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Mary Meeker’s Internet Trends 2017 Report: Reliance Jio Helps Drive Usage in India and More

Mary Meeker's Internet Trends 2017 Report: Reliance Jio Helps Drive Usage in India and More

India has an Internet user base of 355 million
Overall mobile market has slowed down in the country
Low data costs have driven Internet usage
At the Code Conference in California on Wednesday, Kleiner Perkins Caufield & Byers partner Mary Meeker delivered her annual Internet Trends report. What was interesting this year was that 56 out of the 355 slides were devoted to India, talking about the user growth, Android market battle, consumer usage, government policies, and challenges.

Here are all the interesting facts that came out of her report:

1. Second biggest Internet user base, changing how Indians live
India has the world’s second biggest Internet user base at 355 million, despite having only 27 percent penetration. There was a 40 percent year-on-year growth. 72 percent of Internet users are less than 35 years old, with more than 35 percent in the 15-24 bracket.

Around 80 percent of Internet usage in India happens via mobiles, as opposed to the global average of 50 percent. 45 percent of mobile time is spent on entertainment, 34 percent on search, social and messaging. A lot of the former is driven by combination of on-demand videos and low cost data, with the report citing All India Bakchod’s 100 million views as an effect.

While adblock use on desktops is one of the lowest in the world (at 1 percent), it’s one of the highest on mobile (28 percent), possibly due to apps that have built-in ad-blocking. It’s higher than China (13 percent) but lower than Indonesia (58 percent).

Indians spend 28 hours per week for media on mobile, compared to just 4 hours watching on TV, and 2 hours reading print. With over six languages spoken by more than 50 million people, 46 percent of Internet users in India primarily consume local-language content

Smartphones and Internet have also changed learning, healthcare, and groceries. With after-school education a big industry, students spend over 40 minutes average daily on learning apps, and learning outcomes have improved 15 percent, according to data from Byju’s.

This is also happening with fresh produce, where mobile and direct-to-consumer allows for 20-25 percent lower prices. Healthcare spending is changing too, thanks to online hubs that provide 40-50 percent lower prices for lab tests, and save 20-30 percent on prescriptions.

2. Biggest global market for Android phones, outside China
In terms of time spent on Android phones, India is the biggest market excluding China. It went from 60-75 billion hours in 2014 to 140-150 billion hours in 2016. India also crossed the US in Google Play downloads in 2016, with more than 6 billion total downloads.

In terms of top downloaded Android apps, WhatsApp is still number one, as it was an year ago. It’s followed by Facebook Messenger, ShareIt, Truecaller, Facebook, UC Browser, MX Player, Hotstar, Jio TV, and Facebook Lite. JioTV has seen the highest growth rate; it was at rank 301 last year . Both Facebook and Hotstar have fallen a few places.

Over in the mobile browser war, Alibaba’s UC Browser holds half the market, while Google Chrome is second at 32 percent. Chrome has increased its share in the last year, while UC has fallen.

3. Overall mobile market slowed down, despite falling prices
The total mobile market – smartphone + feature phones – is on a decline in the last two years, with 2 percent fall in 2015, and 3 percent fall in 2016. 2017 is bucking that trend so far, with a 6 percent year-on-year growth in Q1 2017.

Smartphone shipments are responsible for that resurgence, falling from 29 percent in 2015, to 5 percent in 2016, and then jumping up to 15 percent year-on-year in Q1 2017. The number of smartphones sold went from 80 million in 2014, and 104 million in 2015, to 109 million in 2016.
India’s mobile market has seen a major shift for competitors. From Q4 2014 to Q1 2017, Chinese companies have gone from 15 percent market share to more than 50 percent. In the same time, global and Indian brands have seen their shares fall from above 40 percent to 35 percent and 13-14 percent, respectively. The latter decline was despite Reliance gaining share in 2016 thanks to Jio and Lyf-branded phones.

Average selling price (ASP) of smartphones has declined over the years, from over $200 (roughly Rs. 12,800) in 2012 to less than $150 (roughly Rs. 9,600) in 2016, but it’s still unaffordable for many, according to the report. The ASP is around 8 percent of India’s GDP per capita.

4. Affordable data costs (and Jio) drove Internet usage
Wireless data costs have become much more affordable. Going by the benchmark set by Alliance for Affordable Internet, which states 2 percent of GDP per capita as a good threshold, India’s costs have gone from $47 (roughly Rs. 3,000) for 1GB in Q3 2015 (3 percent) to $23 (roughly Rs. 1,472) for 1GB in Q1 2017 (1.3 percent). Owing to Jio’s extended free period, the average data costs excludes its impact.

Thanks to those low prices, India’s consumption of wireless data has shot up by 9x year-on-year, going from less than 200 millions of GB in March 2016 to around 1,300 millions of GB in March 2017.

The low costs and extra available bandwidth have seen rise in use of heavy apps, such as music and video streaming. Gaana saw a 3x growth from June 2016 to March 2017, while Hotstar saw a 4x growth between June 2016 and April 2017.

India’s wireless market has changed significantly over the past year. Airtel, Vodafone, and Idea controlled 60 percent in first half of 2016 and had monthly average revenue per user (ARPU) around $3 (roughly Rs. 190). Cut to end of Q1 2017, the average cost of data has fallen 48 percent year-on-year, and ARPU have fallen by 20 percent. The cost of data has gone from $3.7 (roughly Rs. 235) for 1GB in March 2016 to $1.9 (roughly Rs. 120) for 1GB in March 2017, with Jio standing at $0.17 (roughly Rs. 10) for 1GB.

Jio’s free period and low price has seen it make up serious ground in the market, going from 0 percent in Q3 2016 to 39 percent in Q1 2017. It had a subscriber base of 16 million in September 2016, which rose to 108 million by the end of March 2017. Since converting to paid-schemes in Jio Prime, the network has retained 72 million subscribers.

5. PM Modi government’s policies have driven change, but not enough
The report also highlighted the pro-digital policies that have been implemented since Prime Minister Narendra Modi was elected, which includes Banking for All (Jan Dhan Yojana). 280 million accounts have been opened in last three years, and direct government subsidies to bank accounts have saved $775,000.

Despite those schemes, the ease of doing business in the country still lags. It takes 26 days to register a business, and the cost of registration is 16.5 percent of income per capita, with the overall rank for ease of doing business coming at 130. By contrast, in the US, it takes 4 days, cost is 1.3 percent and rank is 8.

6. Digital payments and authentication on the rise
Thanks to demonetisation, digital payment systems have received a boost. Paytm has gone from 122 million users in April 2016 to 215 million in March 2017. UPI went from $15 million monthly transaction volume in November 2016 to $380 million in March 2017. BHIM got 17 million downloads within first two months of launch.

Aadhaar covered 82 percent of the Indian population in 2016. It had 16 million authentications per day in March 2017, as opposed to 3 million a year ago. eKYC verifications have also shot up, from close to 0.2 million in May 2016 to over 4 million in October 2016.

Disclosure: Paytm’s parent company One97 is an investor in NDTV’s Gadgets 360.

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Tags: Reliance Jio, Patym, PM Modi, AIB, Byjus, UC Browser, WhatsApp, UPI, BHIM