Mobile VAS and the Indian Market

What is Mobile VAS ?

Services provided on mobile devices (beyond peer to peer communication) are making mobile phones as an integral part of life. Increasingly playing a role of –
  – an entertainer
  – an informer
  – a secretary
  – a guide
  – a companion
  – a retailer
  – a platform for promotion/advertisement

Typical Mobile VAS

1) Entertainment
    – Ring-tones
    – Color ring back tones
    - Wall-paper
    – Mobile games
    – TV related services (e.g., voting)
    – Music download
    – Video download
    – Horoscope
    – Jokes
    – Dating
    – Adult services
    – Mobile TV

2) Information
    – Mobile marketing/advertisement
    – Weather/News services
    - Directory services (Yellow pages)
    – Customer care
    – Exam results
    – Financial info (stock quotes)
    – Internet / Mobile email

3) Commerce
    – Mobile banking
    – Ticket booking
    – M-wallet / Micro payment
    - Shopping

Current Mobile VAS Status

- Content is the major share of  M-VAS revenue share (~60%)
- Most of the services are provided over SMS/Voice/WAP
- Most of the services are controlled by the operators – walled-garden approach
- Operators make the lion share (60-70%)
- Services are less appealing: slow – long user response time; lack rich intuitive UI
- Service configuration is painful or limited for most users

What sells, where and when ?

Contents
 - Ring-tones (Bollywood, Regional, Devotional) 
 - Games: Cricket, Racing, Bollywood (male targeted content)

Delhi, Rajasthan, Karnataka, Andhra Pradesh, Punjab and Maharastra are amongst the top circles M-VAS

Access/Download spikes at lunch time 1 – 3 pm, traveling back home 5 – 7 pm and after dinner 9 -12 am

M-VAS Trend

- M-VAS will move beyond SMS/Voice; Growth in M-Commerce, Mobile TV & Internet based services (GPRS/USSD based)
- Operators need to open their walled garden to allow 3rd party to host services (On I-mode platform: 2000 walled garden services & 50000 open garden services)
- Operators need to change/adapt their revenue sharing and business models to encourage newer and better content and service provisioning – more open mind set with regard to content & services ownership
- M-VAS will become a significant platform for advertisements which will drive down VAS prices and broaden adoption base
- Services will target specific market segment / verticals – Youth/Women/Traders/Adult (location / context based)
- Compelling and locally relevant content / services – highly adapted to mobile terminals and display/viewing capabilities
- More payment options e.g., subscriptions / pay-per-view / sachets / free-trails/preview
- More savvy  MVNOs to drive the adoption, branding

Will the Indian M-VAS market explode?

- Falling ARPU [Rs. 1299 (1999) to Rs. 374 (2005)] will push operators to accelerate M-VAS growth
- Customer willing to pay premium for value-add services (anywhere between Rs. 3-30)
- Mobile devices are set to become the platform of mass market communication bridging the digital divide between rural / urban India – creating more uniform demographic reach
- Lower prices due to advertisement/service sponsorship
- M-VAS revenue for Indian operator is between 7-10% of their total revenue (Europe: 10-20%, South Korea/Japan: 20-25%)

M-VAS: Accelerators
 
-Availability of cheap color / data capable phones
-Easy of use (less # of clicks & intuitive)
-Personalization
-Cheap GPRS
-Segment specific services
-Regional language support
-Advertisements / Sponsorships

M-VAS: Inhibitors

- Poor discovery mechanism
- Limited # of attractive services
- Small display screen
- Low recall of Keyword / Codes
- Plethora of non-standard handsets / platform
- M-commerce limited by credit card penetration / prepaid balance / regulation Slow learning curve
- Difficult service configuration procedure

Growth and Pricing – Chicken or Egg issue

- Will there be mass adoption when prices drop?
- ROI vs. seeding time for non entertainment app is high
- Till there are enough subscribers, does it make sense to invest in innovative services & network (3G) and subscribers will not ask for it if there isn’t enough on offer (both quality & quantity)
- Is creation and growth of killer M-VAS dependent on device/network capabilities? Can such be created for existing?

Source: This presentation was made by Dipak Jaiswal at Mobile Monday, Bangalore