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How the ‘Jio effect’ brought millions of Indians online and is reshaping Silicon Valley and the internet

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India selfie mobileMushfiqul Alam/NurPhoto via Getty Images

  • Something is happening in India which could completely reshape internet culture. Millions of Indians gained regular access to the internet for the first time over the past three years.
  • This is thanks to the "Jio effect," after regional mobile operator Reliance Jio launched extremely cheap data tariffs in 2016, costing as little as Rs 15 ($0.21) per GB.
  •  Indians went from consuming an average of 700mb of data per month to 11GB, according to Counterpoint Research analyst Neil Shah.
  • This has led to unintended consequences like Indian music label T-Series overtaking YouTube star PewDiePie to become most-subscribed YouTube channel.
  • Click here for more BI Prime stories.

The "Jio effect" is little known outside India, but it’s already reshaping the way Silicon Valley does business.

The phenomenon is named after the arrival of Reliance Jio, a mobile network operator that launched in 2016 with extremely cheap data plans.

The network was founded by Indian billionaire Mukesh Ambani, and the telco went from zero customers to becoming the biggest mobile operator in the world with more than 300 million subscribers. To put this in context, Reliance Jio’s customer base is about as big as the entire US population.

Mukesh Ambani RelianceREUTERS/Francis Mascarenhas

Jio’s radical move was this: making 4G available to millions of Indians for free in 2016. It began charging nominal amounts for data in 2017 and, by then, the Indian appetite for internet content knew no bounds in part thanks to the availability of budget Android smartphones. Initially, Jio made no money, but it has now become profitable.

"Jio has changed the consumption habits for hundreds of millions of consumers," said Neil Shah, an analyst at Counterpoint Research. "More people are using smartphones as their first device, unlike developed markets where the PC is the first device."

Shah estimates that thanks to Jio’s pricing, Indians have gone from consuming just 700MB of data per month to 11GB. This would let you watch about 30 episodes of "Game of Thrones."

"You can get around 28GB of data for just a couple of dollars," says Shah. "And in that sense, once you have cheaper data and a smartphone, you’re going to consume more content."

reliance jioReuters

Unlike the West, Indian smartphone adoption is still growing in the double digits as people buy their first internet-connected device. "More and more people are using smartphones as their first device, unlike developed markets where the PC is the first device," says Shah.

This is significant. According to Pew Research, around 81% of Americans own a smartphone, meaning there isn’t much room to grow. The smartphone probably isn’t their first internet-connected device either.

Most consumers outside of India won’t have really noticed what this means for the wider internet, but one incident really put the Jio effect on the map: this year’s battle between Indian record label T-Series and Swedish vlogger PewDiePie to become most-subscribed YouTube channel.

PewDiePie’s war with T-Series hit the Super Bowl, as YouTuber Mr Beast turned up to the game with ‘Sub 2 PewDiePie’ shirtsGetty

T-Series is a long-established Indian record label, producing music videos in various Indian languages as well as highly successful blockbuster films, all targeted at the home market.

PewDiePie, by contrast, is a 29-year-old gaming vlogger and representative of a specific Western YouTube demographic — the self-referential, meme-loving, and occasionally offensive gamer.

Up until March 2018, PewDiePie, real name Felix Kjellberg, was by the far the most popular YouTuber and inspiration for hundreds of other smaller creators who riffed off his offbeat humour and occasionally tasteless pranks.

Read more: How T-Series went from making cassette tapes to dethroning PewDiePie and becoming the biggest channel on YouTube

But the cumulative impact of millions of Indians discovering their favourite Bollywood music on YouTube kicked in, and T-Series became the most popular YouTube channel. It has cemented its lead five months on, with 108 million subscribers versus PewDiePie’s 98 million.

Because cheap bandwidth is essentially unlimited, Indians are treating YouTube as their de facto streaming service, according to Shah. With access to the internet for the first time, they’re turning to YouTube to find their favourite Indian language songs.

"Most users have warmed up to YouTube to consume content, not just video, but music," he says. "They are going to YouTube rather than Spotify. People like T-Series or Star Network are seeing growth in video as well as music content."

Neeraj Kalyan, president of T-Series, told Business Insider: "The recent growth of internet in India has increased the consumption of Indian content and, because of the decreased data costs, increase internet penetration, and higher bandwidth, this has been a real catalyst.

"In 2016, there was mobile internet available in tier one or tier two cities, but now it’s in tier three to tier five cities and villages, which had never experienced internet. So now the consumer is excited, and he’s experimenting with everything, and it’s resulted in an increase in consumption."

It isn’t just YouTube. India is now producing its own Silicon Valley-style internet giants, such as retail firm Flipkart — majority acquired by Walmart for $16 billion — online supermarket Grofers, payment firm Paytm, and Uber rival Ola.

Narendra Modi Mark Zuckerberg IndiaStephen Lam/Reuters

Silicon Valley is also feeling the impact of the Jio effect.

