internet blues for media | Business standard column

Is the decline in online news consumption a sign of things to come? Many of the top 20 online news destinations in India – Times Network, Jagran – saw their numbers decline in reach and time spent in 2022. Overall, the number of Indians using online news fell from 457 million to 451 million in May last year. September. According to Comscore data, the time spent decreased by 9 percent during the same period.

A big reason this paper was the first to report may be the flattening of internet growth. It has slowed from double-digit growth rates from 2016 to 2020 to around 4 percent in 2021, according to data from the Telecom Regulatory Authority of India (Trai). Growth in internet subscribers in the quarter ending June 2022 was less than 1 percent compared to the same quarter of 2021.

Reason? Smartphone prices. The sweet spot for people in the middle and lower end of the market to upgrade from a feature phone to a smartphone was Rs 8,000. Thanks to the pandemic-induced chip shortage and resulting supply constraints, there are no smartphones in this range. According to analysts, the average selling price is Rs 16,000-20,000.

This sounded the death knell for internet development in India. For millions of Indians, the smartphone is their first port of entry to the Internet and their primary device for going online. Of the 800 million who use broadband, 600 to 630 million, or less than 80 percent, use smartphones. These are capable of processing the bandwidth that allows you to watch a movie, listen to music or hold an online meeting. As their prices have come down, the internet has grown in India, making it one of the most exciting media markets. These little devices are what make Google, Meta (Facebook, WhatsApp, Instagram), Netflix and MX Player the dominant media players.

Now, IDC data shows that India’s smartphone market shrank by 10 percent year-on-year in the third quarter of 2022 (July-September). This was the lowest third-quarter reading since 2019. This means that people who use regular phones and want to upgrade to a phone that can help them access all the goodness of the internet simply haven’t moved up the value chain – so little has been added to the existing internet.

Telecom analysts say the first major addition to chip capacity will begin in the second half of 2023. This will ease the supply-demand situation and make the chips affordable for entry-level smartphones.

Meanwhile, what is happening with the media market, where the next phase of Internet growth will move beyond the top 100 cities? The effects of this stagnation on the fast-growing environment will be felt in all sectors, including education and banking. This column focuses on the Rs 1.6 trillion media and entertainment business.

The first, immediate impact was that the number of broadband users has remained at the same level for two years now. That means social media, video and entertainment reach reached nearly 485 million, according to Comscore. News, one of the first genres people hit the Internet, has actually gone down.

You could rightly argue that it is not just the capabilities of the internet that influence news consumption, but other factors such as content quality or timing. Comscore data shows that while accessibility remains the same, time spent on entertainment grew by 2 percent and on social media by 7 percent from May 2022 to September 2022.

Every medium has a natural ceiling for growth. Television reaches 210 million homes, or about 892 million people. But it has been more or less stagnant for several years now. Newspapers reach more than 421 million people and have remained so for nearly five years. Traditionally, electricity and literacy were some of the natural barriers to how deeply these media could penetrate India.

That changed with smartphones. Videos of everything from financial information and cooking to movies and news, the low cost of devices and the ability to charge anywhere have freed the internet-carrying phone from these barriers. The growth of online consumption is only limited by how much time the consumer is willing to spend on it.

That changed with the pandemic. It showed that users can spend hours. It is where we talk, think, question, work, read, relax or hang out with family. Therefore, the time spent will continue to increase for now. However, this will be from the existing 600-630 million smartphone users and will peak at some point, as will newspapers and television.

Advertising, which is the biggest revenue generator for online, not only consumes more time but also needs more audience in different languages ​​and from different parts of the country. Until the number of broadband users, and therefore those who can watch video or listen to music online, starts to increase, life will be uncertain for advertisers and digital businesses alike.

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