributions to Economic Growth,” MIC (2016)