In­dia rides OTTs

A seg­ment un­heard of un­til a few years ago, In­dia’s OTT ecosys­tem is set to touch Rs 2,000 crore by 2016. Voice & Data takes a closer look at the evolv­ing OTT land­scape that is trans­form­ing In­dia.

Voice&Data - - FRONT PAGE - Kr­ishna Mukher­jee x-kr­ish­nam@cy­ber­me­

A re­port on the evolv­ing OTT land­scape

Buy­ing gro­ceries, book­ing rail­way tick­ets or making util­ity pay­ments, mo­bile apps are be­com­ing an in­te­gral part of our lives to­day... Th­ese are not only making our lives sim­pler and smoother but have ac­quired a po­si­tion so prom­i­nent that liv­ing with­out th­ese is be­com­ing unimag­in­able.

Dat­ing back to the end of 20th cen­tury, mo­bile ap­pli­ca­tions were just making a mark, and typ­i­cally were small ar­cade games, ring­tones, cal­en­dars and cal­cu­la­tors. But with time, th­ese apps evolved with their ease of us­age and were adapted by key sec­tors such as fi­nance, ed­u­ca­tion, health and civic gov­er­nance.

The best part about apps is that they are putting all this power in your palm avail­able on your smart­phone, making your life su­per con­ve­nient from just about any­where. Data from a Ya­hoo re­port sug­gests that mo­bile brows­ing en­gage­ment time ac­tu­ally dropped by 50 per­cent and in­stead, phone own­ers are spend­ing more time in their mo­bile apps.

In In­dia, where OTTs were un­heard of un­til a few years back, the app ecosys­tem is now es­ti­mated to be in the range of Rs 2,000 crore by 2016. Around nine bil­lion apps will be down­loaded in the coun­try in 2015, more than five times the num­ber of apps down­loaded in 2012 (1.56 bil­lion) at a cu­mu­la­tive an­nual growth rate (CAGR) of 75 per cent.

More so, the app econ­omy has cre­ated about 75,000 direct jobs in In­dia, and has the po­ten­tial to reach 600,000 over a pe­riod of time. The growth is pro­pelled by a slew of fac­tors, driv­ing the switch from e-commerce to m-commerce.

E-commerce, e-health, e-ed­u­ca­tion… are all adapt­ing to the new era of ‘mo­bile’. With smart­phones prices hurtling south, the af­ford­able smart­phones in the mar­ket are cre­at­ing a win-win sit­u­a­tion for both con­sumers and app de­vel­op­ers. This is in fact one of the key driv­ers of the app econ­omy, con­se­quently ‘Dig­i­tal In­dia’.

“In­dian mo­bile apps are be­ing driven by the in­creased us­age of smart­phones cou­pled with low mo­bile tar­iffs bridg­ing the dig­i­tal di­vide be­tween met­ros, non­met­ros and ru­ral ar­eas. Users ac­cess­ing the In­ter­net through their mo­bile de­vices have be­come a key driver for the growth of mo­bile apps,” says Ashay Pad­wal, Co-Founder at Vserv.

Echo­ing sim­i­lar view, Faisal Ka­woosa, Gen­eral Man­ager, Tele­com & SemiTron­ics, CMR In­dia, says: “There are two fac­tors push­ing for an app de­vel­op­ment. One is the smart­phone pen­e­tra­tion cou­pled with data ser­vices growth. The sec­ond is that many of us are now ac­cess­ing In­ter­net for the first time through a mo­bile phone. In fact, such pop­u­la­tion would never ac­cess data via lap­top or a PC and will con­tinue to use data through mo­bile phones. To cater to them, the app be­comes sig­nif­i­cant.”

How­ever, on one hand, the rise of the app sec­tor has put the mo­bile app de­vel­op­ers, con­sumers, com­pa­nies, start-ups, con­tent providers on the gain­ers side, but at the same time has gen­er­ated in­se­cu­rity for the tel­cos, who have termed th­ese as OTTs or over the top play­ers as they ride on their in­fra­struc­ture free of cost.

The tiff be­tween OTTs and tel­cos is out in the open to­day but the tele­com ser­vice providers have also un­der­stood that OTTs are here to stay and so the tel­cos are al­ready in the process of cushioning them­selves with their own in­no­va­tive apps, apps store plat­form.

