The homegrown Web 2.0 industry in the Asia-Pacific region, excluding Japan (APEJ), is projected to boom as it takes advantage of a huge regional population of 900 million consumers under the age of 16, says IT research agency IDC.

Speaking to BizIT, Sandra Ng, IDC's Asia-Pacific VP for Digital Marketplace research practice, said the 900 million account for approximately a third of the region's population. It is this young group which is reckoned to be the present and future trendsetters in the use of Web 2.0 and social networking tools.

In contrast, this age group is under 20 per cent in mature economies such as the US, UK and Germany.

More than 80 per cent of APEJ's consumers are from India and China, she added.

Web 2.O is not a specific technology or a set of technologies. Rather it refers to a paradigm shift that is happening on the Internet which is dramatically changing the online experience of users. User-generated content, instead of content provided exclusively by a service provider, is the big difference in Web 2.0.

Sites such as online encylopedia Wikipedia, and user-created video sharing portal YouTube, are prime examples of Web 2.0 online content. Second Life, a virtual world within the Internet, is also a good example of a Web 2.0 site.

In terms of users, IDC estimates that a third of all (unique) Internet users in 2007 are Web 2.0 users in India, with the proportion being 83 per cent in Korea and 70 per cent in China, and this indicates that Internet users are quickly going beyond just emailing, chatting and Web surfing.

Interestingly, for the purposes of this study, IDC did not include Singapore, Australia, New Zealand and Hong Kong in the APEJ region.

Explaining, Ms Ng said that the focus of the research was on homegrown Asian companies competing in the Web 2.0 space.

"If you look at the English-dominant countries like Singapore, Australia, New Zealand and even HK, they tend to use basically the global Web 2.0 websites like Second Life, YouTube and other such websites and therefore we did not cover these countries."

She added that only markets that include a flourishing and homegrown Web 2.0 industry like Korea, India, China and emerging Asean nations, which is all the countries in the region except Singapore, are included in APEJ for the purposes of the study.

Ms Ng noted that looking at trends in Singapore, "it's very similar to global trends with increasingly more and more consumers going for blogging and social networking".

The IDC analyst added that the digital marketplace will flourish in APEJ not only because of the sheer size of the population but also growing consumer influence. She cited the rise of new money and the push by governments to create a vibrant IT/Internet-savvy population in many parts of the region including the rural areas and villages.

"The region's entrepreneurial spirit and aspiration combined with the strong need for localisation will lead to homegrown versions of global Web 2.0 powerhouses," Ms Ng said.

IDC estimates that the total ICT (Infocomm Technology) spending from the service provider community of this sector will range from 0.05 per cent to 0.2 per cent of the total ICT spending within most countries.

"While this proportion and the revenue generated by these providers are small, IDC believes that monetisation of business models will take off in the next 2-3 years," she noted.

With the entry of new Web 2.0 providers in these markets, the local economies will attract new venture capital, angel investors and other investments.

"Given the extensive localised nature of the consumer space in many parts of the region, the entry of homegrown Web 2.0 companies and their extensive activities collectively will generate a lot of momentum, interest, demand and excitement."

Ms Ng noted that this market place as well as market opportunity affects not only the providers and their consumers and customers, but also the regulatory authorities.

"The government bodies responsible for content, education and economic development often keep a close watch, in some cases discouraging certain activities (content and education) and in other times, encouraging efforts with incentives (education and economic development)," she said. Most governments, in general, encourage the flurry of investments and activities in this space as it creates a vibrant ICT industry that supports a IT/Internet savvy population.

The analyst noted that while not every sector or provider has figured out ways to monetise their services, the collective opportunity is growing in the region.

"Advertising and subscription are the most common business models today and these are expected to grow aggressively."

She added that premium charges, at times on top of subscriptions, are a high margin model, although identifying and marketing commercial services that are extremely well received is never easy.

"This model however is generally well received among small and medium-sized business (SMB) users. Transaction charges typically on top of the commission or revenue sharing model is another popular business model as more online transactions are made and linked to Web 2.0 services," she added.

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