Technology, Media & Telecommunications

Mumbai, 28 January 2016: Deloitte India predicts that the future of e-commerce in the country is expected to be m-commerce. The 6th edition of Deloitte India’s predictions for the Technology, Media & Telecommunications (TMT) sector in India also highlights that the boom in m-commerce will be powered by social media, and is likely to become the need of every business.

According to the Deloitte TMT India Predictions 2016 report, mobile ad spends are expected to grow from current 2-4 per cent to 15-20 per cent of the overall media expenditure by 2020. Mobile advertising in India is fastest growing among all segments in the digital advertising space, and is gaining momentum through various apps and mobile sites.

“With telecom operators launching 4G and hi-speed Wi-Fi services, mobile-based internet connections are set to surge which will also fuel growth in social media users,” said PN Sudarshan, Senior Director, Deloitte India. “At the same time, more and more consumers in India are accepting the idea of buying products online through social media. Accordingly, e-marketers will have to devise their strategies factoring in the digital surge.”

In the coming years, Deloitte India expects digital-first brands – brands that can only be purchased online – to see strong growth across categories such as budget fashion, furniture, jewellery and groceries. These are categories where India has strong design and manufacturing capabilities, thereby allowing companies to set up an efficient supply chain and sell these products at high gross margins.

The report adds that there will be significant adoption of e-commerce in the retail medicine sales market. Medicine e-commerce players would look to take advantage of the inefficient distribution system leading to non-availability of medicines and the issue of counterfeit drugs which currently plague the existing physical pharmacy business. The market for pharma e-commerce will grow 10 times to $400 million in 2017.

Giving a significant boost to the e-commerce boom will be the rollout of 4G in India. According to Deloitte India, 2016 is set to be the year that would herald the 4G revolution in India. While 4G services have been present in the country since April 2012, the push for mass rollouts across major markets gained momentum from 2015. Aggressive 4G rollout plans from major operators and the growing demand for and availability of affordable 4G-enabled handsets point towards 2016 being a breakthrough year to kick-start the 4G revolution in India.

Additional findings from Deloitte 2016 TMT India predictions include:

Technology    

• Wearables: The next smartphones: Deloitte predicts that in 2016, digital wearables would have experienced a significant adoption across consumer segments though it would primarily emanate from tier 1 and 2 cities. The global sales of wearable devices is expected to be approximately 250 million units by 2018, while the major portion of the sales will be driven by North America and Europe, India is expected to have some participation in this segment. According to Deloitte, fitness trackers and smartwatches will see mass adoption in the coming years and expect safety devices geared towards location tracking and emergency assist to also see significant adoption.
• The emergence of smart cities in India: Deloitte estimates that $150 billion needs to be invested in the development of smart cities in India over the next few years. Several challenges remain with respect to the development of smart cities including those related to project funding, project management, government decision making and policy & regulatory framework. Deloitte expects that despite existing challenges, service providers will increase investments in the development of smart city solutions. Major service providers will also continue to invest heavily in infrastructure solutions relevant for smart cities (e.g., Wi-Fi, fibre networks, and backhaul networks).

Media 

• International television content on an upswing: International TV content popularity is likely to increase significantly. As digitization in tier 2 and tier 3 cities picks up, TV viewers will be able to access niche channels resulting in increase in viewership of English entertainment and movie channels. Channels will differentiate themselves by broadcasting content along with the US and Western Europe, attracting customers to pay premium subscription charges for these channels.
• Cinema content: Reality into reel: Deloitte predicts that content will be king and theme experimentations such as biopics and reality will be the way forward in 2016 for Indian Cinema particularly Bollywood. Filmmakers will look at platforms like Digital EST, i.e., Electronic Sell-through of a movie directly to consumers to counter the threat posed by piracy.
• Broadcast reach vs Online: Transformation of media trends: In the coming years, digital platform, like digital audio and video on demand service, will see increased activity, and hence getting the right business model will be very crucial for success. Instead of sitting at home and watching the broadcast on TV, the consumers prefer to go online which allow them to connect anywhere, anytime with any device.

Telecommunications

• Used smartphones: The $1.7 billion market you may have never have heard of: India, currently the third largest market for smartphones with estimated annual sales of about 143 million units in FY 2016, is estimated to generate about $1.7 billion for its owners at an average value of about $90 in FY 2016, with outright sale or trade-in of approximately 20 million smartphones. Growing at a CAGR of about 32 per cent till 2020, the used smartphone market is forecasted to grow to about 46 million units generating an estimated $4 billion for its owners.
• The rise of the data exclusive: In 2016, 26 per cent of smartphone users in developed markets will not make any traditional phone calls in a given week. We call these individuals ‘data exclusives’. They have not stopped communicating, but are rather substituting traditional voice calls for a combination of messaging (including text messages), voice and video services delivered ‘over the top.’ Similar trends are observed in India, with voice calling falling drastically over the past 2 years since 2013. We expect this trend to continue over the next 2-3 years as operators as well as smartphone vendors push for 4G fueled by increasing availability and falling prices.
• VoLTE / VoWiFi: Capacity, reach and capability: Deloitte predicts that about 100 carriers worldwide will be offering at least one packet-based voice service at the end of 2016, double the amount year-on-year, and six times higher than at the beginning of 2015. We estimate that approximately 300 million customers will be using Voice over LTE (VoLTE) and/or Voice over WiFi (VoWiFi); double the number at the start of the year and five times higher than at the beginning of 2015. In India, with the proliferation of 4G services and new entrants choosing 4G VoLTE over traditional voice an estimated 50 million subscribers will move to 4G and hence VoLTE.

Now in its 6^th year, Deloitte India’s annual TMT Predictions provides a 12-18 month outlook on key trends in the technology, media and telecommunications industry sectors worldwide. Full details about the India TMT Predictions are available on the Deloitte website: Link