India will have 1 billion smartphone users by 2026. “This growth will result in over 75 percent of the subscribers using smartphones by 2026 from a sub- seventy percent as on date,” says Peeyush Vaish, Partner and Telecom Sector Leader, Deloitte India, who noted smartphones now act as a catalyst for digital penetration across the tier-2 and 3 markets in India.
Favourable policies, convenience-driven mindset, and evolution of the new normal have brought in a renewed focus on tech adoption, according to the India edition of Deloitte’s 2022 Global TMT (Technology, Media, and Entertainment, Telecom), as Vaish notes, “5G enabled devices will contribute 80 percent to the devices being sold in the year 2026 and Indian consumers will purchase 840 million 5G smartphones over the next 5 years valued at $130 billion. In addition, 5G will fuel an incremental sale of 135 million smartphone units over the next 5 years.”
The Deloitte survey that the changes driven by the economic and societal shifts caused by the global pandemic, are poised to result in a better-connected ecosystem of multiple digital devices that can meet the world’s ever-increasing need for faster connectivity, and more chips and entertainment options.
Moreover, an evolving marketplace for NFT, increasing diversity in talent and participation of women in the tech industry, and rising popularity of AI and app-centric approach to promote mental health and wellness indicate enhanced digital maturity for businesses.
There is an urgency to address the semiconductor chips shortage, according to Deloitte. The global shortage of semiconductor chips has affected the manufacturing industries across the world. As demand soars, supply is likely to be constrained in the near term, but gradually ease up in 2023. With an increase in supply and normalisation of demand, and the specific initiatives muted by GoI, India can play on the strength of its large and thriving domestic market to form a basis for setting up the domestic semiconductor and electronics manufacturing industries in the next three-five years.
“As the ecosystem matures in the medium to long term, we expect India to emerge as a strong regional hub in semiconductor and electronics manufacturing,” said P. N. Sudarshan, Partner and TMT Industry Leader, Deloitte India.
According to him, “The government’s recent announcement on the Production Linked Incentive (PLI) scheme for the semiconductor and electronics manufacturing industries has the potential to create an end-to-end ecosystem for manufacturing electronic products. We expect the broader shift to digital to continue in 2022 and drive the industry growth in the future.”
According to the study, in 2021, the Indian telecom sector has undergone major policy reforms to reset growth and revive the health of the operators. The total cumulative shipments of smartphones in the country are expected to reach 1.7 billion units from 2022 to 2026, creating a market of about $250 billion.
According to Deloitte’s analysis, smartphone demand in India will increase at a CAGR of 6 percent in the rural market and at a CAGR OF 2.5 per cent in the urban market to reach a cumulative number of about 400 million units being sold in 2026. This is largely propelled by demand for internet services in the rural market with the adoption of E-learning, Fintech and E-health platforms. Internet enabled devices in the rural market will also get a push with the government’s plan to fiberize all villages by 2025 under the BharatNet program.
5G devices will alone contribute 80 percent (about 310 million devices) to smartphone demand by 2026. Furthermore, the recently announced incentive package of US$10 billion to drive semiconductor manufacturing in India and the PLI schemes will encourage handset manufacturing in India to service the second-largest smartphone market in the next five years.
As a result of this, the Indian streaming industry is expected to evolve dramatically, the study says.
Greater adoption by audiences, the popularity of international content (such as Korean, Israeli, or Spanish) in India, and the ability to attract a wider audience through subtitles and dubbed content, have broken previously held views on the characteristics of the Indian market.
These trends have forced many streaming companies to revise their original strategies. Pricing for streaming services will remain competitive as service providers attempt to stabilise and consolidate their customer base. However, in a rapidly evolving market, streaming players would rather focus on customer acquisition instead of customer churn. As prices stabilise and content libraries become nuanced and structured, the focus will shift to the minimisation of churn, said the study.
Jehil Thakkar, Partner, Media and Entertainment Sector Leader, Deloitte India, said “Evolving consumer behaviour in view of the pandemic has increased digital content consumption in India. Audiences are experimenting with genres and languages with regional content breaking out of its traditional boundaries. Fierce competition is likely to persist in the short-to-medium term with more than 40 service providers in the fray.”
This growth will be driven by heavy investment in original content, pricing innovations, low data costs, and the rise of short-form content. However, this progression from the early to mass stage might come at a cost to the broader media industry as subscribers, especially in tier-1 and tier-2 cities, may switch to more streaming content from traditional linear TV.
The analysts of the report however, do not expect India to cut the cord. Gaming and commerce are important elements contributing to attract, retain and amplify consumer stickiness as the battle within the evolving digital world continues.
At the same time, the report shows that more market players are realising AI’s importance, including its ability to provide competitive advantage and sculpt the future of work. In 2022, we expect to see India’s AI priorities shift towards cost efficiencies and employee productivity.
One of the most interesting aspects of the report is that mental health becomes a priority with increasing app penetration. Given the challenges related to awareness, access, and capacity, technology can play a significant role in building scalable solutions that can help the population at large. About 36 percent of the Indian millennial have a fitness app installed on their phones and ~45 percent think leading a healthy life is essential.
The Deloitte Global also predicts that NFTs for sports media will generate more than US$2 billion in transactions in 2022, about double the figure for 2021. Given the global trends and the government of India’s pending policy/regulatory framework in this area, it is a matter of time before NFT-based market for movies and sports memorabilia becomes a reality in India.