India has witnessed remarkable growth in various digital segments since the launch of 5G networks over a year ago. One notable development is the dominance of 5G handsets in the market due to their low pricing. Other segments, including online gaming, over-the-top (OTT) services, augmented reality (AR)/virtual reality (VR), cloud gaming, international roaming services, smart rings, and digital payments, are also riding high on India’s digitalisation wave. Meanwhile, one new segment is AirFiber, with a few telcos launching offerings in India. Together, these present a plethora of opportunities for stakeholders operating within these segments.
A look at key developments across digital segments during 2023…
5G handsets
Ever since the roll-out of 5G networks in India in 2022, telcos have been aggressively deploying the services across the country. As a result, customers are now switching to 5G smartphones, given the widespread accessibility of the network and the introduction of affordable 5G smartphones by manufacturers. The demand for 5G smartphones in India has skyrocketed, propelled by the rapid deployment of the network technology by telecom operators.
According to the International Data Corporation’s (IDC) report, the share of 5G smartphone shipments reached 58 per cent in Q3 2023. This growth can be attributed to two reasons. First, the average selling price of 5G smartphones dropped by 9 per cent year on year to
Rs 29,700, indicating that manufacturers are working to make 5G smartphones more affordable. The share of 5G smartphones in this segment also increased from 34 per cent in Q2 to 52 per cent in Q3. Second, with the unlimited 5G data offer from Indian telcos, an increasing number of users have started upgrading to 5G phones.
According to Ericsson Mobility Report, approximately 39 per cent of users are willing to pay more for higher data usage on 5G plans. The report also noted that 5G users in India spent two more hours per week on average using apps or services such as HD video streaming, video calling services, mobile gaming, and AR compared to users in other early-adopter 5G markets such as the US, the UK, South Korea and China.
Online gaming
In 2023, the number of online gamers in India reached an impressive 442 million, making it the second-largest gaming user base in the world. This sector has the potential to boost foreign direct investment, employment and investments in a variety of sectors. It will also stimulate ancillary industries such as fintech, cloud services, data analytics and cybersecurity. The online gaming segment has emerged as a powerhouse and is growing rapidly, driven by factors such as widespread smartphone usage, improved internet connectivity, a burgeoning youth population, increased awareness, and the creation of local gaming content tailored to individual preferences.
The Indian government is also taking steps to support the growth of the online gaming industry. In 2023, the Ministry of Electronics and Information Technology introduced the draft Online Gaming Rules, amending the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. These guidelines aim to reduce ambiguity, boost investor confidence, attract funding, and promote innovation in India’s digital economy, all while prioritising user safety. In another move, the GST Council implemented changes in the taxation of the online gaming industry. The GST on online gaming (including the value of actionable claims) is now taxed at 28 per cent of the deposit value.
From FY 2019-20 to FY 2022-23, the online gaming sector in India experienced a compound annual growth rate (CAGR) of 28 per cent. Industry estimates suggest that it will reach Rs 332.43 billion in FY 2028, with a CAGR of 15 per cent.
OTT services
OTT platforms have brought a significant transformation to the Indian entertainment industry, revolutionising the way people consume content. Post-pandemic, OTT players are exploring ways to increase their revenues. With the advent of 5G networks, lower subscription prices, and a surge in smartphone usage, OTT platforms have experienced exponential growth in India.
One of the primary reasons for the adoption of OTT platforms in India is the wide range of available content. Another opportunity that digital players have successfully capitalised on is regional language content, which has gained immense popularity.
According to PwC’s report, the revenue of the Indian video OTT market, dominated by players such as Amazon Prime Video, Netflix, and Disney+ Hotstar, is set to reach $3.5 billion by 2027. Further, projections indicate that the number of OTT video users in India will reach a staggering 4,216.3 million by 2027, with a user penetration rate of 53 per cent.
AR/VR
The introduction of AR and VR in the consumer market has opened a whole new world of possibilities and has shown immense growth in 2023. A growing influx of investment and funding is fuelling the growth of the AR/VR industry in the country. According to Statista, the AR/VR market in India was valued at Rs 624.3 million in 2023 and is expected to advance at a CAGR of 38.29 per cent to reach $14.07 billion by 2027. This growth can also be attributed to increasing smartphone penetration and widespread internet connectivity.
Additionally, the integration of AR/VR into different sectors such as entertainment, education, tourism, gaming, retail, and healthcare is also contributing to this exponential growth. The industry’s growth is being driven by the widespread acceptance and integration of AR/VR technologies into wearable devices such as mobile phones.
In terms of user base, the AR/VR market in India is expected to comprise approximately 1,275 million users by 2028. These technologies have facilitated the development of new products and services that hold greater appeal for customers. Their application extends beyond gaming and entertainment and is increasingly being adopted in various industries, including construction, real estate and manufacturing.
Cloud gaming
Cloud technology is being integrated into the gaming industry, allowing users to stream high-end games on portable devices, such as laptops, tablets and mobiles, with fast network connectivity. This eliminates the need for regular hardware upgrades of devices such as consoles, PCs and laptops.
The inception of 5G and the availability of numerous data plans have been critical factors contributing to the success of cloud gaming worldwide. Developers, publishers and platforms are witnessing increased profits and broader reach, and finding more ways to monetise their cloud solution services. The seamless connectivity and low latency offered by 5G have enhanced the cloud gaming experience, eliminating the need for expensive hardware.
