Mobile advertising to get a leg up with mobile VAS growth

With mobile phones increasingly morphing into all-round connectivity on the move devices, demand for mobile value added services (MVAS) is going up as well. MVAS already forms a large percentage of a carrier’s revenues. How can the market potential be fully explored? Industry experts share their views with exchange4media on the challenges and opportunities.

e4m by Robin Thomas
Published: Jul 6, 2009 8:23 AM  | 7 min read
Mobile advertising to get a leg up with mobile VAS growth

According to a report titled ‘India Internet Statistics Compendium 2009’ by, one of India’s leading online publisher of Internet industry reports, India’s total mobile subscriber base at the end of April 2009 was 403.66 million. The report pegged the total market revenue of mobile value added services (VAS) at $1.6 billion as on March 2009.

As per the report, revenue from the VAS segment is growing at the rate of 40-50 per cent annually, and currently the VAS market has been growing at over 10 per cent of the total revenue of mobile telecom service providers.

“In India, wireless operators, music and film companies, cartoon artists, game makers and musicians are all aggressively entering the mobile content market for ring tones, gaming, mobile imagery and streaming audio and video,” the report added.

With so much at stake, what challenges and opportunities do industry experts see on the road ahead for MVAS growth in India? exchange4media finds out.

Neville Taraporewalla, CEO & Online Media Director (APAC) Publicitas Digital Pvt Ltd, explained, “As the mobile device becomes a permanent feature of an individual, there will be a continuous increase in the use of various value added services. MVAS is already a large percentage of a carrier’s revenues, and with increased bandwidth and better technologies, usage is bound to increase.”

Manoj Dawane, CEO, People Infocom (Mauj Mobile), observed, “I see a resurrection of mobile advertising, although we had a good traction last year. There will be an increased focus on the MVAS side for video and application, and rural MVAS is another huge opportunity. From the industry perspective, today MVAS is on a very good platform, a little bit of self regulation that has come in is great. It is currently around Rs 5,700 crore and expected to grow to around Rs 16,000 crore in three years.”

From the operators’ perspective

According to Pradeep Shrivastava, CMO, Idea Cellular, “The current focus of telephony operators are geographical operation to villages, tariff plans to allow mobile to be affordable for lower income groups in urban markets, so both expansion of rural and lower income group in urban market essentially creates new entrance to telephony category, who initially look at making and receiving voice call and in select few cases even sending and SMS. The focus and story of mobile telephony has been number of subscribers, and this focus is likely to continue for some more years because there are a lot of unchartered, under-penetrated single digit penetration markets in rural India, which is a great opportunity to go mobile.”

He further said, “Some VAS have been well received, for instance, services which are not literacy and English language dependent such as music on mobile, are fairly a strong area. More than 50 per cent of ITR revenue earned by the music industry today comes from mobile, while the remaining comes from radio, television and everything else together, therefore, mobile has become very important in music and music is, in turn, very important in mobile VAS.”

The challenges

Taraporewalla noted, “I think network congestion, loss of data packets, revenue shares between carriers and content creators are all challenges that will get addressed as the market evolves. We have seen rapid growth in the past few years, so these challenges will get addressed.”

According to Dawane, “Currently, there are too many players, and as a result it becomes difficult for the overall ecosystem to manage the industry. Therefore, a little bit of consolidation is necessary, which has begun, for instance, Altruist and Mobile2Win coming together. We can also see operators taking some interest in an MVAS company directly, so consolidation is where you will see MVAS getting into. Revenue shares from operators continues to be a challenge all for the right reasons, but there could be a little bit of relent either from the content owners’ side or the operators’ side in the next one or two years.”

Mobile2Win Co-Founder Rajiv Hiranandani pointed out, “The challenge I believe lies in consumer adaptation of MVAS, which will happen to a large extent only if the consumers are educated on the use of MVAS. Revenue share, content, more new products and services must be delivered for people to download more and more services and content. There is need to educate the consumers better on how to download content, otherwise adoption will be very slow.”

Idea Cellular’s Shrivastava said, “Localisation of content is a big challenge, it is a long term opportunity and it will be tough. At a very basic level, we need to have a high quality of networks. Secondly, there is a need for distribution and service infrastructure, and even if you have a high quality of GPRS infrastructure, it does not mean that a rural subscriber will understand how to subscribe and unsubscribe, so there are challenges related to how the consumers would like to use MVAS. Therefore, a lot of education of the consumer needs to be done.”

Kunal Ahooja, Director and CEO, Spice Mobile, noted, “As of today, we are seeing big brands focusing on services and content, which act as differentiation. We see the trend shifting to content in MVAS more from the device perspective than from operator’s perspective as there is a limit to adding features on phone. With the rollout of 3G in India, accessibility will be more on a wider basis and this is one of the challenges that can be sorted out.”

Trends to watch out for

Taraporewalla of Publicitas Digital said, “I see a bunch of services being offered via the mobile device. Buying tickets, local search, booking of airline tickets, mobile advertising, news and financial services, micro payments for usage of services and facilities – all of these are possibilities. The key here will be how the carriers work this out with the relevant content service providers. Pricing of these services via the mobile is going to play an important role. Gratification will be a key as customers use these services. If it’s a positive experience, there will be repeat users and you will see an explosion with increased usage. It will need to be simple and cheap for it to fire.”

Dawane of Mauj Mobile said, “Bollywood and cricket are soon losing ground and others are picking up, there are other categories of non-music VAS consumptions like fashion, devotional, etc. Therefore, the overall dominance of Astrology, Bollywood and cricket is getting softened and other sectors like regional, especially South Indian, devotional and fashion are soon catching up.”

Hiranandani of Mobile2Win opined, “I believe rural India will be important for the growth of mobile VAS, and the moment this part of India adapts to MVAS content, it will result in huge growth opportunities.”

The 3G factor

Dawane explained, “Although 3G India is very crucial for MVAS, the Indian base is going to remain non-3G. In fact, 3G can be used for corporate or government VAS. I believe that at a consumer level, the requirement to have 3G is limited to a particular segment, but it won’t be something like an SMS, which will have a high penetration or usage. So, 3G will be a good bearer as it will help us differentiate services and help us getting all the video services back to the consumer, but it will not be a mass VAS ever.”

Hiranandani felt, “3G India rollout will be very crucial for the growth of MVAS. This would lead to an increase in speed in content download and will be a huge opportunity in terms of revenue generation for mobile TV too.”

Taraporewalla too felt that 3G would play a big role. “The experience is more wholesome and rewarding. 3G in Europe is an awesome experience with a whole host of features all available for the customer on a mobile handheld device,” he added.

While mobile VAS may be on a growth spree and 3G rollout will only give a boost to this growth, nevertheless industry experts believe that consumers being educated on MVAS would lead to the real big growth in the mobile industry. Astrology, Bollywood and cricket have long been the growth drivers of MVAS, however, some believe this dominance is softening and new entrants like devotional, fashion and regional content are catching up fast.

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