Sandeep Ladda , Partner , Global TMT Tax Leader , India Technology & eCommerce Sector Leader, PWC
Examples of new taxation and high end litigation across the globe are becoming a common phenomenon.
Digital shift is way past the tipping point, and now the amalgam of players in the technology, media, and telecommunication sectors (TMT) is crafting new landscapes.
According to a survey by Netflix, 73 percent of people watch 2–6 episodes of the same TV show in one sitting. This is drastically changing the manner in which – an otherwise television content – is consumed.
Technology is causing the shift and shaping the narrative of the TMT businesses in this digitally borderless world. In PwC's 2017 Global CEO survey, 54 percent of TMT CEOs said that technology has completely reshaped their industries in the last 20 years (compared with 27 percent of the cross-industry average), and 47 percent of TMT CEOs said that technology has completely reshaped their industries in the last five years (compared with only 20 percent of the cross-industry average). This evolution does not seem to slow down anytime soon. While CEOs from all industries agree that technology will significantly impact competition in the next five years, 43 percent of TMT CEOs (compared with 23 percent of all CEOs) stated that technology will again completely reshape future competition in their sectors.
It is undisputed that we are in the era of connected commerce. Also, the various multi screens and the technology that connects these multi screens will continue to evolve, the universe of distribution channels and platforms will also continue to expand and evolve; however, the one constant in this ever evolving commerce is the consumer and his changing needs and preferences. Companies with profound insight into their consumer behaviors could possibly make a case for growing market share.
Overall, unearthing value amidst the TMT convergence and its consequential disruptions, lies in the ability of the TMT companies to adapt to and weave together the continuously evolving technologies and deliver personalized, comfortable, and a holistic consumer experience.
With convergence dictating the game, in order to stay relevant, it is not enough for a TMT player to be just a telco operator or a broadcaster or an app company or a content distributor! Collaborations through acquisitions, partnerships and JVs, x-TMT sector, and x-territory, could be a strong enabler in building the capability portfolio and delivering enhanced consumer experience.
Another case in point is that of HOOQ – the digital content service provider – with presence in Philippines, India, and Thailand. It is a classic studio–telecom partnership between Sony Pictures Television (with all-embracing collection of movies and TV programs), Warner Bros. (with world class content library), and The Singtel Group (with a sturdy base of mobile subscribers).
There are several global and local examples of collaboration Netflix–Vodafone, Time Warner–AT&T, LionsGate–Alibaba, Apple–Eros, etc.
Furthermore, the trends indicate that growth will be fed primarily from the emerging markets of Latin America, Asia, Russia, and the Middle East. India, in particular, will certainly be one of the key markets for more than one reason, global affinity toward Indian content, the rising number of young tech savvy millennials with the ability and interest to spend (in addition to the ever rising smart phone population), and the foreseeable better infrastructure with the successful 4G rollout.
With the above 3 Cs (convergence, collaboration, and cross-border deals), governments across the globe, and so also in India, are faced with the challenge of taxing and regulating these TMT companies in the borderless digital world. Examples of new taxation and high end litigation across the globe are becoming a common phenomenon. With opportunities galore, challenges are not few, and only those companies will thrive who have the ability to take risks, are nimble footed, and stick well to the 3Cs discussed above.