As the telecom industry speeds up the roll-out of the 5G network in India, several new digital segments have sprung up. A new segment witnessing immense growth is smartphones, with an ever-rising number of 5G handsets being launched. The other segments including mobile gaming, advertising, cloud gaming, over-the-top (OTT) services, metaverse apps and super apps too are all set to ride India’s 5G wave. Together, these present a plethora of opportunities for stakeholders operating in these segments.
During the past year, these digital segments witnessed immense activity. A look at the developments that occurred across these segments during 2022…
Smartphone brands release 5G handsets to foster service adoption
The roll-out of 5G networks was initiated in India during 2022. This pushed smartphone brands to launch more 5G-enabled handsets. Smartphones with advanced 5G processors rapidly captured consumer share, especially in the affordable and mid-range segments. In these segments, 5G processors have been coupled with features such as enhanced battery life, fast charging technologies and better camera quality. Another key trend was the rise of telco-handset player partnerships to enable a swift transition to 5G.
According to a report by Deloitte, the country will have 1 billion smartphone users by 2026. Demand is also expected to rise in Tier I and Tier II cities due to a high concentration of young and tech-savvy citizens.
Commercial availability of 5G networks will prove to be an inflection point that will drive handset sales. According to analysts, 5G smartphones would account for nearly 35 per cent of the total smartphone shipments in India by the end of 2022. The figure is expected to rise to 53 per cent by the end of 2023.
Going forward, more technological innovations by smartphone original equipment manufacturers (OEMs) are anticipated in the next phase of the evolution of 5G devices. They will offer more light-weight and visually appealing form factors, housing powerful chipsets, without compromising on the quality of experience.
Widening scope of mobile gaming
The rise of smartphones in India has certainly given a shot in the arm to the gaming industry. According to a report by KPMG, there are over 420 million online gamers in the country. Another industry report states that India currently accounts for 50.2 per cent of the gaming population in the top 10 Asian nations in the mobile gaming domain.
Currently, the mobile gaming market in India stands at around $1.5 billion (in revenue) and is poised to touch $5 billion by 2025. India is currently home to over 430 million mobile gamers and the number is estimated to grow to 650 million by 2025.
Owing to high speed internet and affordable data packs, people can now play high-end games as well as games with video chat options. In the future, the Indian gaming industry is set to embark on a high growth trajectory, with rapid digitalisation and transformation, increasing internet usage and rising smartphone penetration.
Cloud gaming disrupts the gaming industry
Cloud technology is disrupting almost every field and the gaming industry is no exception. Cloud gaming is a new-age technology that allows users to stream high-end games with fast network connectivity across various devices, such as laptops, tablets and mobiles. The emergence of cloud gaming platforms has only made it easier for developers to produce new games for a wider market. With around 420 million active online gamers and a 500 million-strong digitally native population aged 15-35 years, India is set to become one of the fastest growing markets globally.
With the launch of 5G services in India, cloud gaming is expected to gain traction as 5G promises a fast, stable and low-latency network. In the cloud gaming set-up, the server accepts the user’s control inputs, processes them and then tries to deliver the result as soon as it can. The growing popularity of cloud infrastructure has resulted in an abundance of computing, storage and communication resources that are dependable, cost effective and low on maintenance. The growth of the cloud gaming market can also be attributed to the growing proliferation of affordable smartphones and internet penetration.
The government is taking active steps towards promoting a secure and conducive environment for the online gaming industry to thrive. In addition, 100 per cent foreign direct investment is permitted in the gaming space. India’s flagship programme, Digital India has escalated the gaming industry’s growth to a certain extent.
Going ahead, cloud gaming is a segment that could gain prominence in the country once 5G is launched. 5G will redefine cloud gaming by providing a better gaming experience. Consumers can opt to pay more or switch connectivity providers for the new gaming experience. Also, as the gaming industry continues to evolve, advanced 5G and fibre connectivity are expected to create new opportunities for gaming innovations such as massive multiplayer augmented reality (AR) games on mobile, or untethered, immersive virtual reality (VR) games.
Mobile advertising revolutionising the advertising industry
The growth in app downloads and the average time spent on mobiles has given a fillip to mobile advertising. Growth in the e-commerce presence of brands and in overall digital transaction volumes has led to the realisation that mobile advertising can bring in far more effective and measurable returns on spends.
The use of conversational chatbots is on the rise. Chatbots respond to customers’ questions by mimicking human interaction through a combination of pre-programmed scripts and artificial intelligence (AI). Besides, location-targeted mobile advertisements are growing as a way to serve location-focused advertisements to consumers on the go. Compared to other digital advertising methods such as banners, posters and messages, mobile video offers greater engagement and better conversion rates. As such, mobile video is seeing widespread adoption amongst various leading brands as a preferred medium for showcasing advertisements.
According to PricewaterhouseCoopers’ Global Entertainment and Media Outlook 2021-2025, India’s entertainment and media industry is expected to grow at a compound annual growth rate of 10.75 per cent and reach a valuation of over Rs 4 trillion by 2025. The global mobile advertising market is set to gain momentum from the emergence of numerous innovative video ad formats such as VR, AR, 360-degree videos and vertical videos.
Going forward, mobile advertisers and content creators are projected to develop age-group-specific content to target the mass mobile internet population. The key players operating in the mobile advertising industry are anticipated to create and develop mobile advertising content that can easily support mobile devices used in low internet connectivity areas.
OTT players up their game
OTT services started gaining popularity in India in 2018 and have been witnessing rapid growth in their adoption ever since. OTT video streaming platforms such as Netflix, Amazon Prime Video, Disney+ Hotstar, Voot, SonyLIV and others gained immense popularity post the pandemic, with these players exploring new growth avenues to drive revenues.
