India is home to the world’s second-largest internet user base, with 780 million users, and is expected to surpass 1 billion users by 2030, according to a recent report by Redseer Strategy Consultants.

The growth of the internet and smartphone adoption in India has been driven by cheaper data costs and affordable smartphones. Indian internet users can be divided into three categories: explorers, transactors, and mature users.

The report suggests that a large number of internet users in India are currently in the early phase of their digital lives, exploring digital services such as social media, gaming, and streaming.

“India has ~350 Mn online transactors across e-commerce, shopping, travel and hospitality, and OTT. We estimate there are 40-45 Mn mature users; these are the users who spend a considerable share of their wallet online (more than 50%). We expect online transactors to become 2X by 2030, with mature users being the faster-growing cohort. We also estimate that these mature users would account for $400 bn online spending by 2030,” says Mukesh Kumar, Engagement Manager, Redseer Strategy Consultants.

The majority of online service users come from Tier 2+ cities

Tier-2 and beyond – this is where most of the action is. Most internet users come from product commerce, OTT video platforms, short form, gaming, and OTT audio platforms. Most of the users across e-tailing and gaming come from tier 2+ cities. There is a new trend in content consumption where the time spent on user-generated content is 2X of platform-generated content.

But who serves these tier 2+ digital users? “Leading global apps are more targeted to metro and tier-1 users (mostly English-speaking users); this is where new-age domestic players have emerged and are solving for the needs of smaller cities. Social commerce, for example, has built trust amongst small city users with its reseller model. They have also been a platform where users shop online for the first time. On the other hand, vernacular and regional content focused platforms have been able to serve the needs of Tier-2+ users in their digital content consumption. As a result, we have seen leading app focusing on Tier-2+ users see maximum growth in users over the last 1-2 years,” adds Mukesh.

Growth in UPI payments

With the increasing digital India push and explosive growth of UPI transactions, internet users are becoming comfortable paying online on digital platforms. As comfort with paying online increases and customers evolve in their journey, we expect this to drive growth in transacting users, where users will shift their offline wallet spending to online.

Gaming is one of the fastest-growing markets

Growth in UPI payments and the comfort of paying online have led to ~110 million paid online gamers in India, second only to e-commerce. Gaming is adding ~2 Mn paid users per month. Every second internet user is a gamer in India, and every 3rd transacting user in India is a paid gamer. Gaming has almost 450 Mn users in 2022, and the market will see a 33% rise in paid gamers by 2026. These users come from across India and pay for real money games like Rummy, Poker or make in-app purchases on casual/core games.

Digital media plays a key role in customer decision-making criteria

For the first time, the number of eyeballs reached by digital platforms is expected to surpass traditional media by 2025. Digital ads account for ~53% of the total ads spent in India in 2022. Online shoppers have started to depend on digital channels such as social media, e-commerce marketplaces or general online searches for decision-making. Therefore, brands and retailers can’t ignore digital media channels in their advertisements and brand campaigns.

https://government.economictimes.indiatimes.com/news/technology/india-set-to-surpass-1-billion-internet-users-400-bn-online-spending-by-2030-report/96239734