Welcoming the Consumer Internet Era in Indonesia
The trifecta of market readiness, massive investment and strong entrepreneurs is making Indonesia one of the globe’s most important Internet markets.
When at least 25% of a country’s consumers have access to the Internet, the next step is mainstream adoption and consumerization.
published at Forbes Indonesia February 2014
Indonesia’s Internet is now entering the age of consumerization. Delivery of content, media, e-commerce and cloud services will be part of our daily lives. The trifecta of market readiness, massive investment and strong entrepreneurs is making Indonesia one of the globe’s most important Internet markets.
It is projected that Indonesia Internet users last year reached about 75 million and it will grow to 90 million users in 2015—already above 30% of the population. When at least 25% of a country’s consumers have access to the Internet, the next step is mainstream adoption and consumerization. It becomes ubiquitous and a daily necessity like electricity and water.
One major issue is infrastructure development. Despite current telco investments, more is needed to improve broadband connectivity. Local digital media is also hampered with more than 60% of Indonesia’s digital media spending goes to Google and Facebook. One boost to spending will come from political campaigns and soccer marketing this year. Social media played a significant role for Jokowi during this gubernatorial election. Presidential candidates must now put serious effort, and funding, into digital media to win elections.
Social media also provides opportunities for content creators to become online celebrities. One example is comedian Raditya Dika, who became a celebrity through blogs, books and Twitter. In fashion, Diana Rikasari started with blogs and now is currently selling her own shoes exclusively online.
The Internet is a gateway for local publishers to go global. One successful case study is Icon Pop Quiz with its 40 million downloads, creating a global quiz game franchise. TouchTen, one of Ideosource’s investments, is creating hit games such as Ramen Chain and Infinite Sky, and is using iTunes and Google Play to globally distribute them. Using Blackberry, photo app Picmix has more than 14 million users.
With the growth of smartphones and digital payment solutions, digital content companies are moving forward in the local market. Indomog is the leading e-wallet for digital content. Mandiri e-cash is a joint venture between Mandiri Bank and Kompas Gramedia, quite similar to CIMB mobile payment. The battle between Line, Wechat and Kakaotalk as the messaging service to replace Blackberry (now in decline though still market leader). In contrast, Path—a hit social app—just raised $25 million from a group of local investors, led by the Bakrie group.
The e-commerce battle is getting fierce. Local retailers such as Bhinneka and Blibli are losing out to international players, such as Rocket Internet’s Lazada and Zalora. XL Axiata and SK Telecom Korea have launched online shopping site Elevenia. Some local players are doing better: Tokopedia wants to become Indonesia’s Alibaba and was recently funded by Japan’s SoftBank Ventures. Classified ads leader TokoBagus boasts one billion page views per month. Berrybenka, a fashion site, raised $5 million in its latest investment round.
Investment interest is on the rise as well. East Ventures, Merah Putih/GDP Ventures, Cyberagent and Ideosource are among the most active venture capital firms in the digital space. The Skybee group invested into Kapanlagi and Fimela. The Erajaya group invested into Indomog and Picmix. In media, Trans Corp acquired Detik and the MNC has a joint venture with Tencent to roll out Wechat. SCTV is pushing Liputan6 and Bakrie successfully built Vivanews. The Kompas group is investing into Urbanesia and digital publisher Scoop. Finally, the Djarum group has invested into Kaskus and Blibli.
Andi S. Boediman is the Managing Partner of Ideosource venture capital.
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