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Entertainment drives the VAS scene

Mobile value added services are entering a high growth trajectory. Vinita Gupta focuses on the opportunities that exist for players in this field

India’s Mobile Value Added Services (M-VAS) market is the second largest in the world in terms of the subscriber base. This industry segment is growing at an exciting pace and India is among the top three countries (after the US and China) when it comes to mobile and Internet VAS.

According to IMRB International, on the supply side, falling ARPUs (Average Revenue per User) are fuelling the growth of M-VAS. On the demand side, the rising penetration of low-priced feature-rich handsets is driving this market.

Deepak Halan, Group Business Director, eTech Group- IMRB International, revealed that a number of organizations, which have nothing to do with telecom (for e.g. a candle manufacturer in Delhi, an auto components manufacturer in Udaipur), are eyeing the M-VAS market today.

Wide-ranging applications

VAS was earlier restricted purely to SMS, and this service continues to account for a large chunk of M-VAS. However, the concept of VAS has broadened to include audio, video, text, images and applications. You can club a wide variety of services under the VAS umbrella. These go beyond ‘plain old voice’ including content (music, video, information), commerce (m-banking, m-payments, m-remittances, m-advertising) and community related services (chat, messaging, polls).

Movies are a continuous source of fascination for most Indians. Short films shot on the mobile phone are catching on with the public. Sandeep Marwah is the Director of Asian Academy of Film & Television. His Festival of Cellphone Cinema attracted about 90 entries from aspiring filmmakers. Content creators are creating innovative offerings such as the Akbar Birbal Remixed show for the mobile and Web produced by Rajshri Media.

“The biggest growth driver for M-VAS in our country is entertainment: films, television, music and cricket. Entertainment drives VAS more than anything else does. Other genres include devotional and local language content. The mobile phone is truly emerging as the most personal and powerful entertainment touch point for an on-the-go audience,” said Rajjat A Barjatya, Managing Director, Rajshri Media.

Halan mentioned that several innovative services are pouring into the market, such as AdRBT (Ad Ring Back tone) wherein each time a person calls he hears an ad instead of a ring tone. Then you have healthcare chains tying up with service providers to use SMS for alerting patients about appointments or to take their medicine.

“There is a need to continuously innovative or create additional features in an existing VAS as some services fail while others pick up,” said Pankaj Jain, President & COO, Webdunia.

He pointed out that SMS and subscription-based VAS (monthly services for news, astrology, Bollywood previews, etc.) are quite popular. Indian users do not make much use of m-commerce, but it has started picking up and users are slowly starting to feel that it is easier and more comfortable to buy movie, air tickets, etc., through their mobile phones.

The success or failure of any particular VAS depends on quality content, ease of use and reasonable pricing. Krishna Durbha, Head of Business and Marketing-VAS, Reliance Communication, said, “The penetration of caller tunes and Interactive Voice Recognition (IVR) is high. In the case of an IVR system, users need to only dial a number and they can access information, news, jokes, etc. Reliance Mobile World has more than 1.02 crore users. We even create our own content such as wallpaper. We have some good services in the m-commerce area, but are waiting for RBI guidelines,” stated Durbha.

Good returns

SMS or text messaging continues to dominate, followed by ring tones and caller ring back tones. Unstructured Supplementary Service Data (USSD) is an attractive technology for rapidly developing markets, as the majority of the population falls into the low-income bracket and does not yet belong to the mobile subscriber base.

Voice is a commodity leaving service providers with the thankless task of somehow making up for the loss of voice revenue by selling VAS. It is the only way out to retain customers, develop alternative revenue streams, and create a basis for differentiation in a high churn market. Voice-based services require greater efforts from the operators, but they also generate additional revenues vis-à-vis text-based services.

Ambar Sur, CMO, Bharti Telesoft, pointed that revenue from the VAS segment is growing at 40-45% year-on-year. Service providers can supplement this with interactive SMS that converts static SMS into a dynamic tool that interacts live with users and allows them to access the services of their choice. “Bharti Telesoft aims to raise its revenues to $200 million within three years. This will be achieved by working closely with existing customers to build a suite of value-added offerings, as well as penetrating further into existing markets and entering new geographies,” asserted Sur.

Growth barriers

India’s large and rapidly growing mobile population already consumes a wide array of content on the mobile, primarily in the form of ring tones, ring back tones, image-based applications, games and audio content through a service provider’s voice portal. This consumption is set to rise dramatically with the advent of 3G, which will offer the consumer faster data speeds and greater bandwidth. The growth and use of higher quality, rich media handsets with superior multimedia features, battery life, form factor, etc., will also spur consumption of content on the mobile.

“India is currently a 2.5G country,” pointed out Barjatya. With the advent of 3G technology, richer services will be viable and service providers will make it available to end users. Moreover, with the rising proliferation of rich media handsets, consumers will have access to a host of rich media applications, all of which will become an integral part of their daily lives. Therefore, ‘network evolution’ and ‘device evolution’ are both required to make all of this a reality.

“As content creators and owners, it is our responsibility to create and/or repurpose compelling content for the mobile platform. Creating awareness and excitement around the mobile entertainment ecosystem is also of paramount importance and this is best done in partnership with the mobile carrier,” added Barjatya.

Sur felt that M-VAS in India will require operators to reach out to all segments of the population and that significant growth would be coming from low-income segments. For this reason, interactive voice and menu-driven application access is essential.

Focus on rural markets

The expansion of mobile services to rural areas will be a significant driver for the VAS market as the reach of mobile services to these hitherto untapped areas will bring more consumers under the ambit of M-VAS. The rural consumer will then start to utilize basic services for communication and subsequently upgrade to using VAS for his livelihood and entertainment. Rural areas are likely to use voice-based services for entertainment and income generation, accessing commodity prices, weather, stock market updates, etc.

Halan from IMRB said that since the urban market is largely saturated, the next wave of telecom growth has to come from semi urban and rural areas. Several service providers are chalking out plans for the rural market. M-commerce has considerable potential in rural India. As stated by TRAI in its consultation paper (mobile)-payment will be a great convenience, particularly in rural and remote areas where there is easy accessibility of mobile phone services, but banks are not easily accessible. The RBI has taken a step in this direction.

“As the penetration of M-VAS grows in rural India, the necessity and importance of IVR systems will rise. Rural users will be more comfortable with an interactive voice platform in the local language as opposed to punching numbers to exercise their options,” stated Sur.

Durbha revealed that “rural” does not equate to poor; consumers in the hinterland are brand conscious and require access to high quality content just as much as their urban counterparts require. He added, “Every year we at Reliance Communication conduct contests in the rural areas such as ‘VAS in rural’ and through this invite ideas from different people and take them to the rural consumer. We work with partners and create local content, for instance, whether the local bank is open or not, when the Panchayat meeting is being held, etc. as such news is more relevant to them than national news.”

Jain said, “More regional content is required to boost entertainment and rural VAS and we at Webdunia develop and transfer content in Indian languages. We cover all 11 languages and our content is device complimentary which means that it can be accessed by any device.”

The future of M-VAS in India is among the brightest in the world, given India’s huge mobile population, which is growing at the rate of 8-10 million new users a month. India’s ‘insatiable appetite for entertainment’ on all platforms further fuels this, as does an improvement in the telecom bandwidth with the advent of 3G and the increased proliferation of rich media handsets.

vinita.gupta@expressindia.com