India’s OTT market continues to be one of the fastest growing markets in the world. The closure of cinemas and theatres due to the pandemic for over a year gave rise to original premium content, especially in regional languages, which is one of the biggest growth drivers and differentiators for OTT platforms, as several of them are now vying for consumers’ attention. Growth in the market can be attributed to rapid advancements in online platforms and the increasing need for quality experiences across multiple devices.
Going forward, as the demand for high quality content and seamless streaming rises, 5G will present the perfect opportunity to propel OTT viewer experience to new heights, especially as video accounts for the majority of mobile internet bandwidth used today.
According to a report by RBSA Advisors, India’s video OTT market is expected to touch $12.5 billion by 2030 from about $1.5 billion in 2021. The report further noted that the next wave of growth in the OTT landscape will come from Tier II, III and IV cities and local language-speaking populations.
Super apps emerge as a one-stop destination for multiple services
Super apps are gaining popularity among consumers as they eliminate the need to download and maintain numerous different programs, while still providing all functionalities that one may need in a central location. The idea is to make it convenient for people to use a single login for all their possible needs. Across the globe, these platforms are being envisioned as virtual malls.
Globally, the most successful super apps have been built around core services such as social messaging, digital payments, food technology, and so on. However, in India, banking has taken the lead.
As open banking expands further into open finance and open data, super apps will be able to access and connect with a larger number of partners. Some UPI-based issuers, too, are fast diversifying into full-fledged financial services such as lending. Examples include Paytm, PhonePe, MobiKwik, Google Pay, BharatPe, Pine Labs, RazorPay and CRED. Trends such as “buy now, pay later” are offshoots of open banking.
As seen in other Asian markets, India, too, is likely to end up with one or two players dominating the space. A report by BofA Securities argues that big tech firms such as WhatsApp, with a large user base, are best placed to become super apps. Experts point out that as super apps become popular in India, addressing regulatory concerns around data privacy and building a robust infrastructure will be key.
Smart wearables gain momentum
Wearable smart devices, commonly known as wearables, have gained a significant customer base globally over the past decade. Wearables such as smartwatches and fitness bands have witnessed large-scale adoption among consumers due to the rapid evolution of lifestyles. With growing urbanisation, consumers are opting for aesthetically appealing and advanced wearable technology that can serve daily requirements and track real-time data.
Several factors are driving the growth of the wearables market. These include the increase in health awareness among consumers and the consequent rise in demand for fitness trackers and health-based wearables, coupled with increasing incomes and changing lifestyles. Furthermore, technological advancements and innovations are anticipated to create lucrative growth opportunities in the wearables market. Also, rising internet penetration is expected to bolster market growth.
Consumers are increasingly getting inclined to access features of a smartphone in a watch, stimulating the growth of smartwatch adoption. In addition, technological improvements and modular aesthetics are other growth drivers. The low latency and high reliability offered by 5G technology will also enable wearable designers to reduce the focus on storage capacity and processing power.
Nonetheless, the International Data Corporation predicts that the outlook for wearables will be strong as brands will try to attract consumers in Tier 2 and Tier 3 cities. Rapid research and development efforts and ongoing advancements by players will facilitate the expansion of the wearables market. Additionally, the production-linked incentive scheme for wearables announced by the government is expected to further push prices down and increase volumes, with key players launching “Made in India” products.
eSIMs set to replace physical SIMs
Traditional SIM cards have played a fundamental role in mobile telecommunications for over 25 years. However, with changing times, embedded-SIM (eSIM) technology has been catching up fast. The role of the SIM itself does not change when shifting to an eSIM – only the removable hardware component is done away with. The eSIM standard was first released in 2016 and since then, eSIMs have begun to replace physical SIMs in domains such as cellular telephony. eSIMs are gaining momentum in the consumer market, opening up new opportunities for mobile ecosystem players and enabling new benefits for consumers.
From a design perspective, eSIMs allow significant space reduction in a phone by eliminating the space required for removable SIMs. This is a crucial factor in the 5G era, as 5G requires more space for antennas and larger batteries, especially in early 5G devices. Meanwhile, global consumer surveys show that the consumer intent to upgrade to 5G is growing in most markets. Therefore, for OEMs mobile network operators (MNOs) and mobile virtual network operators (MVNOs), 5G device renewals represent an opportunity to push the pedal on eSIMs, as a larger number of 5G smartphones will have eSIM capabilities.
As eSIM uptake is set to grow across a gamut of connected devices over the next decade, owing to its flexibility, cost efficiency, security and other myriad benefits, developing an eSIM strategy and externalising it to stakeholders and the wider mobile ecosystem are vital to support and drive eSIM deployments.
Metaverse goes mainstream
Metaverse, as a concept, came into prominence when Facebook’s parent company, Meta, started exploring it. The company’s metaverse application, Horizon Worlds, hit 3 million users in February 2022, with over a billion virtual worlds created by these users. The application works on VR headsets Oculus Quest and Oculus Quest 2. Many other platforms have also experimented with metaverse gaming, such as Roblox, which has been in the gaming industry for the past 15 years. Another platform, Zepeto allows users to create their own avatars. Microsoft, too, recently programmed a metaverse-based interaction for new Accenture employees.
As per industry reports, the metaverse market size was valued at a whopping $100.27 billion in 2022. The rising demand for VR devices from both enterprises and consumers has fuelled market growth for the metaverse industry. With the growing adoption of AI, blockchain and mixed reality, the market size of the industry is also increasing. However, there still exist a number of factors that are hindering the industry’s growth. The metaverse industry still needs to ensure that enterprises are aware of its scope for enhancing the growth of each sector. There is also a greater need to protect the industry from security attacks, given that the cryptocurrency industry is also partnering with metaverse platforms. Financial fraud must be avoided to make sure that enterprises and consumers are safe.