India’s Internet Explosion: A Manifestation of Network Effects
India is a country with over 1.35 billion people – that’s more than Europe and the United States together. Thus, when something becomes popular in India – especially something with positive network effects- it quickly gains a lot of traction and spreads like This is what happened in 2016 in what is sometimes referred to as the “Jio Effect.”
The Jio Effect, named after Indian telecom company Reliance Jio Infocomm, refers to the massive uptake in Internet usage out of India over the past few years. It started in September 2016, when India’s richest man and owner of Reliance Jio Mukesh Ambani launched a promotional offer to the Indian public which offered everyone free data for 6 months and affordable rates in the months following. This rocked India’s mobile market, causing data prices in India tank due to the market’s competitive nature. Thanks to the newfound abundance of cheap smartphones imported from China, hundreds of millions of Indians now had access to the Internet for the first time. It is a great example of how the adoption of technology can spread rapidly in a dense cluster like urban India. As a result of the widespread adoption of smartphones, Indian Internet companies benefitted massively from the network effects of having more smartphone owners nearby. Two such examples I will discuss in greater depth are the messaging app WhatsApp and the Bollywood record label T-Series.
Indian billionaire Mukesh Ambani, Jio’s largest shareholder, at a press conference
I’m sure everyone reading this is already familiar with WhatsApp. What you may not be familiar with is just how dominant WhatsApp has become in India. According to TechCrunch, WhatsApp has more than 400 million active monthly users in India (Manish Singh). Those are gargantuan numbers- to put it into perspective, the whole of the United States has less than 400 million people. WhatsApp is not a new app however – it had been used in India for years prior to the launch of Jio. Consequently, when millions of Indians all bought new smartphones, what better way to message friends than to use the app their friends were already using? “What could be better than free group chats and video calls with your friends? Besides, everyone else is doing it.” This mentality led to a massive cascade of WhatsApp downloads in the months and years following Jio’s launch. To this day, WhatsApp remains a giant in the tech world, with a market value of over $1.5 Billion and no end to its dominance in sight.
Another great example of instant internet stardom out of India is the YouTube channel T-series. T-Series is an Indian music record label founded in 1983. Recently, T-Series has become analogous with the Indian Bollywood craze, with the T-Series YouTube channel seeing exceptional growth. Yet again, note that T-Series was an established company that existed well before the so-called Jio Effect, and the T-Series YouTube channel had already amassed billions of views on YouTube before September 2016. As a result, when millions of Jio subscribers launched YouTube for the first time, they were recommended T-Series videos. T-Series immediately saw a skyrocket in subscribers and views. The positive trend is evident in the graph below, which shows the observed growth in T-Series’ channel views over the past few years. Knowing all this, it is no wonder why T-Series is now the most subscribed channel on all of YouTube with over 160 million subscribers and counting!
In conclusion, the positive network effects associated with an influx of new Internet users in what was known as the Jio Effect propelled a select few companies and individuals to elite status. Companies such as WhatsApp and T-Series saw their value boom, while Indian celebrities like cricket player Virat Kohli were also able to capitalize on the public’s fascination and amass massive followings through clever marketing and investments. India’s massive population of 1.3 billion people represents a largely untapped market, and you can be sure to expect Indian-based startups to explode in popularity on the global Internet in the same way WhatsApp and T-Series.
Sources:
1. https://blog.telegeography.com/the-jio-effect-how-the-newcomer-made-an-impact-in-india
2. https://techcrunch.com/2019/07/26/whatsapp-india-users-400-million/