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Broadband in India: Business Models

November 20th, 2009 · 50 Comments

The sad state of Indian portals can be seen from the recent results of India’s leading home-grown portals – Rediff and Web18 both lost upwards of Rs 10 crore in the past quarter. Google is cleaning up on the ads front because it doesn’t do content and it links ads with context (in search). The transaction-focused companies in travel and trading are doing well. But more broadly, the Indian Internet companies need to think different if they are to survive and thrive.

They need to look no further than the value-added services business that exists around the mobile phone. Even as Internet advertising in India is at about Rs 600-700 crores, what users spend on mobile VAS is at about Rs 5,000 crore, with an additional Rs 5,000 crore spent on person-to-person SMS.

What is needed is a “user pays” model for services delivered on the Internet, along with the creation of an AppStore (publishing platform and marketplace) to enable monetisation of services. Users may still not pay for services delivered on the computer, but could be persuaded to pay if the mobile can be integrated into the experience.

What needs to be happen is that the concept of ‘cash balance’ with the ability to do microtransactions needs to also come to the computer-centric Internet for home users. This will open up creation of new services. Imagine a base of 10 million Indians willing to pay Rs 100 a month for services – this Rs 1,000 crore is already more than what the ad opportunity on the Internet is today.

Conclusion

For broadband in India to grow, many things have to fall in place quickly across the four areas that we discussed – devices, pipes, services and business models. If we can get this going, venture investment will also start flowing in and create the innovation ecosystem that India so desperately needs.

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50 responses so far ↓

  • 1 Broadband in India: Business Models « Internet Cafe Solution // Nov 20, 2009 at 8:11 am

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  • 2 Broadband in India: Business Models | Drakz News India // Nov 20, 2009 at 9:09 am

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  • 3 Broadband in India: Business Models | 1001need News // Nov 20, 2009 at 10:29 am

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  • 4 Broadband in India: Business Models // Nov 20, 2009 at 10:48 am

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  • 5 uberVU - social comments // Nov 20, 2009 at 4:31 pm

    Social comments and analytics for this post

    This post was mentioned on Twitter by rajeshjain: Broadband in India: Business Models: The sad state of Indian portals can be seen from the recent results of Ind.. http://bit.ly/3L7Izo

  • 6 Arpit Rai // Nov 20, 2009 at 6:35 pm

    What sort of services on mobile are you referring to? Can you state some examples.

  • 7 Kalyan Vadrevu // Nov 20, 2009 at 10:45 pm

    Rajesh – I enjoyed reading your complete analysis of Broadband in India. It’s interesting how the ability to create micro-transactions seems to be the way to go for services!

  • 8 Bharat Kumar // Nov 22, 2009 at 6:18 pm

    Rajesh-ji,

    Do you think Google, Yahoo or MSN are making profit from their Indian operations ? You must have a strong reasons to distinguish Indian portals from Indian operations of Google, Yahoo even MSN. Can you share some?

    How is MyToday doing? I remember that you sold off samachar and khoj for a good profit to Ramalinga Raju. Lucky You 🙂

  • 9 Broadband in India: Business Models | Drakz News Station // Dec 10, 2009 at 8:19 am

    […] the original post: Broadband in India: Business Models Share and […]

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