Media giants are looking to further ties in India, where the mobile economy is booming. News companies, like the Wall Street Journal, the New York Times and NPR have expanded staff or products in India over the past few years to cover the growth story. Western companies already have big stakes in the Indian market. Twenty-first Century Fox-owned TV streaming company Hotstar is by far the biggest over-the-top TV provider in India with roughly 100 million subscribers.
As tensions with China grow deeper, media giants could look to further ties in India, where the mobile economy is booming. Why it matters: India is one of the fastest-growing internet markets in the world. But few consumers have the disposable income to pay for multiple services, which will make it hard for some companies to conquer the country. Background: Like many developing countries, India is mostly a mobile-only internet economy.
“India’s story is not an evolution story, it’s a revolution story,” says Ravi Agrawal Managing Editor of Foreign Policy and author of “India Connected: How the Smartphone Is Transforming the World’s Largest Democracy.” “Hundreds of millions are getting online through smartphones with cheap data plans….That growth is the reason corporate America is bee-lining there.” By the numbers: Unlike the largely saturated North American digital market, India’s still has room to grow.
With nearly 500 million internet users and roughly 530 million smartphone users, India is the second-largest online and smartphone market in the world next to China. Roughly 40% of the country’s total population is using smartphones and is accessing the internet. The number of internet users is expected to roughly double over the next four years, according to Cisco’s latest Virtual Networking Index. Internet adoption is driving unprecedented advertising growth in India, as many consumers are more comfortable with paying for content via data-based ads. India will be the third-biggest contributor to ad spend growth globally between 2018 and 2021, according to a new report from global media agency Zenith.
The media scramble: Western tech and media companies have been expanding their presence in India to take advantage of and cover the growing economy. News companies, like the Wall Street Journal, the New York Times and NPR have expanded staff or products in India over the past few years to cover the growth story. Tech companies like Google and Facebook that serves as big distributors of information in India have pushed to expand internet access in the region to increase the internet population. Google launched its “The next billion users” plan to conquer India last year. Facebook’s “Free Basics” program was rejected by regulators in 2015. From a social media perspective, Google is now looking to take on Facebook’s social media and messaging dominance in India with a new hyper-local social network called Neighbourly, Amazon officially rolled out its social e-commerce site Spark, in India last week.
Media Consumption Growth
India’s media consumption has been growing at a compound annual rate (CAGR) of 9 per cent over the past six years. This is almost twice that of China and nine times that of the US, a study said. The report, from the Boston Consulting Group (BCG) and the Confederation of Indian Industries (CII), highlights significant changes in the media and entertainment (M&E) sector. “This is an unparalleled situation, even for an industry that has always been at the forefront of disruption. The industry will now need new answers, and will need these fast, even on the most fundamental things like talent pool to run our companies and methodology for measuring the impact we are delivering to advertisers on our platforms,” said Sudhanshu Vats, chairman of CII’s committee on M&E. Vats is also group chief executive at Viacom18 Media.
The report points to multimodal growth across all major media, unlike any of the other key markets. At 4.6 hours of consumption per capita per day, India is behind China (6.4 hours) and US (11.8 hours), suggesting room for growth. Unlike in developed countries, this growth in India has been additive, not by cannibalising traditional media. Hence, traditional and new-age platforms of content distribution can co-exist, according to the report.
“We have significant under-penetration of non-digital media. More than 95 per cent of TV households in India are single-screen. Hence, TV consumption happens in a family viewing setting. Literacy levels constrain print penetration and screen density is much lower than in China and the US. At the same time, there is a digital explosion. The number of broadband users has become two-fold (480 million across mobile and fixed) and the data consumption has become 10-fold (10 GB per user per month) over the past two to three years,” the report said.
Kanchan Samtani, partner at BCG India, said: “India is one of the few countries where we are witnessing most mediums growing hand in hand and we see this continuing in the future. For example, video consumption on OTT (direct streaming over-the-internet) is supplementing linear TV, versus cannibalising it.”
This growth will, says the report, fundamentally change the way media houses look and operate. The changes will range from rethinking the front-end content involving format and language to reorganising the back end with newer skill sets and partnership models. New-age technologies such as artificial intelligence and analytics are getting ingrained in each function of media operations.
“The industry has to rewrite many definitions and conventions on almost a daily basis. While the erstwhile fixed prime time for TV for family in the evening remains, many new personal viewing occasions have come via OTT screen consumption,” said Karishma Bhalla, another partner at BCG India.
While digital enjoys 18 per cent share of total video consumption in the country, its share of video advertising revenue is 8 per cent. In China, Britain and US, the share of digital in consumption and ad revenues is at par. In China, digital has 22 per cent of total video consumption and 20 per cent of total ad revenues on video; in Britain, it is respectively 28 per cent and 27 per cent. The US is closer to India, in that 28 per cent of total video consumption comes on digital but only 17 per cent of ad revenue goes to the medium.
“This is one reason why monetisation of digital media has been a challenge and dollars have moved slower than eyeballs. What marketers really want is a converged offer that is anchored cross platforms and brings in sharper targeting, as well as ideation and storytelling. The media house of the future will need to create this converged offer bringing in personas, higher attribution and weaving in of narratives and content native to the platform across advertising,” the report said.