The good news for the tel­cos is that by 2016, av­er­age data us­age per sub­scriber in In­dia is ex­pected to dou­ble and the num­ber of smart­phones is ex­pected to cross 200 mil­lion, driv­ing 4G ser­vices.

Cur­rently, with more than 300 mil­lion in­ter­net users, In­dia has the sec­ond largest in­ter­net user base in the world, which is es­ti­mated to touch 503 mil­lion by 2017.

The rise of the app ecosys­tem is al­ready push­ing In­dia to have the largest num­ber of soft­ware de­vel­op­ers by 2017. At present, it has around 300,000 app de­vel­op­ers and is al­ready the sec­ond largest An­droid de­vel­oper com­mu­nity in the world.

Not only apps con­fined to busi­nesses are gain­ing mo­men­tum, but gov­ern­ment-spon­sored apps are also see­ing a lot of trac­tion. Ac­cord­ing to in­dus­try ex­perts, NTES (Na­tional Trains En­quiry Sys­tem) from the In­dian Rail­ways, with 1,000,000 down­loads, is the most pop­u­lar app in In­dia.

Since the Naren­dra Modi-led gov­ern­ment has been in charge, the gov­ern­ment apps have be­come the talk-of-the town, with My­gov, Naren­dra Modi app, IRCTC Con­nect, MEA In­dia, mPass­port Seva, be­ing some of the apps used by ne­ti­zens fairly ac­tively. Even though the over­all adop­tion level of gov­er­nance apps in re­la­tion to most pop­u­lar apps is some­what lag­gard this will likely change in the com­ing two years.

Talk­ing about busi­nesses, it’s not just start-ups but tra­di­tional busi­nesses as well have re­al­ized the power of apps and are de­vel­op­ing apps for their busi­nesses to stay afloat in the hy­per-com­pet­i­tive mar­ket.

The tiff be­tween OTTs and tel­cos is out in the open to­day but the tele­com ser­vice providers have also un­der­stood that OTTs are here to stay and so the tel­cos are al­ready in the process of cushioning them­selves with their own in­no­va­tive apps, apps store plat­form.

The App Glut

The mar­ket has a plethora of apps to­day. Th­ese app-based plat­forms are ex­pand­ing their reach across mul­ti­ple ar­eas at­tract­ing users to spend more time com­mu­ni­cat­ing, shop­ping as well as con­sum­ing con­tent. But with so many apps around, the war of apps has just started off, which is in a way, com­pelling app de­vel­op­ers to look be­yond run-of-the-mill prod­ucts and de­velop some­thing out-of the box.

Talk­ing specif­i­cally about the mes­sag­ing apps, re­search firm Coun­ter­point says, “The mes­sag­ing apps are cre­at­ing greater amount of stick­i­ness and us­ing their hor­i­zon­tal busi­ness model to scale and with pres­ence on the ma­jor plat­forms from iOS to An­droid to Win­dows to tar­get the com­plete pie of smart de­vices users.

They are surely ma­jor threat to each other but more so to big­ger mo­bile OS plat­forms/ecosys­tems play­ers such as An­droid, iOS and Win­dows and even so­cial net­work­ing gi­ants such as Face­book, eat­ing into the na­tive stick­i­ness fac­tors such as me­dia, com­mu­ni­ca­tion, so­cial net­work­ing, commerce and much more.”

In­dus­try ex­perts be­lieve that with the ris­ing num­ber of apps, the mo­bile de­vel­oper has an up­hill task of dif­fer­en­ti­at­ing their apps, and at the same time, mon­e­tiz­ing the apps. They are also of the view that with the in­creas­ing pen­e­tra­tion of 3G and 4G the user ex­pe­ri­ence of apps would im­prove, app de­vel­op­ers should fo­cus on making the apps more ef­fi­cient in terms of data consumption.

Dis­cov­er­abil­ity of apps re­mains a is­sue though. “If you look at the Ap­ple app store you have more than one mil­lion apps to­day and ba­si­cally a user can­not have more than 50 apps in the phone, so con­sumers need to cherry pick the right app that works for them,” says Girish Trivedi, Co-Founder, Monk Con­sult­ing.

With a plethora of apps, one thing is per­ti­nent that users’ choice to pick the reg­u­lar so­cial apps such as What’s up, Face­book would be there but when it would come to oth­ers apps , they would down­load need-based apps only, he adds.

