Mobile Value Added Services

In the early years telecom revolution piggybacked on booming Indian economy, increased disposable income, proliferation of mobile devices, and reduction in call rates. The scenario has changed; Indian mobile users are very comfortable in using their phones and want to exercise option other than the basic voice applications. Today, the mobile phone has become a truly personal device and Mobile Value Added Services (MVAS) has become an extension of persona. Currently Mobile Value Added Services accounts for 10-12 percent of the operator’s revenue. Industry research on MVAS suggest that, in the next 10 years it will contribute around 60 percent of the telecom operator’s revenue. They believe innovative mobile content and applications are the only way to keep a subscriber glued to particular services. In India, the revenue from MVAS is expected to increase to USD 348.8 M in 2009, at a compound annual growth rate of more than 50 percent. The prominent players of the industry are ACL Wireless, Active Media, Air2Web, AOL Mobile, Cellebrum, Cellnext, Hungama Mobile, IMIMobile, Indiatimes Mobile, Jataayu, Mauj, Mobile365, One97, OnMobile, Phoneytunes, Roamware.

MVAS in India has grown from the early days of SMS to host of other services including wallpapers downloads, ring tones, caller ring back tones, SMS contests, and games. For better understanding of the MVAS, it can be divided into basic and advanced services.

Basic MVAS includes SMS and Mobile music. Growth of SMS traffic is a direct result of high voice traffic with SMS as it is priced substantially below call tariffs. This has led to extensive use of SMS based services by the operators, especially the reality shows. Indian Film Industry, electoral campaign, and Sports sponsors. The other prominent basic MVAS is Mobile music. It comprises ring tones, caller ring-back tones, and music clips.
Advanced MVAS include mobile TV/video, full-motion videos, wireless teleconferencing, multi-player online games, and m-commerce. These services typically require high bandwidth and a superior level of support technology. The introduction of 3G will help operatrs enhance features of SMS based IM’s, Stock Alerts, Chat Applications, Examination results, Movie Ticketing.

VALUE CHAIN
There are multiple stakeholders playing across the MVAS value chain many with overlapping roles and functions. A well demarcated value chain of MVAS is yet to evolve. The main stakeholders involved in the vas value chain are:

Content owners: At the first level of the MVAS value chain are the content owners, which develop original copyright content. There are different forms of content providers. First in the list is the original copyright content developer like music production houses – Tseries, BIG Music, SaReGaMa, Sony; bollywood production houses – Adlabs, Yash Raj and other media houses – Star, NDTV, Zee, and TV18. There are other set of players who are customized content creators for the mobile value added services. They are the companies who generate customized content for users through their own portals like Mauj, One 97, and Hungama Mobile.

Mobile operators: They provide transport and support mechanisms for delivery of mobile content. Most operators are now trying to innovate their Value Added Services offerings and create sharper differentiation for their offerings. Most of the basic content available to the end users revolves ringtones of popular bollywood songs, wallpapers of movie, and games developed around movie themes.

Technology enablers: They provide technology platforms that enable access to MVAS. They are content portals or content aggregators. These are organizations that gather web content and distribute content to suit customer needs like hungama Mobile, Indiatimes , OnMobile, Bharti Telesoft, Webaroo, etc.

Handset manufacturers: Mobile handset manufacturers also play an important role by including embedding software links in their handsets, allowing direct access to content portals, creating services customized to the need of certain regions, etc

BARRIERS TO GROWTH OF MVAS IN INDIA
In India, the VAS industry is still don’t have a proper process or common benchmark. Furthermore, the revenue sharing is a major issue. It stems from the fact that the operators charge low revenue from the end user leading to lower revenue share with MVAS. The industry has attracted many players, leading to the competition which is driving down the revenue share. Few other challenges are to show the customer value beyond mobile entertainment, establish MVAS standards, copyright protection initiatives. The challenges that need the immediate attention of key stakeholders are:

Copyright protection: In India, the regulatory framework for copyright protection continues to remain weak despite the extension of existing copyright laws to content. The MVAS industry requires a stringent regulatory framework in place, to encourage the flow of branded content to consumers. The protected MVAS content will lead to increased revenues from data services, stop customer churn and motivate MVAS provider to investment in innovative.

Low feature handsets: In India, the mobile subscriber base is growing, a large chunk of the market is opting for basic low feature handsets in spite of the fact that handset prices are coming down. According to the India Mobile Handset Usage Satisfaction Study 2006, an integrated digital camera, FM Radio, and speaker phone features remain the most likely upgrade drivers. The poor penetration of feature-rich mobile handsets is a barrier to the growth of MVAS in India.

Transparency in revenue sharing arrangements: In Indian market the biggest area of concern is the skewed revenue sharing models where the content providers have to share revenue with content aggregator and service provider. The Indian MVAS industry needs to take a close look at best practices in developed markets like China, Japan, and other European nations to design a fair revenue distribution system. There is a need to create a transparent framework with a fair system of payouts to different stakeholders across the value chain.

Focus on youth and entertainment: The MVAS market in India continues to be focused on entertainment – movies, music and sports which cater to the needs of the younger consumer segment. There is a need to focus on information VAS and transactional VAS (M-commerce), which will ensure uniform growth among all consumer segments. MVAS should create applications for niche segments, which will create real value for the subscribers.

Absence of utility services: The cost of Entertainment VAS, which has a high perceived value, is high but over a period of time as customers get used to it, the willingness to pay high amounts may come down and then MVAS will have to shift focus from Entertainment VAS to other utility services. These are the services which have a high practical value. They services mainly fall in the category of mCommerce and to some extent Infotainment. The future belongs to services providing value to the customer exploiting the mobility factor.

Lack of Infrastructure: There are a lot of services which cannot be introduced in India because of lack of supporting infrastructure. The major roadblock in providing quality content to the end user has been the availability of bandwidth. Most of the applications are not able to provide the optimum user experience due to bandwidth issue, which makes streaming and downloading practically impossible.

THE FUTURE OF MVAS IN INDIA
In years to come MVAS will see a lot of structural changes, consolidation and emergence of cutting edge services. At present biggest pie of the MVAS revenue goes to the mobile operators but in years to come they will lose prominence in the value chain. The market for Content Aggregators will consolidate and with their better bargaining power, this will ensure a revenue shift from Operators to Aggregators in the value chain. In MVAS content there will be shift from entertainment MVAS to interactive MVAS. However mobile gaming will continue to grow and will contribute a higher share to the VAS pie. The other big change is emergence of regional content. The regional content is giving a significant boost to the content market especially in the entertainment category. With all these changes the MVAS industry is about to mature.