4G and its Impact on Video On-demand Players

For 4G to succeed in India, Operators will have to provide high transfer rates over longer distances and efficient bandwidth. (Source)

For 4G to succeed in India, Operators will have to provide high transfer rates over longer distances and efficient bandwidth. (Source)

Author: Ravi Bhushan, Vice President, Spuul Global

India, as per Cisco’s VNI report is poised to have ~650 million smartphones by 2019. That’s ~650 million personal televisions in user pockets. In comparison, there are only ~168 million TV households in India – a majority of which are single TV households. The kind of scale that we are looking at over the next few years makes the mind boggle. The only stumbling block, towards the rapid ascent of the Video-On-Demand (VOD) space in India, remains the infrastructure for high-speed low cost wireless Internet. 

For Digital India to take shape, High speed data connectivity is one of the key foundations. According to a recent report from the IAMAI and KPMG, India is expected to have 236 million mobile internet users by 2016 and 314 million by 2017. Out of this figure, 60% are consuming internet on their handsets, tablets, etc.

However, it isn’t all smooth sailing for VOD industry. The first challenge facing VOD service in India today is the cost of data. Streaming video, consumes larger quantities of data than say, messaging services like WhatsApp. A 3 hour movie, at a decent rendition would be ~250MB at the very least. 1 GB of 3G data costs approximately ~Rs. 150 across telecoms today, so streaming an entire movie would cost Rs. 40 approximately. In a country where the ARPU per telecom subscriber is on average about Rs. 200, Rs. 40 is a fairly significant amount.

High data costs have meant that VOD service providers have had to innovate to deal with this issue. 

The launch of 4G services, especially by the likes of Reliance Jio should dramatically reduce data costs. Reliance Communications, when it launched in the early 2000’s with it’s Monsoon Dhamaka offer, came with hugely subsidized phones and voice rates. We expect something similar with the launch of Jio, placing pressure on industry incumbents to follow suit and resulting in a lowering of data prices across the board.

The second challenge that VOD services in India face is simply network speeds. Streaming video requires high fidelity networks with consistent speeds of at least ~2-3 MBPS to deliver a buffer free experience. An interesting thing to note is that more than a year after its launch, 3G adoption in India remains subdued at 10-12 million users due to various issues like poor network quality as operators are cash-strapped to spend on 3G expansion and low penetration of 3G enabled handsets, etc.

For 4G to succeed in India, operators will have to overcome the challenges of high transfer rates over longer distances and efficient bandwidth so their consumers can seamlessly watch any content at any time. The initial signs are promising. When Airtel launched 4G services in Delhi, users consistently saw speeds of ~30MBPS and above. Undoubtedly, these speeds will reduce as more users switch to 4G services – but it should still be enough to deliver a buffer free experience.

The penetration of 4G devices also remains a concern. According to Cyber Media Research, 4G/LTE device shipments in India had reached 5.7 million units during April-June 2015, recording a 154% quarter-on-quarter growth. Almost every handset manufacturer has integrated 4G on all their new launches. The pricing of these devices, will determine the rate at which the masses adopt 4G.

The VOD space in India is on the cusp of the kind of growth eCommerce has already experienced. The pieces of the jigsaw are slowly falling in place. 4G is the key piece in this puzzle, and one that has VOD services and content providers positively salivating with the transformation it could bring.

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