Asides

2014 -will it bring us closer to the Digital tipping point?

As 2013 comes to a close, last few weeks as usual have seen a frenzy of images, reminding us of the important milestones we witnessed in the past 12 months. Besides the lukewarm fortunes on the economy, which were consistent alongwith a rather poor record of good governance , there were also images of the political churning against corruption as well as surprising voice of the ‘AamAadmi’ finally starting to come to the fore. One startling fact that everybody  recognised and noted was the advent of Social Media as the preferred choice as the carrier of the message. While the world may not have shifted away from other forms of  media, the digital interconnected highway of information is increasingly making its way as a very important medium of communication. In a country like India, where internet infrastructure and intelligent devices are not at par with the world , it was always considered that digital revolution was, a while away. The importance of the ‘Social Media’ has surprisingly also coincided with the increased use of the digital information highway for access to information and online purchases. The current valuation of some of the online properties bear out this fact. This therefore begs the questions – ‘Are we close to the digital tipping point? ‘  ‘What caused this change?’ and finally what are the likely implications for the E&M industry?

 

It is also customary at every start of the year to do a little crystal ball gazing as to what the future holds for us.  Before we do look at the crystal ball and imagine what is likely to happen in 2014 ,its important to understand what is causing us to reflect that we are at the cusp  of a major change . As per TRAI latest estimates, the internet users are likely to touch 200 million plus, making India the second largest  internet user after China. The user base has grown by 40 -60% in the urban/rural markets respectively over the last year. It is pertinent to note however that while the wireline access grew , the major growth as well as connectivity came through mobile. 60-70% usage is through mobile and growing at a faster clip than wirelineaccess . Facts now corroborate what one had predicted earlier that India’s digital growth will largely happen through a mobile platform.

 

Therefore, if the above is a fact then its good to crystal gaze and visualise how the business of Entertainment & Media will change. Also it may be the right time to estimate the pace of change and how far are we from the tipping point. People have an insatiable desire for  entertainment and one does not want to be caught on the wrong foot, if the medium of satisfaction of that desire changes  and changes rapidly.

 

Lets look at some of the pointers. The first is the growth in internet usage. The second is the demand for Smart Phones and Tablets which have outstripped the supply of fixed PC / laptops and are increasingly cannibalizing the TV screen. Prices of the   said smart devices are constantly  coming down making them affordable. Further with faster  4G speeds becoming a reality, we would be fooling ourselves if we do not fore see that the tipping point is closer than we think. Centre of this change is clearly the ‘Mobile’ device.

 

Therefore we need to reevaluate ourbusiness plans keeping distribution through wireless devices primarily the Smartphone in consideration. Content companies whether they are in news , current affairs, movies, documentaries, short films or TV serials need to resize their offerings based  on a new distribution medium. There is a need to rethink the economics and the value exchange.What could  be a loss of value can be made up by much faster growth. Its time to think of what ‘ Netflix’ ‘Redbox’ or ‘HuLu’ have on offer or for that matter what domestic companies like EROS, HUNGAMA and SHEMAROO have already started doing.Image

 

Market is in a transition mode. Its not that the traditional business of entertainment is going to finish. The companies need to defend these traditional offerings while trying to extend the new modes of delivery of content. There are still hurdles to delivery through Mobiles though.The payment gateway is still far from refined, the battery lives still not long enough, screen size is still small for total enjoyment of video and the prices of the devices remain high. Therefore, it’s a key question whether Mobile will be able to overcome all these issues to be relevant as we think it should be.  2014 could be a game changer should there be solutions to these hurdles. From all available facts the ‘Digital’ way of life does not seem very far away.

 

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