Content Wars: The Race to Capture India
The scale and depth of opportunities presented by the quickly evolving digital entertainment industry in India is astounding. India is an ideal market for new digital entrants.
With a population of 1.3 billion and purchasing power of $9.7 trillion, it is unsurprising that both domestic and foreign players are actively working to enter this market. Media giants such as Netflix, Amazon, and Hotstar are investing significant resources to develop strategies for capturing the Indian market. However, none of the current players have managed to gain a significant foothold as yet.
We’ve spoken to a range of startups and media giants in the country over the past ten weeks + conducted surveys + in-depth secondary research, in order to better understand the content war brewing in the country.
This is what we found:
The Market Opportunity
Traditional market factors make digital in India an attractive opportunity. To begin with, the country’s media and entertainment industry continues to grow and is expected to reach $34.8 billion by 2021.
Contributing to the growing opportunity for digital players is India’s rising internet adoption. In recent years, internet use has grown to an estimated 38%. While this percentage seems low compared to countries like the United States, which boast a 76% penetration rate, when accounting for India’s large population, this still represents nearly 500 million consumers. Additionally, converting the remaining 62% is a large opportunity and makes the market very attractive. Fortunately, digital hopefuls do not have to wait long to receive the benefits of this growth, as penetration is expected to reach the 60% mark by 2020 assuming current trends persist.
While there is a large population living with low disposable income, the country’s striking income inequality creates large — in total numbers — middle and upper classes. These classes have been the largest drivers of internet adoption in the country to date. While controversial, this fragmented internet adoption creates opportunities for digital players who now understand that part of their strategy to win this key market is developing solutions accessible to India’s poorer and rural populations.
Mobile phone adoption
Moreover, increased use of smartphones and cellular data creates new access points for the internet, especially for poor and rural citizens for whom internet adoption is low. The entry of mobile network Reliance Jio by giant Reliance Industries jumpstarted growth in India’s internet use.
Since launching in September 2016, the company has “acquired over 100 million users — many connecting to the mobile internet for the first time in their lives.”
The introduction of Jio has increased not only the total number of users now accessing online content on their mobile devices, but also the amount of consumption happening on those devices, as the data pricing is now a much lower barrier for price-sensitive consumers.
The Evolving Digital Viewer
India’s first digital consumers were male millennials who lived in urban areas. However, as internet and mobile penetration increase in the country, the profile of the average digital viewer is shifting dramatically.
Between 2016 and 2017, the largest growths in digital usage occurred among three segments: women, older millennials, and rural populations.
Women, particularly those in smaller cities, are gaining online access at a fast rate. According to Hotstar’s The India Watch Report 2018, women in cities with populations between 1L and 10L increased online usage growth by a magnitude of three between 2016 and 2017 compared to two times growth for women in metro areas and cities with at least one million inhabitants. This trend is attributed to the increased availability of affordable smartphone options, which allows both women and those in rural areas to access online content on their mobile devices for the first time. This increase in women internet users is also important because women wield a great deal of purchasing power, controlling 44% of household spending.
India’s millennial population features strong purchasing power, increased internet access, and sheer volume at over 400 million people. The Indian population is relatively young when compared to other major markets such as China and United States. In fact, according to Morgan Stanley, India is on-pace to be the youngest country in the world by 2020. In addition, they are more educated and globally connected than previous generations, expecting content and information to come to them rather than needing to actively seek it out as older generations did via print and television channels.
With these factors at play, it is unsurprising that millennials, and to a lesser extent Generation Zers, are a driving force in India’s increased digital consumption. With mobile and digital adoption (generally) inversely correlated with age, it is therefore unsurprising that consumer brands are targeting India’s millenial and Gen Z populations as key demographics to capture.
While people in major metro areas saw a 3.5 times increase in consumption, it was in smaller cities where the jump was most pronounced — a whopping 4.3 times the rate of 2016. Debunking popular thought that metropolitan areas are so-called “cities that never sleep” and therefore have higher consumption than smaller areas, our research has proven that overall consumption as well as binge watching are highest in smaller areas, where their populations stay awake much later than those in large urban areas.
Changing Consumption Patterns
India’s population is increasingly gravitating towards digital media over legacy options in print, TV, and film. According to eMarketer, “digital will take up nearly a third of daily media time in India”. This year, the average adult will spend an estimated 1 hour 18 minutes per day with digital media.
Control, convenience and quality
The first India Watch Report 2018, has highlighted some interesting shifts in consumer habits. The new generation of consumers prioritizes control and convenience. Online video consumption has grown by 5x in the past year, and web series are gaining traction as viewership numbers for some of these series begin to exceed the most watched online TV shows in India for the first.
Interestingly, the report also notes that over 96% of Hostar’s watchtime came from videos that were over 20 minutes long: which leads us to believe that consumers are willing to invest time in high quality content. In terms of genres, sports and Bollywood films continue to drive the highest engagement, with comedy and drama series coming second.
A second key shift is the growth of the popularity of regional content. India has over 125 million English speakers: online, English is still India’s dominant language. Elite viewers primarily consume content in English: this demographic is projected to increase from 8% to 16% by 2025. However, 70% of these users also view content in other languages.
Importantly, a recent study by KPMG India Google found that nearly 70% of Indians consider local language digital content more reliable than English content. The regional language OTT market is growing at 60–65% every month, while regional content comprises nearly 45% of India’s overall online video content consumption.
Additionally, by 2021, an expected 201 million Hindi users — 38% of the Indian internet user base — will be online, according to the same study.Given the rate at which its demand is growing, regional content is expected to comprise 20–25% of the overall digital consumption in 2018.
The shift to creating regional content has just begun, and will be a key driver of growth in of content consumption in Indian markets going forward.
Another shift in consumption patterns, highlighted through our interviews and consumer survey, was the move family viewing to individual content consumption. We think this shift is worth noting, as the move from a family-based to private setting creates the opportunity to create more personalized, contemporary content for various demographics.
Stay tuned for Part 2, where we analyse the current players in the media landscape + highlight why we think there is still ample room for new players and approaches, even as the competition for Indian eyeballs heats up.
This article was published by Candace Jones & Natasha Malpani, who are both Stanford MBA Class of 2018 students. Over the past ten weeks, they have conducted interviews with several digital platforms in the country, undertaken secondary research and surveyed over 200 consumers of Indian digital content in order to explore the opportunities and challenges presented by this complex market. This project was supervised by Stanford’s ex-Dean.