Market Insight

Samsung pushes mobile content to grow business in India

September 26, 2014

Abel Nevarez Abel Nevarez Research Analyst II, Mobile & Telecoms, IHS Markit

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Samsung has launched its Club Samsung 2.0 digital content store in India. The re-launched digital portal, which initially launched in 2013 for the Galaxy Grand 2 smartphone, comes with new music, film, and live TV services aimed to entice India’s growing smartphone user base.

Club Samsung 2.0 will initially be offered on 14 devices on September 30, but will expand to 33 Samsung devices later. The new service will support content in Hindi, Punjabi, Bengali, Tamil, Telugu, Kannada, Malayalam, Marathi and Gujarati. The content store will also support offline content.

Our Analysis

Samsung is facing increased competition in emerging markets like India at the hands of Xiaomi and local OEMs such as Micromax, Karbonn and Spice. Samsung hopes to retain and lure new customers by providing digital content services that complement its hardware devices. Offline support is likely to be a key differentiator as Samsung also aims to reach users who have poor or no service connection throughout India. IHS research indicates mobile data traffic growth will measure over 180% for 2014, while annual 3G subscriptions will grow by 72% in India.

Samsung however has tried using content to differentiate itself before in mature markets with mixed results.  In recent months, it has streamlined its portfolio and closed several services to focus on partnerships. In mid-2014 Samsung shut down its Samsung Media, Video, and Music Hubs, only to later launch a Samsung Galaxy App store and new US-based Milk Music service as replacements.

Samsung’s big challenge is in being able to provide enough differentiation from existing services that are preinstalled on devices via Google Play. Offline support will be a key differentiator, but Samsung should also consider ways to provide bundled content where the cost is effectively hidden in the price of the device to add value for consumers.

Local content partnerships will also be crucial; a recent IHS study of the mobile apps markets in leading European, North American markets, India, Russia, and Brazil found that India was the country in which local content took the highest share of app downloads.

With so many launches, re-launches and shut downs Samsung risks making it difficult to differentiate itself from competing OEMs, especially at the content level.

Google’s recent Android One smartphone launch in India will also put added pressure on Samsung. With direct access to the Google Play app store, Android One handsets offer users the full Android experience without the need to go through Samsung’s own content stores.  As such, Samsung still needs to improve it content lineup to lure new customers.

Moreover, ensuring content can be paid for through operator billing is critical in a prepay dominated market such as India, where credit card penetration is low. Samsung already has partnerships with Vodafone and Aircel through its previous app store and will need to provide widespread support for its new version to see revenue success.

Samsung’s cover-all-bases strategy, although successful with it hardware units, may prove to be a lot more challenging with content services.

 

Geography
India
Organization
Samsung Electronics
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