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AOL-Time Warner merger

How will it impact Indian consumers and companies?

THE AOL-Time Warner merger, though the largest in corporate history, is not important for its size. The real significance lies in the new direction that it has set for media organisations, media technology, and the way the consumer will interact with med ia services. And this time, it is likely that developments in India will almost mirror those in the West, for quite a few reasons. Advances in technology, as evidenced in the cellular and satellite television sectors, no longer take any time to be reflec ted in the Indian market.

Second, the sheer size of the Indian market (and this is not a repeat of the `vast Indian middle-class' story of the '90s) will compel media organisations to move rapidly to corner the market. While India's current Internet user base is estimated to be o nly around 2.5 million, there are an estimated 70 million Internet users forecast by 2003. India would then boast of one of the largest Internet user bases in the Asia-Pacific. This is coupled with a current figure of around 60 million television viewing households, a very significant (and rapidly growing) proportion of which is connected to satellite television through cable. So it is likely that the convergence developments in the West would have an immediate impact in India, at a pace much faster tha n normally expected.

What exactly would these changes mean to the much-talked-about Mrs. Sharma, the `typical Indian middle-class housewife in Lucknow'? Let's look at the Internet in India _ while posted to grow exponentially in the next three years, the real constraint has been the low penetration of home computers. Convergence implies that the TV takes on the entire gamut of Internet functionality _ at a low (probably subsidised) price.

This implies that a very high proportion of C&S households could get Internet enabled _ at a pace that would put the vaunted Internet explosion mentioned earlier to shame. The Internet would then become extremely accessible across demographic groups _ an d lose its current high-tech, elitist image. Quietly but very rapidly, the World Wide Web would join hands with television, and enter into millions of middle-class drawing rooms, settling down with apparently strange bedfellows like soaps and film-based programmes. Convergence could also imply that some of the current infrastructure problems such as telephone access and slow links could be bypassed if cable access is utilised.

Now how would this change the way Mrs. Sharma views television? While it is an important component of most Indian homes today, the television tomorrow could dominate the household. It would no longer be something that she watches passively on bored after noons, but could actually move her to active transactions with shopping sites just a click away.

E-commerce, today's buzzword that hasn't really touched too many consumers, could soon become part of her daily routine for articles ranging from soaps to vegetables. Moreover, she would be able to receive e-mail on her television, and use instant messag ing to communicate with her friends, either on their cell phones or on television. All this would result in a quantum shift in the use of information technology across society _ to a level that would otherwise have taken a few decades.

In the long run, this convergence would not just involve a combination of entertainment, information and related transactional activity, but expand to include the utility components of the household. Interactive television would be joined by handheld com puters and other Internet access devices as the new media interfaces. Eventually, this would lead to a central nervous system for a household, linking various components internally, in addition to controlling communications to and from the external world .

How does this affect marketers? Integrated communications would actually come into play in a big way, with brand messages funnelled into a potent mix of the sheer visual power of television, coupled with the instant interactivity of the Internet. This in teractivity would imply that most advertising would therefore move towards inciting direct response _ either to a Web site for more information, or directly to purchase. A direct result would be that the increased measurability of marketing messages as w ell as media options would increase the knowledge base of marketers, reducing the subjectivity involved.

So what are Indian media businesses likely to do in the light of these developments? Very soon, most media houses will attempt to expand their scope with a synergistic presence in both the `old' and the `new' areas.

Indian media organisations, currently present in either of the media businesses, will move rapidly towards taking advantage of the opportunities presented by convergent technologies. Almost all media corporates will soon be scouting for targets that woul d result in a fusion of television software, print content, movies, Internet portals, Internet access, cable networks, and telephony.

Some leading satellite television organisations have already expanded the scope of their business by exploring online opportunities, and the AOL-Time Warner merger would definitely accelerate these moves. Additionally, other corporates with a strong pres ence in Internet related areas, are likely to look at acquisitions in the traditional media content as well as cable network businesses.

(The author is Vice-President - Marketing, ITspace.com, a part of the Microland group. Feedback may be mailed to bleditor@thehindu.co.in)

Balu Nayar