McKinsey: The Next Generation Arena, A New Competition Landscape Begins

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Competition unfolds on the next-generation large-scale arena

As early as 2024, McKinsey published a report titled “Next-Generation ‘Arena’,” defining arenas as industries with the fastest growth, most vigorous competition, and frequent market share shifts.

This recent publication is an updated version of the previous report. The 18 “future arenas” previously identified have far outpaced other industries in growth, becoming the core engine of global economic growth.

From 2022 to 2025, the total market value of these 18 future arenas is growing at a 29% compound annual growth rate, nearly four times that of non-arena industries (8%); their revenue growth rate is 11%, while other industries are almost zero. Capital expenditure and R&D investment in these arenas are also rising at a 14% CAGR, far above the 4% in non-arena industries. Currently, these 18 arenas contribute about half of the global market value and revenue growth, showing higher competitive vitality. It is estimated that by 2040, the total revenue of these 18 future arenas will reach between $29 trillion and $48 trillion.

The report divides the 18 arenas into five major themes, each with different growth speeds:

① AI foundational layer (semiconductors, cloud services, AI software and services): The fastest-growing theme, adding about $11 trillion in market value and $500 billion in revenue from 2022-2025. The AI investment wave is reshaping the entire value chain from chip design to cloud services.

② Digitalization (e-commerce, digital advertising, video games, streaming, cybersecurity): Although mature, it is being reactivated by AI and emerging markets. AI assistants are changing traffic entry points, and “agent-based commerce” may disrupt existing patterns; cybersecurity is accelerating due to AI-related risks and demands.

③ Electrification (electric vehicles, batteries, nuclear fission): Strong demand, but competition has shifted to cost and efficiency. China leads in electric vehicles and batteries, while nuclear fission is regaining attention due to AI data center needs for stable power.

④ Hard technology (robots, shared autonomous vehicles, future aerial mobility, space, modular construction): Generally in early scaling stages. Autonomous taxis are commercially available in multiple cities; space is accelerating due to reusable rockets and defense needs; eVTOL and modular buildings still face regulatory and economic challenges.

⑤ New biological frontiers (weight-loss drugs, non-medical biotechnology): The weight-loss drug market is booming, with increasing competition; non-medical biotech (such as alternative proteins, agricultural biotech) remains in early commercialization stages.

The report also analyzes nine “all-round” companies (Amazon, Tesla + SpaceX, Alibaba, Alphabet, Apple, Huawei, Meta, Microsoft, Samsung), which are enterprises with strong cash flow generation capabilities. Through financial strength, innovation, and decisive execution, they are expanding across arenas. Their advantages lie in reusable infrastructure, data network effects, and top talent attraction, pushing competition to new heights.

Regionally, arena headquarters are highly concentrated in the U.S. and Greater China, accounting for 90% of market value. U.S. companies lead in 14 arenas, especially in AI and digitalization. Greater China performs strongly in electrification (electric vehicles, batteries), with notable revenue shares. Other regions like Europe, Japan, and South Korea have advantages in specific fields such as robotics and weight-loss drugs.

The report points out that whether or not companies directly participate in arenas, their operations and competitive environments will be reshaped. Decision-makers need to activate their “arena radar,” assess their proximity to these high-growth fields—whether they are within, adjacent to, or on the periphery—and quickly reconfigure resources and strategies accordingly to respond to the accelerating competitive landscape.

Excerpt from the report

[Content omitted for brevity]

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Disclaimer: The report is shared for informational purposes; all rights reserved by the original authors.