Brief

MVAS Predictions

Revenue sharing in the value added services space

The Mobile Value Added Services (Mobile VAS or MVAS) industry could be worth nearly a billion dollars (Rs 4,560 crores) by end 2007, from its current size of Rs. 2,850 crores says a report from the Internet and Mobile Association of India (IAMAI). The “Mobile Value Added Services Report” has been jointly prepared by the IAMAI and IMRB International.

The report reveals that of the market size of Rs 2,850 crores, person to person (P2P) SMS or Text Messaging, continues to dominate the industry with Rs. 1,140 crores. This is followed by ringtones, including caller ring back tones (CRBT) at Rs 1,026 crores; Person to Application (P2A) and Application to Person (A2P) at Rs 428 crores; games and data at Rs 171 crores and others (MMS etc) at Rs 86 crores.

The P2P SMS revenue goes solely to the telecom operators. The remaining MVAS revenues are distributed among content owners, developers and the telecom operators on a revenue sharing basis.

The report suggests that the revenue sharing arrangement is heavily weighted in favour of telecom operators. This model is significantly different from developed markets such as China where typically the operators are entitled to 20 to 30 percent. In the case of enterprise solution services the revenue sharing arrangement between operator and short code owner is typically 70 percent and 30 percent respectively.

Commenting on the study Dr Subho Ray, President, IAMAI said “We are hopeful that the government and industry will look at the MVAS industry with the attention that it deserves.” He also added that for the market to grow and come out with innovative solutions three issues must be set right at the outset. Firstly, the revenue sharing and scheduling of payments, which is currently heavily in favour of telecom operators, needs to be agreed upon. Secondly, the government needs to put stable and long term policies in place. Lastly, intra industry issues such as intellectual property rights needs to be sorted out. Without these, the industry will not be able to sustain growth.”

The eTechnology Group at IMRB (specialist technology research unit of IMRB International) & IAMAI interviewed key stakeholders in the Mobile VAS space for their perspective. The respondents comprised representatives of a cross section of telecom companies, content aggregators, platform enablers, short code owners and industry experts. They also analysed data from industry associations such as Cellular Operator Association of India (COAI) and Association of Basic Telephone Operators (ABTO) and other published reports and used several independent methods to arrive at the industry size and growth estimate for 2007.