Thursday, February 02, 2006
Various estimates put Internet users in India between 15-50 million. I estimate the total number of Internet users at 25 million.
Let us put this in conjunction with figures for television and telephones.
There are 108 million TV homes in India out of which 61 million have Cable & Satellite access. This makes the estimated TV viewers in India between 500-600 million.
Mobile phones have vaulted to 75 million and Landline users are estimated to be 48 million making the total telephone users to 123 million.
Key growth drivers for number of Internet users:
Growth of Internet users has been sluggish in India. The following will be the key growth drivers for Internet usage.
Connectivity from home: Almost 60-70% Indians connect to Internet from Cyber cafes. The connectivity from homes need to go up significantly. At current rates the bottleneck is the cost of a PC. If the hardware players are able to provide a PC bundled with Internet connectivity at say Rs 500 per month EMI it can provide an impetus to people for getting PCs + Internet in their homes. This is similar to the reliance offer of monsoon hangama that catapulted the number of mobile users to a different orbit.
More local language content and offerings: Most of the current Indian Internet content and offering is largely in English. Estimates put the total circulation of all English publications in India at 8 million with an estimated readership of around 20 million. Can we conclude that by and large Internet has reached almost all English conversant population of India?
More compelling content & services: With compelling services like filing of statutory dues like challans, payment of taxes etc, school / college admission process getting online will boost the Internet usage. We can learn from the success stories of players like IRCTC & Air Deccan who have driven a lot of non internet users to start transacting !
I estimate the current Indian Internet industry size between Rs 2700-3000 crore. This is not including B2B or access business.
The Indian Internet market is still small but is growing at a fairly fast pace. Everyone in the Indian Internet industry is waiting for the inflection point to be reached. This will obviously need more and more users to be connected through various devices leading to a larger revenue size of the Industry.
My take is over the next 18-24 months we will see a 50 million Internet user base, up from current 25 million. Doubling of the user base would lead the Internet market to grow to around Rs 10,000 crore.
Here is a split of the market size:
Advertising: 150-175 crores.
IAMAI estimates it at 162 crores http://www.iamai.in/IAMAI_new.html
B2C Ecommerce: Transactions at gross value 1,500 crores.
This includes transactions on IRCTC & Air Deccan sites. Of course, one can argue that these are not pure-play Internet businesses, however I have decided in taking these numbers in my market size analysis. I estimate the travel business contribution to the total B2C commerce market at around 75%. This number is at best around 30-35% in the developed Internet markets. Travel has moved online because players such as IRCTC and Air Deccan have given good value proposition and convenience to the users.
If we were to remove IRCTC and Deccan from the business then the total B2C ecommerce market would be in the region of around 450 crores with travel contributing to around 125 -150 crores. This number would be in line with the global trends.
Online Stock broking: 500 crores
The 500 crore market size is of the “brokerage” earned. If we were to convert into gross value aka e commerce this will translate into a total value of between 1,50,000 – 2,00,000 crores. This is a segment that is the largest and growing very fast. I would not be surprised if this doubles in next 12 months.
Listing / Information / paid content : 300 crores.
I have included all revenue streams of players like Naukri, Shaadi, Bharat Matrimony etc. This revenue category is a personal favourite of mine. I feel this segment has grown largely due to tremendous work done by players like Naukri, Shaadi etc. They have put a humungous number of feet-on-street and are influencing even the small businesses to advertise on their portal. My wife who runs a small Interiors business has advertised twice on Naukri and has got a very good response!
Not surprising that this segment is larger than the advertising business. More about this segment on my future posts.
Mobile VAS players: 200-300 crores. All telecom brands of leading internet portals like Indiatimes 8888, Yahoo etc.
Caution: The numbers I have quoted here are my estimates and I request the readers not to take these as “definitive”.