India to dominate RCS messaging market by 2029, affecting tech, telecom, and communication industries.
Source and citation: The Economic Times, Oct 14, 2024.
TLDR For This Article:
India is projected to become the largest market for Rich Communication Services (RCS) messaging by 2029, generating $544 million in revenue. The country will surpass the combined markets of Europe, Middle East, and Africa. With 254 million users by 2029, India’s role in the messaging space will significantly grow, supported by iOS and Android adoption.
Analysis of this news for a layman:
RCS, short for Rich Communication Services, is like SMS 2.0. It allows users to send interactive messages, pictures, and videos, similar to how apps like WhatsApp work, but directly through the phone’s default messaging app. By 2029, India is expected to be the biggest player in this field, contributing a whopping $544 million. What’s driving this growth? Both Android (by Google) and iOS (by Apple) now support RCS, meaning a huge user base is going to start using it more frequently.
This rise in RCS means fewer people will rely solely on apps like WhatsApp or Telegram, instead opting for the more integrated RCS, which is available without downloading any additional apps. The increasing smartphone penetration and mobile data usage in India fuel this growth. Companies that rely on mass communication for customer engagement, such as e-commerce, banking, or travel, may shift their marketing strategies to use RCS over traditional SMS.
Impact on Retail Investors:
- Telecom Companies: Airtel, Jio, and Vodafone Idea could see a boost as demand for RCS grows, particularly with increased data usage.
- Tech Companies: Companies offering communication platforms, like Tanla Platforms or Route Mobile, which specialise in cloud-based messaging services, could benefit as they pivot more toward RCS solutions.
- App-based messaging services: Platforms like WhatsApp might see competition from RCS, potentially affecting their user base in India, though it might take longer to see any tangible effect on their market share.
- Investment Opportunity: As RCS picks up steam, stock prices of companies involved in communication technology, mobile infrastructure, and data transmission may experience growth. Retail investors could look into companies like Route Mobile or Tanla Platforms, which are poised to benefit from this shift.
Impact on Industries:
- Telecommunication: Telecom giants like Bharti Airtel, Reliance Jio, and Vodafone Idea may be among the biggest beneficiaries as the demand for data services spikes with RCS adoption.
- Advertising and Marketing: As RCS allows more interactive content, industries dependent on consumer engagement like FMCG, retail, and e-commerce could shift a significant portion of their marketing budget to leverage RCS. Companies that use bulk messaging services will see this as an opportunity to connect with users in a richer, more dynamic way.
- Tech Providers: Communication technology providers like Tanla Platforms, Info Edge, and Route Mobile will likely gain from businesses integrating RCS into customer service platforms.
Long Term Benefits & Negatives:
Benefits:
- Boost for telecoms and tech companies: As the user base grows, companies in telecom and communication technology will likely see long-term revenue increases.
- Digital transformation: This shift from SMS to RCS will push more companies to adopt digital strategies, benefiting industries from banking to retail.
- Consumer convenience: With RCS, users get an integrated messaging experience on their default app, eliminating the need for multiple messaging apps.
Negatives:
- Challenges for app-based services: Messaging apps like WhatsApp or Telegram could lose user base if RCS becomes the default.
- Privacy concerns: RCS operates similarly to messaging apps, raising potential concerns over data security and privacy.
Short Term Benefits & Negatives:
Benefits:
- Market excitement: Companies associated with RCS could see short-term stock price increases as the market anticipates growth.
- Advertising potential: Immediate shifts in how companies approach consumer engagement might bring more dynamic content to users quickly.
Negatives:
- Adoption speed: In the short term, the challenge may lie in how quickly users and businesses adapt to RCS, given that many are comfortable with existing messaging platforms.
- Technical implementation: Integrating RCS across all devices and platforms might face initial hiccups, slowing down the full realisation of its potential.
Analysis of RCS Messaging Market Growth and Impact on Indian and Global Companies
Indian Companies to Gain from RCS Messaging Growth
- Reliance Jio: As a major telecom operator in India, Jio is likely to benefit significantly from the growth of RCS messaging. They can monetize RCS services through premium features, partnerships, and advertising.
- Bharti Airtel: Similar to Jio, Airtel’s vast user base and network infrastructure position it well to capitalise on the RCS opportunity. They can offer value-added RCS services and potentially attract new subscribers.
- Vodafone Idea: Despite facing challenges, Vodafone Idea can still benefit from RCS growth, especially if they can improve their network and service quality. They can leverage RCS to enhance customer experience and increase ARPU.
- Tech Mahindra: As a leading IT services company, Tech Mahindra can provide RCS solutions to telecom operators and enterprises, driving revenue growth. Their expertise in digital transformation can help clients implement and manage RCS effectively.
- Infosys: Similar to Tech Mahindra, Infosys can capitalise on the RCS market by offering consulting, implementation, and maintenance services. Their strong global presence and domain knowledge can attract clients from various industries.
Indian Companies to Lose from RCS Messaging Growth
- Traditional SMS Gateway Providers: Companies that primarily rely on SMS gateways may face declining revenue as RCS becomes more popular. They will need to adapt their business models or explore new opportunities to stay competitive.
- Small-Scale Messaging Companies: Smaller players in the messaging market may struggle to compete with larger operators and technology providers. They may need to partner with others or focus on niche markets to survive.
Global Companies to Gain from RCS Messaging Growth
- Google: As the primary driver of RCS, Google stands to benefit significantly from its widespread adoption. They can monetize RCS through advertising, data analytics, and partnerships with businesses.
- Apple: With the recent introduction of RCS support for iOS, Apple can enter the growing RCS market and offer a seamless messaging experience to its users. They can integrate RCS into their ecosystem and potentially generate new revenue streams.
- Infobip: As a global communications platform provider, Infobip is well-positioned to capitalise on the RCS opportunity. They can offer RCS solutions to businesses and telecom operators, driving growth and profitability.
- Twilio: Similar to Infobip, Twilio can benefit from the increasing demand for RCS. They can provide RCS APIs and messaging services to developers and enterprises.
- Sinch: As a leading cloud communications provider, Sinch can leverage its expertise to offer RCS solutions and expand its market reach. They can partner with telecom operators and businesses to drive RCS adoption.
Global Companies to Lose from RCS Messaging Growth
- Traditional SMS Providers: Companies that primarily rely on SMS may face declining revenue as RCS becomes more popular. They will need to adapt their business models or explore new opportunities to stay competitive.
- Legacy Messaging Platforms: Older messaging platforms that do not support RCS may become less relevant and lose market share. They will need to invest in upgrading their technology or risk obsolescence.
Note: The impact of RCS messaging growth on companies may vary depending on their specific business models, market strategies, and ability to adapt to changing technologies. It is essential to conduct a more in-depth analysis to assess the potential implications for individual companies.