In a depressing economy and a sluggish advertising market, the good news on the internet continues to roll in. Two recently released reports, one by the financial services firm Avendus Capital and the other by the Internet and Mobile Association of India, talk about the growth of the mobile internet. Earlier this year, comScore released data that showed the phenomenal growth of online video consumption in India. The country is now among the top 10 internet markets in the world, with about 227 million people online - roughly half of them use the internet on their mobile devices. These could be smartphones, tablets, phablets or anything that doesn't have a wire attached to it and can be used to go online, on the go.
Then there is the news that Google India reported revenue of Rs 2,077 crore in March 2013 and roughly half of it came from advertising. There is also a rise in the number of firms that earn a decent amount by selling content online or from advertising revenues - some of these firms are Saavn, Gaana, Hungama and ZengaTV. Online advertising is one of the fastest-growing segments of the national advertising pie. The growth of online video is making advertisers sit up and take a look at the internet as a proper advertising medium a la television - largely because extending creative production from the 30-second commercial to the video advertisement online is easier than extending it for a banner or click-through. This has led to a rise in advertisement rates. The rates per thousand people reached online rose by 60 to 70 per cent in 2012 as against 2011, says Kedar Gavane, a senior director at comScore India.
For the Rs 83,000-crore media and entertainment industry, this seems like the second coming of the internet; the past decade was marked by disappointment with the online world as it became a hub for piracy, abysmal advertisement rates, and pay revenues dominated by telecom operators. As the internet bounces back with stronger revenues and audiences, aggregators are becoming content producers and almost every television company has an OTT, or an over-the-top strategy to address people watching television online.
It is, however, the rise of the mobile internet that is driving, and will continue to drive, many of the big changes in this market. In March 2013, the share of mobile data traffic was 14.2 per cent of all online traffic. Mobile advertising accounts for 6.6 per cent of the Rs 2,700-crore spent on digital advertising, or Rs 180 crore. Avendus expects this to grow to 28 per cent, or Rs 8,800 crore, in 2015. Interestingly, mobile-only internet users are typically first-time users. The report reckons that the share of mobile-only internet users in developed countries ranges between 20 per cent and 25 per cent. In developing countries, it is much higher: China, 38 per cent; South Africa, 57 per cent; and Indonesia, 44 per cent. According to estimates, it is more than 50 per cent for India. This indicates that the internet is bridging the digital and the infrastructural divide in small towns, rural India and among the lower-income groups in urban India.
The growth in mobile internet dovetails beautifully with the growing video consumption. Being able to access videos online suddenly opens up a new world of entertainment and communication for semi-literates or illiterates. It also gives people who are more comfortable reading or hearing a language other than English an option to watch something in their own language. How many of us have seen domestic helps or drivers gather around a mobile phone listening to music or watching a film, or have done it ourselves with a bunch of friends? In smaller towns with patchy electricity, thousands of new viewers plug into free-to-air channels, such as Zee Anmol or ABP News, on the mobile phone.
Google's YouTube accounts for 58 per cent of video traffic in India. T-Series and Star TV are among YouTube's most popular channels. In March 2013, Google India earned Rs 1,076 crore from advertising, a bulk of which comes from YouTube. Note that, on an average, YouTube shares 30 to 35 per cent of its advertising revenues with channel partners; it is becoming a small but steadily rising source of revenues for television and film companies. Little wonder, then, that most television broadcasters are very active on YouTube and have an OTT strategy.
The only segment that seems to be totally lost in this new world where mobility, video and online are settling in as a cosy threesome is publishing. For a very long time, publishers have, rightly, been preoccupied with the fastest-growing part of their business - good old newspapers. For most of them, the internet accounts for just three to six per cent of their revenue. The reason TV broadcasters have been proactive this time around is that many sell their programming overseas and have seen audiences shifting online. In India, while the shift is happening in English newspapers, non-English language newspapers have been protected. That may change, as the rising mobile internet penetration gives readers video options for news, thereby creating, arguably, some discontinuous growth. It's time, then, for publishers to hurry up.