Some stats about India
While building PopStats — I collected lots of population stats about India. These may be useful for any consumer product or service. Here are some of my big takeaways (somewhat obvious).
- 300M MAU. Indian Internet monthly users
The big 4 Internet services (Whatsapp, Facebook, YouTube, Google) each have between 200–250M monthly active users. The total number of mobile data subscribers between by all the telcos is about 400M. A sizable number of people have two SIMs, or unused SIMs, or don’t top-up data every month etc. Hence, its a good estimate that there are between 275-325 M unique Indians currently accessing the Internet every month (as of Aug 2017).
300M MAU means about 170M DAU. FB has 65% DAU/MAU ratio globally, India is likely ~60%.
2. 900M Indians live in villages.
There are about 1.35B people in India. Of these there are 450M living in urban areas, 900M in rural areas. This is very different than either China or USA. USA became a majority urban country in 1920, and China in 2010. Even by 2030, India will only be 42% urban.
3. 27% kids — under 15. Indian is exceptionally young !
India is very young. 27% of its population is under the age of 15. Less than 10% of the population is over 60. The rural population tilts even younger (30% under 15) than the urban population. Compare the shape of India’s pyramid to China’s or USA’s.
Its hard to internalize what this means. Let me dramatize it for effect.
The median age is 27. This means a 30-year Indian is married with a few kids — i.e. already an “over the hill” Uncle-ji or Auntie-ji. Mid 30 year-olds are not thinking of a new car or house; they are already worried about jobs for their children, and marrying them off. Mid 40 year olds are adjusting to their aging in-laws, handing over their responsibilities to their children and taking on more sedentary roles. 50 year olds are frail and cared for by their families. The typical 60 year old Indian is dead. Things are changing, but demographics change slowly. India’s median age will shift only to 29 by 2021 and to 31 by 2030.
From a Internet service’s perspective, this relative youth is good and bad. Positively, India is an efficient machine at flushing out tech-ignorant oldies and replacing them with tech-savvy young people. Conversely, as a country with 27% of its population under the age of 15, India has a demographic constraint to Internet growth — besides its affordability and accessibility constraints.
4. India is a very poor country.
China’s per-capita income is 5x of India. America’s is 25x. Around 20% of Indians are below poverty-line — they make less than Rs 1000/mo ($15/mo) and struggle for food. While 7% GDP growth-rate is good, it will take many decades to uplift large sections of the population.
Thus, India should be thought of as a country of the size of UK or France — in terms of overall economic opportunity. The size of our internet businesses will also be similar to the biggest businesses in those countries, in the medium-term. Can you name 2 large French tech unicorns ?
Even if India keeps growing at 7% (a big if), it will reach China’s current GDP levels — in about 18 years (in other words, India is about where China was in 1999).
Key Takeaway
India is neither like USA or China. India is unique — far younger, much more rural, and much much poorer. Overall, except for mobile access, where the gap is closer, India is about 15–20 years behind China, and 50+ years behind USA. We should not look at either country, to project what will happen in India.
Some Predictions
- Mobile user growth — bumpers ahead
My prediction — Internet users will grow for 2 years (~20%) and then quickly taper off to a very modest growth rate (< 10%).
We often hear the fact that India’s Internet penetration of 22% is far behind the developed worlds (75+%) and hence, 3x growth is possible in short order (5–7 years) from 350M to 1B as India catches up.
However, I think 600M MAU by 2025 is more realistic (and still on the optimistic side of 500–600M). User growth is likely to quickly taper off for three reasons that are unique to India — demographics, rural population and affordability.
- Children — India will continue to have 25% of its people under the age of 15. These take off about 300M from the base.
- Access — 400M indians live in very small villages/settlements (T7 & T8) that are hard to connect cheaply. Of these 300M are adults who will continue to have meagre internet access. Even assuming a very optimistic 30% internet penetration in these areas by 2025, thats another 200M adults off the grid.
- Poverty — Even assuming continued healthy economic progress, about 10% of the urban (T1-T4) population and 20% of the rural population (T5–6) will continue to be below the poverty line by 2025. They will have much more basic needs. Even if Jio or Google or Facebook makes it free, these people won’t be coming on the Internet. This rules out another 200M people.
These aspects are unique to India and takes off ~700M people off the table. Hence, the max base by 2025 is only about 750M. Assuming a very optimistic 80% penetration of that base, gets us to a Internet user base of 600 M MAU (400M DAU) by 2025.
2. Usage — will keep growing and growing
The real upside is not in the number of Internet users but in Internet usage. Mobile data consumption is doubling year-on-year. India usage growth will continue to significantly outpace the world for a long time (2025+) — because we are far behind the rest of the world in time, money-spent and number of use-cases served. Services that depend on consumption will do well.
Look out for a flurry of activity in media, gaming and content businesses.
3. Telco shakeout
Till 2020, there will be both user-growth and ARPU, but after that growth will predominantly come from ARPU. Mobile users will hit the 500M wall soon and then it will be a slow plod forward.
Over the next 2–3 years, all the users that matter will have arrived in the new land, and by 2025 they will all have picked out their favorite telcos and services. This means likely price-wars amongst telcos for a couple of years followed by a period of shakeout and consolidation, and then rational price-increases and profitability.
4. Value-added services have a LOT of growth left.
While growth in mobile-internet MAU will taper off soon, this does not seem to be a bottleneck for most internet value-added services.
Their penetration is so low relative to the number of mobile users, that headroom in both user-growth and ARPU is huge. Even until 2025, and beyond, user-growth can be very strong (30%+ per year) in most categories — e-commerce, media, travel-services, transportation, payments etc. Only fundamental communication services like Whatsapp should be bottlenecked by mobile-access.
The concern for mobile service business will be profitability. The opportunities going forward will be for
- more difficult categories — food, groceries, education, health;
- Serving the needs of the lower middle class users (50M — 500M)
- Needs of people living in more distributed locations — lower density of need-states.
This means acquisition costs will increase and lifetime values will be lower. In other words, if life was tough so far for internet companies — the going gets tougher.
The good news for is that the long-term opportunity is huge. In 2025, one can imagine a sizable media industry (400M MAU, $10B+ revenue), an e-commerce industry (200M MAU, revenues of $50B). Whether these companies will be profitable is hard to say, as it depends on competition and the cost of capital. But, consumer demand has a lot of headroom.
Government policy is key here. If it gets too restrictive — the long-term risk capital needed to build these services will not come and the ecosystem will consolidate too early.
Side notes
While working with the data, I found a lot of problems with the data itself. Some examples :
- Household vs. Individuals : Data is often in terms of households, not individuals. For example, per-capita income and house-hold income are related but differing metrics. Merging such data is tricky, especially when so much of the population is under 15 and not generating income. Mapping household distributions to people requires some hand-waving. I wish there was a generally acceptable way to map households to people (I have used a 5x ratio).
- Internet data : Most of the data about Indian internet, talks about the number of internet subscribers. This usually means number of connections, not users (humans). India has an almost 1.5–2.0x ratio between connections and users (Its a pre-paid society, so people carry multiple SIMs and charge up whichever SIM is cheaper). Similarly, the definition of a subscriber can vary — it can be cumulative (including inactive), active in the last 6 months, active last month, daily active etc. Numbers often require some interpretation..
