The Indian telecom sector continued on its transformative trajectory in 2018. Low data costs and the consequent in­crease in video consumption  stimulated grow­­­­th in the over-the-top (OTT) space and in the fixed broadband market. Dec­lining ARPUs pushed telcos to explore new revenue generation models and sign key partnership deals with OTT players.  Mean­­­while, artificial intelligence (AI)-en­abled virtual assistants and chatbots made their presence felt in the industry.

A look at the key sales and marketing trends in 2018…

Rise of OTT

Fast and affordable internet connectivity has been a key driver in the growth of OTT content providers. The $280 million OTT market with close to 100 million subs­cribers is poised to grow at 35 per cent per annum. To effectively tap this market opportunity, OTT players are creating original and exclusive content in order to differentiate their offerings. For example, Indian players such as Hotstar, Eros Now and Voot are streaming regional content from popular channels and media houses such as Star India and Viacom 18 as well as Bollywood movies. With increasing competition in the OTT space, companies are now live streaming sports.

While the opportunities are immense, OTT players have their own set of challenges to deal with. While content creation is capital intensive, subscribers  are reluctant to pay for OTT services. Only 2-3 per cent of Hotstar’s total subscribers pay for the services while the rest access the content for free.

Telcos join the OTT bandwagon

With ARPUs and profitability declining, telecom players are launching their own OTT platforms in a bid to diversify their re­venue streams and differentiate their offerings. They are partnering with content providers to develop value-added services. The year 2018 saw an upsurge in the number of tie-ups between leading telcos and OTT players as well as content providers.

Airtel TV partnered with Amazon Pri­­­me, FastFilmz, Eros Now, SonyLIV and HOOQ,  and also added over 300 TV cha­n­­­n­­els, and 6,000 movies and popular shows to its platform. To further diversify its content portfolio, Airtel acquired a strategic stake in Juggernaut Books. Like­wise, Voda­fone partnered with Amazon Prime, Disco­very Communica­tions India, AltBalaji and Netflix to either provide subscriptions to these services or to stre­am their content on the Voda­fone Play app. Vodafone is also giving free subscriptions to Magzter with over 100,000 issues of more than 4,000 national and international magazines. Joining this league, Idea Cellular pa­rt­nered with Ditto TV,Yupp TV, Eros and AltBalaji to provide video content to its customers. To offer music content, Idea Mu­­­­­­sic partnered with Sony Music, Zee Music, SaReGaMa, Universal, BPL and Ad­i­tya Mu­­sic. In addition, it collaborated with Ma­­­­gz­­ter to provide customers access to di­gital magazines and news. Idea users can access all the content on the MyIdea app.

Revamping the home broadband market

Players in the fixed home broadband segment are increasingly revamping their old copper cables by replacing them with high speed supporting fibre networks. Affor­dable data plans along with higher speeds are driving growth in the wired home broad­­band subscriber base, which is expan­ding at 4-5 per cent a year. To tap the po­ten­­tial of the growing fixed home broadband market, Reliance Jio Infocomm Limi­ted, in July 2018, made a foray into this space through its JioGigaFiber service. This fibre-to-the-home broadband service claims to offer speeds of up to 1 Gbps. Reliance Jio’s entry into the fixed broadband space has set alarm bells ringing for the incumbents. A number of them are taking pre-emptive measures for enhancing their offerings in order to minimise customer churn. Several incumbents have, in fact, modified their offerings in anticipation of Reliance Jio’s aggressive pricing strategies. Companies are offering discounts on packages that come with half-yearly and yearly subscriptions in an attempt to lock in customers.

Virtual assistants and chatbots promise interesting times ahead

The role of AI has expanded significantly in the past few years. From being just a buzzword among industry professionals, it has gradually become a part of the common man’s life. The two most common types of AI assistants being deployed are virtual assistants and chatbots. While virtual assistants such as Amazon’s Alexa, Google Assistant and Apple’s Siri have found a place in people’s homes and smartphones, chatbots are being increasingly deployed in sectors such as e-commerce, banks and health care to address client queries. Enterprises across sectors are in­creasingly deploying chatbots to offload routine tasks and run core operations in a more systematic manner.

Most virtual assistants come with a similar set of features and capabilities, and can perform basic functions like web searches, provide information on the weather and news, and set reminders, etc. Meanwhile, chatbots help businesses to better utilise their human resources and efficiently cater to customers by automating certain aspects of the user communi­ca­tion process. In re­cent years, smart chat­­­­­­bots have gained trac­­tion across en­ter­prises. The need to reduce operating costs, coupled with the pressure of in­creasing sales, is pushing companies to invest in the technology. According to Juniper Research, companies can expect to increase their annual savings from $20 million in 2017 to around $8 billion by 2022 through the use of chatbots.

The year 2018 saw an upsurge in the number of tie-ups between leading telcos and OTT players as well as content providers.

Mobile advertising push

Organisations today are acknowledging the increasing popularity of social media platforms and leveraging audiences on these platforms to augment their marketing campaigns. Advertising on these mediums is undoubtedly cheaper as compared to traditional mediums. Going forward, mobile advertisement spending is expected to adversely affect traditional advertisement spending. Further, mobile adve­r­ti­sing enables advertisers to target users based on their browsing or shopping history, device usage patterns, geographical variations, etc. Such personalised information provides immense opportunity to marketers to target relevant audience with minimal budgets, thus generating good returns. Of late, the rural hinterland has witnessed increased penetration of smartphones and feature phones. The Boston Consultancy Group estimates that by 2020, half of India’s internet users will be in the rural areas. Given this, mobile advertisements are expected to see faster growth than traditional television advertisements. Moreover, companies are in­creasingly focusing on advertising in vernacular languages in order to reach a larger and more diversified consumer base. According to eMarketer, mobile ad spends will grow by 40 per cent in 2019.

Mobile gaming

Once a niche market, digital gaming has today become mainstream entertainment, with mobile gaming emerging as the most dominant segment. According to a report by the Mobile Marketing Association and Kantar IMRB, the Indian mobile gaming market is projected to become a $1 billion industry with around 368 million mobile gamers by 2022. Much of this will ride on the success of smartphones and the availability of relatively cheap data in the country. The Indian mobile gaming market offers huge potential for both local and foreign game developers and publishers, advertisers, investors, gaming equipment providers and smartphone manufacturers. In-app advertisements and product placements are a win-win for both advertisers and game developers. Apart from this, revenues are realised through in-app purchases under the freemium model, subscription services, pay per download, etc. Clash Royale, Subway Surfers and the majority of the other popular games in India are based on the freemium model. To realise the potential of the Indian gaming market, several foreign players have stepped up investments in new gaming ventures in the country. Indonesia-based Go-Ventures is finalising a plan to invest $30 million in Bengaluru-based esports company Mobile Premier League.

Outlook 2019

Going forward, telcos will explore more opportunities and partnerships to streng­­then their OTT play in order to offset the decline in revenues from traditional services. Use cases around technologies such as AI will expand further for a better customer experience. Meanwhile, the fixed home broadband space will become extremely competitive with the expansion of Jio­Giga­­Fiber. Innovations in marketing strategy, product offerings and pricing will the dominant trends in 2019.