Ac­cord­ing to Bharath Lin­jan, CEO, (x) cube Labs, “Of course, the chal­lenge is user re­ten­tion how do we en­sure that our users are us­ing our app again and again and not delet­ing it. So, what we want to do is bring tech­nolo­gies that will help de­rive more value from the lo­cal­ized con­tent. The in­tent is to de­velop tech­nolo­gies so that con­sumers can use smarter apps, bet­ter look­ing apps, es­sen­tially, tech­nolo­gies that have built-in an­a­lyt­ics into it for help­ing the con­sumers.”

“In the war of apps, the most fric­tion­less app will win the race. It’s a world of word-of-mouth mar­ket­ing and user ex­pe­ri­ence. Push­ing the app down­loads down the con­sumer throat through mas­sive me­dia spend won’t help,” says Ab­hishek Rungta, Founder and CEO, In­dus Net Tech­nolo­gies.

Hy­per­local vs Global

The In­dian app sec­tor, how­ever, does not see a ma­jor threat from the global play­ers, as com­pa­nies gen­er­ally be­lieve that the apps de­vel­oped in In­dia by lo­cal en­trepreneurs have an up­per hand be­cause of the lo­cal­ized con­tent they of­fer. Lo­cal com­pa­nies have an edge and ad­van­tage, in the form of deeper cul­tural un­der­stand­ing of the users, which they should lever­age.

The suc­cess of Flip­kart and Snapdeal in In­dia, and Alibaba in China, are tes­ti­mony to the abil­ity to adapt to lo­cal cul­ture and con­di­tion, and the po­ten­tial of lo­cal mar­ket­places.

Vikrant Singh, As­sis­tant Man­ager, Tele­com, at CMR (Cy­ber­Me­dia Re­search), says, “This is the time for home­grown apps to get into the mar­ket with new and rel­e­vant of­fer­ings, as the in­ter­na­tional play­ers are not much aware about the lo­cal needs. There are many un­tapped ar­eas, spe­cific only to In­dia or may be even to a state or lo­cal­ity in In­dia – th­ese op­por­tu­ni­ties can be uti­lized by those look­ing at en­ter­ing the ap­pli­ca­tions’ mar­ket. There is still a lot of scope for the rel­e­vant of­fer­ings. Also, the lo­cal de­vel­op­ers have an op­por­tu­nity to fill the gap which is not ad­dressed by the global app de­vel­op­ers.”

Rungta adds: “The lo­cal play­ers will al­ways have an edge. It’s like play­ing a league match on the home-ground. But, this lead is not per­ma­nent. The global play­ers will con­tinue to adapt to lo­cal con­di­tions. There­fore, suc­cess­ful lo­cal play­ers have to take a call - dig their heels deeper in their lo­cal mar­ket and main­tain the lead, or go global them­selves.”

Not only we will see the suc­cess of lo­cal apps across cer­tain seg­ments (En­ter­tain­ment, Travel, Sports) but go­ing for­ward we can see global play­ers go­ing the lo­cal way. So th­ese ‘Glo­cal’ of­fer­ings will be an ef­fort to of­fer dif­fer­en­ti­a­tion tai­lored ac­cord­ing to lo­cal needs and pref­er­ences. “Hence, ex­pect some global play­ers go­ing the ‘Glo­cal’ way and th­ese apps be­com­ing an ecosys­tem in it­self,” adds Tarun Pathak, Se­nior Tele­com An­a­lysts at Coun­ter­Point Re­search.

An­other point to be noted here is

The rise of the app ecosys­tem is al­ready push­ing In­dia to have the largest num­ber of soft­ware de­vel­op­ers by 2017. At present, it has around 300,000 app de­vel­op­ers and is al­ready the sec­ond largest An­droid de­vel­oper com­mu­nity in the world.

that the global com­peti­tors are wellestab­lished and cash-rich which can help them sus­tain for a longer pe­riod of time, whereas the lo­cal play­ers have to strug­gle hard be­fore they get any fund­ing.

Singh of CMR warns: “The well-set­tled play­ers have an ad­van­tage over the net­work op­ti­miza­tion and mem­ory op­ti­miza­tion pa­ram­e­ters, which takes time for the new en­trants to fig­ure out. There should be a part­ner­ship among the app de­vel­op­ers, net­work providers and hand­set man­u­fac­tur­ers which can help the whole ecosys­tem to op­ti­mize the re­sources.”

Global com­pe­ti­tion from smaller play­ers like Slack and Tele­gram will come soon. But given that this is a new par­a­digm, ini­tial com­pe­ti­tion will ac­tu­ally val­i­date the con­cept and will hence be sup­port­ive.