Facebook, for example, began talking about the Jio effect indirectly in late 2016. The firm first mentioned the impact of cheap data in India on its Q3 2016 earnings call when CFO Dave Wehner said: "We’re seeing the introduction of low price data plans in markets like India and Mexico contributing [to user growth]."

Facebook would continue to talk about the impact of India’s "promotional free data plans" on its user growth in every subsequent earnings call for a year. And the firm has described India as its biggest growth market in every quarter since Q3 2016, according to call transcripts analysed by Business Insider.

Google is also playing nice with Jio. Its CEO Sundar Pichai attended the wedding of Akash Ambani, son of Reliance chairman Mukesh Ambani, earlier this year.

And the firm has been flagging the massive growth in Indian Android users since early 2017, not long after the launch of Reliance Jio. The firm said there more than 300 million new Android users from markets such as India and Brazil. At the beginning of this year, the firm said India was the fastest-growing market for YouTube. Its companion app, YouTube Music, had more than 15 million downloads.

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Source: Business Insider – sghosh@businessinsider.com (Shona Ghosh)

A VC who worked on Microsoft’s $8.5 billion acquisition of Skype says it provided a valuable lesson about why the best startups are ‘bought not sold’

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Paul 001Northzone

  • Paul Murphy is a partner at VC fund Northzone in London. He worked at Microsoft during its $8.5 billion acquisition of Skype.
  • That experience, alongside helping to realize the fund’s exit from Spotify during its IPO last year, helped shape his vision for what makes the best companies.
  • "The best businesses are bought not sold," Murphy told Business Insider in an interview.
  • Click here for more BI Prime stories.

Microsoft’s acquisition of Skype was one of its biggest acquisitions of the past decade, and for Paul Murphy, who worked on the deal, it was a sign of the best practices for a business.

The $8.5 billion acquisition came about as part of an irreconcilable moment for Microsoft. Despite being one of the biggest companies on the planet, with billions on its balance sheet and thousands of employees, it could not create a product as good or successful as Skype, forcing the acquisition.

This was a lightbulb moment for Murphy who spent eight years at Microsoft and is now a general partner at Stockholm-headquartered VC fund Northzone.

"It taught me that the best companies are bought, not sold," he told Business Insider in an interview. "They had a business model that couldn’t be replicated, even by Microsoft, and I take the same approach to investing, I want to invest in companies that are one of a kind."

Murphy served as chief of staff to Kurt DelBene, president of Microsoft Office, at the time of the Skype deal. He created presentation slides, speeches, and analyses to help get the deal signed off by the board and sat in on high-level meetings as part of the acquisition.

Satya NadellaDrew Angerer/Getty Images

Skype had an established customer base, good user experience, great software and a strong software team which made it an essential purchase for Microsoft — even at something of a premium. The same can be said of Spotify, according to Murphy, which went public last year having fundamentally changed the music industry.

The company was part of Northzone’s portfolio until 2018 and now serves as an example of a business model that refused to copy others to succeed. Everyone from Apple to Jay-Z’s Tidal has now tried to move into the streaming market as consumers move away from owning music.

That disruption and ambitious thinking is key for Murphy, who was formerly CEO and cofounder of games company Dots. "I came to invest in Europe to work with crazy ambitious founders who want to build companies that are going to lead globally," Murphy said. 

He says that his investment in Berlin-based electric scooter firm Tier is a good example of a business which takes the right kind of risk.

"These guys are one of those companies where you’re still taking a leap of faith, but they have everything they need to succeed," Murphy added. "Instead of trying to make just a few cities profitable, they are taking the riskier approach, competing with incumbents and beating them by focussing on unit economics and execution, aiming for a global leadership position."

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Source: Business Insider – cburroughs@businessinsider.com (Callum Burroughs)

Take an Official Look At Nike’s FIBA-Themed Air Jordan 12 “White/University Red”

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After teasing the new silhouette alongside Jordan Brand’s forthcoming FIBA-themed footwear collection, Nike has shared an official look at its Air Jordan 12 in “White/University Red.” The shoe undoubtedly celebrates the international hooping tournament, the 2019 FIBA Basketball World Cup, and its host country, which will take place from August 31 to September 15 in China.

The new iteration of the famed sneaker employs a white leather upper, with various gold and red accents that take note of the host country’s colors. Gold overlays mark both the lateral and medial sides, as well as the top lacing eyelets, with red hits found on the heel, as well as on various branding throughout. The red heel tab totes Chinese characters that reiterate various individuals’ love for the game.

You can check out the Air Jordan 12 “FIBA” via the gallery above. The shoes are slated to drop via SNKRS on August 23 at 10 a.m. for a retail price of $190 USD.

For more footwear drops, check out this slingback version of Nike’s Air Force 1.

Click here to view full gallery at HYPEBEAST

Source: HYPEBEAST – info@hypebeast.com (HYPEBEAST)

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