It wasn’t too long ago that I was sulking away at home looking for work. Among the limited options that I had, a very generous man offered me a chance to join a small team operating in the virtual private network (VPN) industry. Well, it’s safe to say, everything else is history now.
In my experience of over 4 years in the VPN industry, I have seen numerous changes that have taken the industry by storm. Among them were very disruptive forces that changed the landscape of operations, but also propelled the industry to new heights.
The VPN market is currently worth US$20 billion and future projections suggest that it will grow to almost US$36 billion by 2022 . This makes it a highly profitable niche for entrepreneurs and venture capitalists, especially if you are in Asia.
According to Internet World Stats, Asia has the largest number of Internet users—2062 million . They make up 49% of the overall Internet population worldwide. Therefore, it’s the right time for anyone looking to head into the VPN industry.
Why are VPNs so Popular in Asia?
When you compare which country has the most VPN usage in the Asia Pacific, Indonesia and India lead the race by 38%, followed by China, Malaysia, Vietnam, and the Philippines. What are the reasons for this increasing use? .
Well, the Internet is a scary place, full of cyber threats. You are just a click away from inflicting a world of pain and exposing your privacy. Similarly, numerous worldwide incidents involving hacking, data loss, and malware attacks don’t make it any better.
And to top it off, there are certain restrictive government regulations that don’t allow users to access different websites and web services.
Bypassing Internet Censorship and Geo-Blocking
Let’s take the case of Indonesia. The country has strict censorship policies and blocks some of the most popular websites, including the likes of YouTube and MySpace. Likewise, it blocked more than 70,000 websites containing negative content, such as pornography or extremist ideologies .
Another region that has a scrupulous reputation in terms of being non-Internet friendly is China. Known for its Great Firewall, the country has one of the most powerful content filtration systems in the world .
You will not find popular social media services, such as Facebook, WhatsApp, Instagram, and Snapchat, in China. Likewise, Google services, such as Gmail or YouTube, also don’t exist in China. Even the search engine is no longer available in the region after the government blocked it in 2010.
If you see this theme of constant censorship, blocking of web services and unavailability of content for digital users, there is an opportunity for entrepreneurs to target. By offering VPNs as a solution to these problems, they can kick-start their own business.
Note: The author and EC-Council do not suggest or endorse the circumvention of laws of sovereign nations. Before using VPN tools to access blocked sites, consult local legal guidance.
Covering Digital Footprints on Public Wi-Fi Hotspots
Now if you’re one of those who works online or meet clients at public places while using free Wi-Fi hotspots then having a VPN in your arsenal is a must. Wi-Fi hotspots are easily available at any local coffee shop, restaurant, hotel, Internet cafes, and airports, and they attract cybercriminals of all sorts.
A few years ago, a group of hackers (later to be called Darkhotel hackers) targeted business executives visiting luxury hotels in Asia . As soon as any executive would logon to the hotel’s Wi-Fi, they would be prompted to download a software or an update. The hackers would then infect the devices through a specifically designed malware (keylogger) that looked for data, such as username and passwords for Google, Facebook, Twitter, and Yahoo accounts.
While downloading the malware falls on the due diligence of an individual, but you can disrupt the data being sent back to the attackers by encrypting it using a VPN. It will at least prevent them from reading the plain text of web communications.
Therefore, you can see the privacy threats of public Wi-Fi networks. A VPN can provide some relief through SSL encryption and routing your data through a secure network.
Intriguing Challenges Posing Entrepreneurs
As you can see from the increased use of VPN in Asia, the industry is as inviting as the Infinity Stones in the Marvel Universe. Whoever can get their hands on them can command an infinite amount of power.
However, just as in the comics, there are formidable foes that need to be defeated before you can get to wield that much power. Let’s take a look at some of the Thanos(s) of the industry…
High Advertising Costs
In the VPN industry, one of the biggest hurdles new entrants will face is of high advertising costs. Over the years, the VPN industry underwent numerous changes and among them was moving from a simple commission-based structure to cost-per-action (CPA) model . Under the CPA model, advertisers get paid when a user performs a specific action. It could be from signing up, subscribing to a service, filling out a questionnaire, or just entering an email.
This shift has driven the CPA costs to new heights, making it extremely difficult for new players to survive in the industry. To give you an idea of how high the costs are, I averaged the CPA costs from January 2016 to June 2018. The result showed a 20 times increase, raising the costs from US$2.00 to US$40.00 .
Low Brand Power of New Brands
The second challenge new VPN services is facing is the competition against existing brands. This might sound like a marketing cliche, but in the VPN industry, you really need to stand out from the crowd to grab attention.
Previously, there wasn’t much focus on branding as services used to provide more or less similar features. However, this has changed with time.
Many new services fail because they have a low lifetime value (LTV). Some of the reasons that contribute toward low LTV because of low brand power and the availability of cheaper alternatives. Both of these factors affect VPN services that don’t work on branding.
How to Overcome these Challenges?
The challenges might seem daunting but they are not impossible to overcome. If you are planning to enter the industry, do your homework. Since the industry has high advertising costs, you should balance your approach between paid vs organic.
As for competing against powerful brands, bide your time. Many VPN services have worked hard on branding; you could do the same. Another way to go against them is by going out all guns blazing and introducing a feature that no one has unveiled in the industry.
Wrap Up: Is the VPN Industry Worth it?
To end things, the VPN industry is a highly profitable niche and that data supports it. The industry is moving towards being worth US$36 billion in a few years time, which presents an excellent opportunity for young entrepreneurs.
Likewise, the increasing popularity of VPN usage in Asia shows a promising sign. With a vibrant target market, demand for tools to preserve one’s privacy and security will continue to increase with time. Therefore, entering the VPN industry is worth it!
About the Author
Aazim Akhtar is a Senior Editor at https://www.vpnranks.com. He loves to write about the Internet freedom and the latest happening in the online world, and guides users to preserve their privacy. When he is not tapping away at the keyboard, he is busy binging shows or playing soccer.