As cloud gaming becomes more popular, telecom operators have started exploring opportunities in this space. For instance, Reliance Jio planned to use its robust 5G infrastructure to enter the cloud gaming market, with JioGames signing a 10-year strategic partnership with Gamestream to launch its own cloud gaming platform called JioGamesCloud. Meanwhile, Vodafone Idea Limited (Vi) has partnered with Paris-based CareGame to offer 5G cloud gaming services in India. The partnership allows mobile gaming enthusiasts to enjoy high quality mobile games across various popular genres without the need for downloads. The rapid adoption of 5G and cloud gaming is fuelling growth in India’s gaming market, which is expected to reach $8.6 billion by 2027.
International roaming services
International roaming services have experienced significant growth in India since the easing of travel restrictions post-pandemic. The Department of Telecommunications has also played a crucial role in boosting customer confidence by addressing the concerns around the high bills associated with these services.
With the roll-out of 5G networks, telcos have identified new opportunities in international roaming plans. The new 5G roaming SIMs offer improved data privacy, better protection against hacking, and seamless global roaming connections. As a result, private telecom operators have been competing to grab a larger portion of this ever-expanding market. Three private operators – Jio, Bharti Airtel and Vi – have intensified their efforts to attract higher-paying postpaid and prepaid customers, aiming to increase the average revenue per user. For instance, Airtel and Jio have introduced competitive international roaming packages with a focus on pricing, convenience and flexibility. Airtel also introduced a single travel pack for 184 countries, while Jio offered features such as in-flight calling and data packs for international travellers.
Smart rings
Smart rings have been available in the market for about a decade, but the growing demand for internet of things (IoT) devices, and real-time data collection and analysis are fuelling their expansion. According to the IDC, 32.8 million wearable units were shipped in Q2 2023. In India, two local manufacturers–boAt and Noise–have entered the Indian smart wearables market, offering affordable wearables to compete against major players such as Apple, Samsung and Huawei. For the initial smart ring sale, boAt has imported 5,000 units and plans to ship between 50,000 and 100,000 units in the first year.
In addition, an Indian tech start-up, born out of IIT Madras Incubation Cell, launched a smart ring called “Ring One” on October 25, 2023. The device is equipped with features such as advanced health tracking, blood pressure measurement and contactless payments.
Although there are very few models available currently, more affordable options from mainstream brands are expected to be launched in 2024. An industry report estimates that Ultrahuman leads the smart ring category with an impressive 75.5 per cent market share, followed by Pi Ring at 10.9 per cent, and boAt (Imagine Marketing) with an 8.2 per cent market share as of Q3 2023.
Furthermore, Counterpoint Research estimates that India’s smart ring market revenue will reach $25 million in 2024, with the shipment volume of smart rings expected to double in 2024 compared to 2023.
AirFiber services
Fixed wireless access (FWA) is a wireless technology that provides high speed internet access without the need for traditional wired connections. In urban areas, laying optical fibre cable (OFC) to connect to the internet is relatively easy, but this is not the case in remote and rural areas. AirFiber is an FWA solution that provides broadband services to homes. The advent of 5G renewed interest in FWA in 2023, making it a more competitive solution compared to established fixed technologies such as OFC.
In 2023, Jio and Airtel launched their 5G AirFiber offerings, aiming to bring high speed wireless internet to homes across India. Additionally, Vi also showcased its Vi AirFiber at the India Mobile Congress 2023.
Moreover, Jio has recently expanded its AirFiber services to 115 new cities across the country, with plans to continue expansion by the end of 2023. Furthermore, the government has included 5G FWA equipment in the production-linked incentive scheme for telecom and networking products. This move will allow equipment manufacturers to claim benefits for locally manufacturing 5G FWA equipment, increasing its availability and affordability for operators.
Digital payments
India has experienced a financial metamorphosis in recent years, with digital payments becoming an essential part of daily life. In 2023, the sector saw a rise in real-time payments, improved collaboration between traditional banks and fintech companies, increased accessibility for customers, and the availability of various digital payment methods. The introduction of innovative products such as the Unified Payments Interface (UPI), the National Electronic Toll Collection, and the National Automated Clearing House have been well received by consumers and are poised for future growth.
As of December 11, 2023, digital payment transactions reached 116.6 billion in FY 2023-24. The growth of digital payments in the country can be attributed to several factors, such as the launch of new and innovative payment products, an increase in smartphone adoption, a growing demand for faster payment methods, discounts on mobile wallets, and strong regulatory support. Moreover, there has been an exceptional rise in UPI transactions, with a staggering 85.72 billion transactions recorded till December 11, 2023.
India’s digital payment revolution is powered by fintech companies that are agile, innovative and disruptive. These fintech start-ups and established players have used technology to deliver seamless and secure payment solutions that are quick and easy to use. Additionally, artificial intelligence and machine learning are enabling fintechs to enhance customer experience.
A notable development in this area is the release of the Digital Personal Data Protection Bill, 2023, which supports India’s digital economy and innovation ecosystem. The RBI has also permitted offline UPI payments through a UPI-Lite on-device wallet, utilising near-field communication technology to promote the use of digital payment mechanisms across the country. Digitalisation is the way forward, and the growing popularity of IoT will transform the landscape of contactless payments, creating a seamless and interconnected digital ecosystem.
Niha
