Future of Mobile VAS in India: Rural IVR is the next opportunity
Stanford University and BDA, through a combination of interviews of executives in leading VAS firms, secondary research and analysis of prevailing trends has released it’s research report on “Future of Mobile VAS in India“.
Here are key excerpts:
Subscriber base:
- Population: 1.112 billion
- Fixed Subs : 39.41 million (Oct 2007)
- Mobile Subs : 217.14 million (Oct 2007)
- Internet Subs : 9.22 million (Jun 2007)
- Broadband Subs :2.67 million (Sept 2007)
Of the mobile subscribers:
- Prepaid connection comprise 85% of total subscriber base (expected to increase to 90%); and over 95% of new additions.
- By the end of 2010, the mobile teledensity will be almost 44% with 497 mn subscribers (driven by semi-urban and rural areas)
VAS in India:Past, Present and Future
- VAS constitutes 7% of of total telecom revenue for Indian operators.
- SMS consituted 55% of VAS revenue in 2006 [P2P/A2P/P2A, A = Application, P=Person), the growth was majorly driven by reality shows like Indian Idol/Kelloggs/KBC etc.
- Digital music (including CRBT and ringtones) constitutes 35% of VAS revenue.
- CAGR of 44% (2007 – 2010), VAS revenues will reach USD 2,744 mn (926mn $ by 2007): This is dependent on several factors like regulatory (e.g. number portability) and non-regulatory factors.
- Growth acceleration will begin in 2009, as various challenges are overcome, size of mature user base increases, and telco focus on high end user VAS heightens
- Bollywood and Cricket is the killer content - though no significant investment has gone beyond developing local apps or even content/services.
- Revenue share between telcos & content providers / aggregators is 70:30, substantially more skewed in favor of telco than in other countries - further aggravated by lack of payment mechanisms.
- SMS/IVR/Music downloads/Internet Apps/Search will see an upsurge; limited growth of UGC and mCommerce
- Almost half of Indians use ULCH (Ultra Low Cost Handsets)
Entities in VAS Value chain
- Content/Application Owner - cos. like saregama/mauj/Rajshri who develop coyrighted content
- Aggregator - aggregates content like games/wallpapers/ringtones and distributes it to suit customer needs [players : mauj, hungama mobile, indiatimes mobile etc]
- software developer – develops applications (like payment/games/middleware etc.) for mobile VAS [players - mchek/July systems/webaroo/affle etc]
- Technology Enabler – provides the platform that plugs into telco networks and acts like a bridge between aggregator and telcos [players include OnMobile, cellnext. mauj etc]
Operators still dominate the revenue sharing arrangement in VAS [Of the amount paid by end users, 60-70% is kept by operator, aggregator gets 20-25% and content app/owner gets 10-15% of the revenue]
Challenges:
- Lack of content localization
- Shortage of spectrum
- Slow adoption of GPRS mobiles (only 6.1 mn GPRS users compared to 200 mn overall subs)
Future VAS trends:
- Location Based Services
- Mobile Music update will increase with better bandwidth
- Migration to 3G will result in increased ARPU
- Local content is on the rise – regional/rural IVR seen as a major opportunity (see our earlier coverage of Ubona)
- Mobile commerce doesn not look too promising (India is still a cash and cheque country)
- IVR will see large scale adoption, especially in rural areas.
- Mobile E-Mail will primarily be driven by enterprises
- Stocks on mobile will see an uptake
The current state of VAS can be candidly summed in one sentence “Novelty of VAS on mobile is short-lived and innovation is the key to success which means technology companies like will have to increase their investments into R&D”
What’s your take?
About the author - Ashish Sinha is a Startup Mentor/Product Strategy Coach, and the founder/chief editor of pluGGd.in.
He has launched/managed couple of products (consumer as well as enterprise) in US and India, and now consults with startups/small businesses on their product/media strategy. He can be reached at: ashish (at) pluGGd.in [+91 98452 06443]
[...] They should explore going beyond the wap enabled mobile users. How about sending a classified ad thru’ SMS (50% of India still uses ultra low cost handsets)? [...]
not Bad…………………….
[...] connection comprise 85% of total subscriber base [via Future of Mobile VAS in India [...]
The operator boom in numbers will determine the market situations as currently operators are very dominating in terms of acceptance from third parties & revenue share
[...] GPRS remains costlier, MyDuniya gets past the Internet connectivity challenge and enables users to send email, files etc [...]
[...] If you look at the mobile VAS industry, rural services stand to constitute the major pie of VAS in the coming years [read this report on Mobile VAS in India] [...]
[...] India, 50% of mobile users are still on ULCH (i.e. ultra low cost handsets) and a service like stands a a good chance of [...]
nice article ashish– detailed analysis, shame that i went through it this late!
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[...] opportunities for mScriber are huge – right from tying up with telco operators for Rural VAS (Rural IVR is the next big bet for Indian telecom operators) to local search providers, to any damn service that wants to tap into voice, mashup with their [...]
[...] (read this detailed report on future of Mobile VAS in India) and BoP market is where the real money [...]
[...] recognition engines will drive the growth of IVR/VAS in India and even though many mobile techies will argue that this technology is no big deal – open source [...]
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[...] PM on Wed Feb 4 2009, 10435 views … Wilson Rothman | Email. Senior Associate Editor: … Future of Mobile VAS in India- market research report |Technology …VAS in India:Past, Present and Future * VAS constitutes 7% of of total … Mobile E-Mail will [...]
more data on mobile commerce..
data on high end users
technology constraints for payment through mobile ,is der ny provision for payment thru their mobile bills and not credit cards
Enterux Solutions Pvt. Ltd. along with IL&FS Education & Technology Services Ltd. launches English Seekho with Tata Indicom, which will boost the entire < Rs. 4000 cell phone users to adopt the Spoken English skills in a more Indian (Instructions Lead) style of learning.
This opens a clearly new space in the IVR based content delivery in a unique fashion.