Frost & Sullivan attended the 25th edition of Convergence India, one of the largest trade exhibitions and conferences for ICT, broadcast, and digital media in South Asia. With over 635 exhibitors, and a 3 day expo that spanned topics such as IoT, OTT Video, Digitization, 5G adoption, emerging business models, among others, the event reverberated the growing optimism and buzz around OTT and telecom innovation, high proliferation of broadband and hi-tech digital media disrupting the TV landscape in India today.
Since 2016, the Digital India movement has been led by the Government of India which has launched a number of initiatives toward consumer as well as enterprise empowerment through technology. In his inaugural address, the Minister of State for Electronics and Information Technology, PP Chaudhary said, “The Government is making concentrated efforts to ensure last mile connectivity of broadband services across the country to make Internet available to all. Digital India will ensure that government services are available to Indian citizens at all times.” Focusing on the importance of IoT across industries, The Secretary of Department of Science and Technology Prof Ashutosh Sharma said, “For the first time in the history of humanity, it is being demonstrated that we are all very strongly connected. Machines and technology enable this connection and empower human beings in all spheres of life.”
According to Frost & Sullivan, digital transformation in India will eventually merge with growing adoption of IoT. 4G-enabled smartphones will comprise 75% of mobile phones shipped in 2017; and growing adoption of a connected universe will drive the growth of the IoT industry to $16.7 billion by 2022. Such rapid growth and adoption of technology entails higher investment opportunities for domestic and global solution providers to capitalize this rising potential.
Frost & Sullivan’s interaction with key industry stakeholders revealed stark contrasts between the raging optimism around growth opportunities and the slow pace of infrastructural expansion. Different key stakeholders in the market attempt to prepare themselves for tackling this dynamic, yet price-sensitive market with innovative solutions across the ecosystem.
Frost & Sullivan found two topics that were discussed at length during the conference: OTT video and its impact on the broadcast industry, and IoT, and its impact across verticals.
OTT: the Harbinger of Change for the Video Business
Frost & Sullivan’s analysis finds that rural Internet India will grow by 40% annually for the next 5 years, making wireless connectivity ubiquitous. This lays the ground for the rapid growth of OTT video consumption which currently has nearly 70 million unique video viewers. To foster growth in this application, the industry would require an amalgamation of service providers across the ecosystem: broadcast networks, industry consultants, OTT video providers, cloud service providers, IoT solutions, Pay TV operators, system integrators, content delivery network providers, payment solution providers, content protection, and analytics solution providers.
The OTT video services in India are empowering connected netizens to access entertainment on the go, regardless of their devices, choice of TV or location. This is poised to be a billion dollar industry by 2022 with the proliferation of broadband services and cheaper smartphone penetration in the market. The influx of trendsetters such as Reliance Jio has brought free Internet services to every device, proving the latent potential of the youth demography and tech-savvy population. As Internet service providers (ISPs) enter price wars to cater to this data hungry generation, online video streaming is now more consumed than ever before, indicating a 75% data consumption for videos only. Such accelerated broadband penetration has opened up opportunities for about 30 local and global vendors including Hotstar, ditto TV, ErosNow, Amazon Prime Instant Video, Netflix, exposing us to the luxury of personal viewing, on demand and the freedom of time-shifted TV. Global exhibitors such as Harmonic, Conax, Verimatrix, Elemental, Irdeto, and Ericsson, among others, pointed vast growth opportunities for high-tech solutions in India alongside other providers including VisualOn, Amagi, Accenture, Adobe Primetime, and so on. Some of the key trends for OTT platforms include ad-insertion for monetizable business models, advanced video compressions for lower latency and bandwidth requirements, deployment of cloud services with local data centers to reduce costs of delivery, investment in content protection (watermarking and CAS systems). Cloud deployment can also provide faster, efficient processing systems for setting up OTT platforms and broadcast services. This will probably see uptake in the next few years, as data centers are mushrooming across the country.
However, amidst the optimism of OTT video uptake, loom several challenges around monetization of services and profitability. Across the panel discussions at the conference, and during meetings with the exhibitors, many expressed a sense of caution reining in the otherwise apparent high-energy. The restraining factors for OTT video business include rampant piracy, non-uniform bandwidth, dearth of paid subscriptions, uncertain RoI, poor regulatory framework for online streaming and a heavily price-sensitive market.
The industry continues to be heavily dependent on advertising for revenue. Monetisation from subscriptions will remain a measly contribution in the near future, making the business viable only for the unicorns and traditional broadcasters who can afford to offer a subsidiary OTT service. According to Frost & Sullivan, there were only 1.3 million paid OTT subscribers in 2016. For pure play OTT service providers and new entrants, it will be a challenge to monetize this content in advertising and sustain a business with non-marquee content and low subscriber base. Adding to the woes are the high costs of content delivery, content protection costs and the cost of acquiring content from producers.
Despite the dearth of uniform connectivity and other fundamental shortcomings, the OTT services market is poised for a disruptive consumption in the Indian household, supplementing linear television in the near term. The onus is on the broadcasters and distributors to conceive a business model to sustain business operations in the long run.
IoT: The Emerging New Normal for Digital India
The IoT expo showcased several disruptive technologies and a wave of solutions transforming the way businesses and households function. The event hosted industry thought leaders, academia, influencers, and industry veterans unveiling the potential of 5G, cloud technology for enterprises, big data analytics and IoT connecting machines and humans to empower all spheres of life.
As the smart city mission is executed in India, more IoT deployments are being explored to improve efficiency and quality of life and solve real life challenges on a daily basis. Smart factories hope to ensure greater productivity and resource optimization for manufacturing units with the help of IoT. Owing to the smartphone boon in India, IoT growth will thrive in the next 5-10 years as people are ready to adopt technologies that are proven to simplify daily activities at a cost-effective offering. The evolution of cloud services; public, private, and hybrid clouds either in the form of Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS) is gaining popularity in Indian business.
However, some of the burning issues revolve around cyber security and the need to ramp up the regulatory framework to crack down on cybercrime and content theft. In addition, the large universe of unconnected citizens in rural India will delay the digital transformation that India seeks, and pose a threat to the adoption of IoT.
Industry market participants hope that the uptake of 5G globally and in India by 2020 will boost revenue for the telecom industry and the IoT universe.
The rapid disruption in the Indian ICT market will push companies across the ecosystem to drive innovation in product development as well as business models. As digital disruption occurs in every segment of the industry, there will be constant evolution of strategies to package solutions and products in a cost effective manner.
IoT will be the next big disruption impacting all major industries, as India prepares to become a hub for IoT solutions. It will be interesting to assess how this revolution unfolds, giving rise to new business opportunities and feasible options for existing businesses to adopt.