“Over­all, the mar­ket op­por­tu­nity is huge so there is scope for col­lab­o­ra­tion rather than com­pe­ti­tion. Since a mes­sag­ing plat­form can be seen as a nat­u­ral ex­ten­sion of SMS and is avail­able / com­mon across apps, both tel­cos and de­vice makers are well placed to sup­port it,” adds Beerud Sheth, Co-Founder and CEO, Team­chat.

Se­cure the Apps

With so much of buzz around OTTs, the talk about se­cu­rity is bound to fol­low. With a num­ber of en­ter­prises into mo­bile apps and mo­bile wal­lets so­lu­tions, ut­most im­por­tance needs to be given to the se­cu­rity as­pects.

Ac­cord­ing to Harshit Agar­wal, Co­Founder and CEO, App­knox, “When we scanned 51 pay­ment and wal­let apps, we found that only six were com­pletely se­cured. Out of 45 vul­ner­a­ble apps most, around 80% had se­vere SSL is­sue which is very crit­i­cal and can lead to threats like Men in the Mid­dle at­tack.”

The above fig­ures in­di­cate the vu l n e ra­bil­ity of mo­bile apps, so it be­comes crit­i­cal for busi­nesses to be ex­tra- care­ful while de­vel­op­ing their first app. Ac­cord­ing to in­dus­try ex­perts, a host of back-end APIs as­sume that only an app will ac­cess it but the servers that an app is ac­cess­ing si­mul­ta­ne­ously should have se­cu­rity mea­sures in place to ward off any unau­tho­rized users from ac­cess­ing data.

To ward off any ma­li­cious at­tack­ers, all APIs should be vet­ted and se­cu­rity mech­a­nism should be strength­ened.

Ac­cord­ing to a Kable anal­y­sis, which gauges se­cu­rity in en­ter­prises, “Em­ployee and sup­plier-fac­ing mo­bile ap­pli­ca­tions were found to be cur­rently in use by 58.8 per­cent of re­spon­dents, while 56.1 per­cent were con­sid­er­ing in­vest­ment in the next two years.”

It also adds that about 13.2 per­cent of to­tal ICT bud­gets which is be­ing spent on ap­pli­ca­tions cur­rently, is likely to rise to 13.9 per­cent next year.

While 70.5 per­cent al­ready had se­cu­rity prod­ucts in place to pro­tect ap­pli­ca­tion se­cu­rity, 60.9 per­cent were con­sid­er­ing in­vest­ment in the next two years.

Se­cu­rity emerges as the top con­cern for en­ter­prise join­ing the app eco sys­tem big bang. There­fore, an im­por­tant as­pect to be kept in mind is data se­cu­rity and pri­vacy as mo­bile apps col­lect and store lots of cus­tomer data and of­ten lack pri­vacy poli­cies, and such lack of trans­parency un­der­mines cus­tomers’ trust in mo­bile apps.

“It be­comes im­por­tant for com­pa­nies to take steps to mit­i­gate the risks by defin­ing clearly what data to be col­lected and how, making pri­vacy pol­icy an in­te­gral part of mo­bile apps, and un­der­stand­ing their re­spon­si­bil­i­ties while shar­ing data with third par­ties,” says San­deep Ladda, Part­ner and In­dia Tech­nol­ogy and E-commerce Sec­tor Leader, PwC.

While big busi­nesses like Ama­zon or eBay form a ma­jor chunk of the app ecosys­tem, small busi­nesses, start-ups are more in­clined to join the app band­wagon. For small busi­nesses, mo­bile apps are the most af­ford­able medium to reach out to huge pop­u­lace.

Fur­ther growth in the app mar­ket will be driven by a strong tele­com in­fra­struc­ture, high smart­phone pen­e­tra­tion, skilled work­force, en­abled by ef­fec­tively man­aged reg­u­la­tory en­vi­ron­ment as laws reg­u­lat­ing dig­i­tal and mo­bil­ity en­vi­ron­ment in In­dia are still evolv­ing and lack clar­ity. And that is a work in progress.

Not only we will see the suc­cess of lo­cal apps across cer­tain seg­ments (En­ter­tain­ment, Travel, Sports) but go­ing for­ward we can see global play­ers go­ing the lo­cal way.

The Busi­ness of Com­mu­ni­ca­tions

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