By Nickhil Jakatdar
Networks across many emerging markets of the world, India included, are in a phase of transition. 4G or LTE as it is globally called is poised to usher in an era of high speed connectivity and much has been written on it being a game changer – both for end consumers and OTT service providers.
From a video consumer standpoint, the common perception is that 4G would end the era of buffering – wherein watching videos in fits and starts would be a relic of the past. For telecom service providers rolling out 4G networks, it is believed that improved speed would translate to greater video consumption and thereby help boost up data revenues respectively. Below we dig into the numbers to get to the heart of the story.
4G: What the numbers foretell
In my last article for Medianama titled ‘From a data standpoint, each smartphone becomes a data generator’, I had briefly touched upon the business rationale behind VOD service providers tapping into India and covered that this rising data consumption over mobile networks is primarily a result of smartphone proliferation and internet penetration.
On the internet penetration front, going by the statistics of an IAMAI-IMRB Report, the number of internet users, which currently stands at 462 million, witnessed a 31% YoY growth, while those accessing the internet via mobile devices, has grown 56% YoY in H1 CY2016. This translates to over 35% of Indians accessing the internet with more than 80% (371 million) of them doing so via mobile phones.
India is one of the few markets that continues to record double-digit growth of its internet user base while growth is tapering off in other global markets. According to the India edition of the Ericsson Mobility Report, data consumption per active smartphone is expected to increase fivefold from 1.4 GB per month in 2015 to 7 GB per month by 2021 largely driven by 4G facilitating consumption of data heavy sources of entertainment such as video and gaming.
On the smartphone proliferation front, India has surpassed the US to become the world’s second largest smartphone market with over 220 million users constituting nearly 60% of total internet enabled mobile users, according to a report by Counterpoint Research. The onset of 4G has seen a rise in 4G enabled smartphone shipments to India which constituted 63% of the total cellular shipments in Q1 CY2016. The availability of affordable 4G enabled smartphones at a price point of under Rs 10,000 facilitates India’s readiness for the new age network. Research firm CLSA has predicted that by March 2018, India’s smartphone users will touch a whopping 350 million of which 210 million will be 4G enabled.
Video consumption trends in the 4G LTE era
Cisco has predicted that video content will account for nearly 50% of total mobile data consumption in India by 2017 and is set to grow at a CAGR of 83% until 2020. 4G will play a major role in this increase.
Vuclip launched its OTT Video services under the Viu brand name in a number of countries earlier this year including Malaysia, Indonesia, Hong Kong, Singapore and India. For the purposes of this study, we focused our attention on data from India and Indonesia since they have similar characteristics when it comes to types of mobile devices, cost of data, etc. The table showing data consumption by Viu users in India and Indonesia reveals the following:
(Note: While computing data consumption, we have considered that all streamed content will be consumed on HD whereas the actual data consumption for the streamed content will be tuned to network quality i.e. If the network is poor, the streaming will be accordingly done at a lower quality)
Data consumption trends: India
– There is greater proclivity among Indians to download videos rather than stream them on both 3G and 4G. Data consumption via downloads is 1.5x greater than streaming on 3G and 1.7x greater than streaming on 4G. This is despite the fact that long form movie content constitutes a negligible part of overall downloads but contributes to nearly 50% of streaming consumption on both 3G and 4G. We have two primary deductions here: The first is that users view the downloaded video content in full, typically in an offline mode when they have dedicated time to watch the full movie, such as on buses and on planes, but only engage in partial viewing of the movies while streaming when they are typically consuming videos with limited attention spans.
– Our user data shows the prevalence of ‘pseudo streaming’ in India i.e. downloading video content, watching it and then deleting it within 24-48 hours. This is largely because Indians dislike interruptions while viewing videos and prefer to download and watch offline.
– Data consumption through streaming on 4G is 2.4x that of 3G. Our user data also indicates users streaming 3.5x more long form content (movies) on 4G than on 3G. Therefore, we can infer that better network speed does encourage users to stream more long form content probably for longer periods as well.
– Download on 4G is 2.7x that on 3G. The delta has equal contribution from movies and short form content. We therefore infer that users not only download bigger files but also more files on account of a better network.
– Therefore, the ideal starter data pack for Indian consumers, in order to balance their optimal usage with their affordability levels, should range between 250 MB – 500 MB.
Data consumption trends: Indonesia
– Indonesia, on the other hand, is a market that prefers to stream videos on 3G and 4G rather than download them. A key factor here is that 50% of all downloads are in SD (this is 70-80% for India). This reduces overall data consumption via downloads since SD content files are about 3 times less heavy compared to HD files. Ideal data pack will range between 1.5 – 2 GB for video streaming. Almost all the content consumed either via stream or download is in the form of TV shows.
– Therefore, the ideal starter data pack for Indonesian consumers in order to balance their optimal usage with their affordability levels should range between 1 GB – 2 GB.
Additional insights and consumption patterns
Less buffering equates to more consumption
In the case of videos, the entire video file gets buffered much faster on 4G than on 3G and streaming starts much more quickly. Just as important, the bigger 4G pipe allows for much higher quality video to be sent through in order to match the ever increasing resolutions of the smartphones. Therefore, data consumption per user on 4G is 1.5-3x of what it is on 3G. Globally, this is validated by Cisco’s Visual Networking Index which has observed that 4G connections constituted 14% of total mobile connections and accounted for 47% of the total mobile data traffic in 2015. 3G connections, on the other hand, represented 34% of mobile connections and 43% of mobile data traffic.
4G mobile users are less compelled to depend on WiFi
Dependence on WiFi for streaming/downloading videos is much lower among 4G mobile users than for those on slower networks. Historically, we have seen that HD quality video downloads and streaming is largely done over WiFi when compared to SD quality videos, but with the onset of 4G and the introduction of larger data packs, the trend towards consuming HD videos on mobile networks is on the rise as seen in the table above.
Traditional media still a force, as price sensitivity around data remains major concern
Given that India is the second largest TV market by volume with 160 million TV homes, the cost arbitrage between DTH/Cable and OTT Video is another hurdle with the former providing access to over 250 entertainment channels at a monthly cost of Rs 200 – 350. Unless VOD players are able to deliver services below this price point inclusive of the data charges, traditional media would still hold the upper hand. Long form content such as movies are data intensive and could consume anywhere between 0.4 – 0.6 GB if watched in SD on a 3G network or 1.1 – 1.3 GB in HD on a 4G network. Data costs range from Rs 110 – 190 per GB for 3G and 4G and this is in addition to subscription fees charged by the VOD platform.
4G: Challenges and opportunities
In summary, with mobile networks and supporting mobile devices in place, 4G is seen by India’s media and entertainment (M&E) sector as a major triggering factor for increased consumption of video content. However, mobile data must not be seen as a luxury. For true progress, affordable data is a key part of democratizing entertainment via mediums like OTT Video platforms. The costing of 4G data packs need to be further optimized so the perception of 4G as ‘A multiplex in the pocket, a hole in the wallet’ does not become true.
Graph: Nickhil Jakatdar