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A leader’s guide to the fastest-growing industries

Leading Off

Conquer the competition ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 
Leading Off

Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms

Welcome to the latest edition of Leading Off. We hope you find our insights useful. Let us know what you think at Alex_Panas@McKinsey.com and Axel_Karlsson@McKinsey.com.

—Alex and Axel
An image linking to the web page “The next big arenas of competition” on McKinsey.com.

The business landscape over the next 15 years will be transformed by industries that are more dynamic and growing faster than others. A McKinsey Global Institute report identifies 18 such sectors, or “arenas of competition,” that could gain a much larger share of the global economy by 2040. This wide-ranging group includes electric vehicles, AI software and services, video games, and drugs for obesity. “Understanding potential arenas is relevant for entrepreneurs and incumbent companies that want to compete directly in arenas, other companies that would be affected by the emergence of arenas, as well as investors looking to allocate capital to these industries,” say McKinsey’s Chris Bradley, Kweilin Ellingrud, Michael Birshan, and their coauthors. According to their analysis, these industries’ collective share of global GDP could jump from 4 percent today to 10 to 16 percent by 2040—and they could generate $29 trillion to $48 trillion in revenues, and $2 trillion to $6 trillion in profit, over the same period.

10+
An image linking to the web page “Talking innovation in video games with Electronic Arts” on McKinsey.com.

Keeping up with the speed of technological innovation is a common need in fast-growing industries—and especially critical for video game makers whose products are most popular with younger consumers. In an interview with McKinsey senior partner Erik Roth, Electronic Arts chief strategy officer Mihir Vaidya explains that the technologies used to develop video game visuals are changing almost daily. “It would be like if Martin Scorsese had to relearn how to use a camera every time he went to make a new movie,” Vaidya says. In addition to tech innovations, the gaming industry is contending with changes to their business and consumption models as younger generations seek more choice and more connection with other gamers. “We think in terms of how the resources we deploy will enable bigger communities to have greater depth of engagement,” Vaidya says.
An image linking to the web page “How beauty players can scale gen AI in 2025” on McKinsey.com.

It’s hard to consider the future of industries without taking AI into account. Just this month at the CES 2025 tech conference, companies unveiled AI-powered innovations such as a memory-boosting app, a TV that allows viewers to isolate different audio sources, and a device that can read a book to kids using their parents’ voices. But AI’s reach goes far beyond cool electronics. For example, gen AI’s impact on the beauty industry could add $9 billion to $10 billion to the global economy. McKinsey’s Kristi Weaver, Megan Pacchia, Sara Hudson, and coauthors note that gen AI use cases in the beauty sector could include hyperpersonalized marketing, virtual try-ons, and rapid packaging and product development. “While much of the beauty industry’s products are cosmetic, gen AI applications in beauty are more than skin-deep,” they say. “Integrating the technology alongside other digital and AI tools and boosting organizational capabilities can differentiate leaders in beauty for years to come.”

Lead by competing for the future.

— Edited by Eric Quiñones, senior editor, New York

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by "McKinsey Leading Off" <publishing@email.mckinsey.com> - 04:57 - 20 Jan 2025