The Strategy Analytics Emerging Markets Communications Strategies (EMCS) service report, “Mobile Value Added Services (MVAS) in India,” suggests that established Indian mobile operators risk losing some of the $1.2 billion in MVAS revenue predicted for 2012 if they continue to focus their efforts on gaining new subscribers, and fail to respond to the requirements of the MVAS market.
At present ringtones and caller ringback tones account for two thirds of the MVAS mix, but their growth is slowing. Building a healthy market for newer offerings like mobile TV, video on demand, music and games will require a thriving content development community, lower data tariffs, and extensive service marketing and user education.
“So far,” says Rahul Gupta, manager, for EMCS and principal author of the report, “mobile operators seem more focused on the race to gain new voice subscribers than they are on building a solid MVAS ecosystem. This may prove short-sighted.”
With operators retaining 60-80 per cent of end user MVAS spending, many content providers express reluctance to invest in new product development, and some are starting to investigate off-deck delivery. The pace of 3G deployment is expected to accelerate in 2009, and along with it the ability to deliver advanced services.
According to the report, MVAS in India are growing at a fast pace, with 20 per cent CAGR projected for consumer spending between 2007 and 2012. MVAS companies came into existence approximately seven years back and have gained significant importance in the telecom space.
Due to their differentiated service offerings MVAS companies have helped the mobile operators in attracting new subscribers. Currently, MVAS contribute about 10 per cent of the total revenues of India’s mobile telecom service providers.
The report notes that the growth in MVAS is primarily driven by declining data service tariff rates, availability of cheap handsets with innovative features and declining prices of VAS services. Service pricing will continue to be under downward pressure as new subscriber growth will increasingly have to come from lower-tier users in rural areas and secondary cities.
P2P SMS and ringtones are revenue generators for MVAS companies but in future, entertainment services such as mobile gaming, mobile radio, mobile Video and utility based services such as information on location, e-learning and mCommerce are likely to impact MVAS revenues.
“Mobile operators are depending on VAS to improve the state of ARPU (average revenue per user) in India which is declining due to the rise of low end subscribers. However, owing to high revenue share of operators, VAS companies intend to offer their services off deck,” the report noted.
The MVAS market has been highly fragmented, with limited restriction on entry of new players, but the market has started the first phase of consolidation, most recently with Bharti Telesoft’s acquisition of Jataayu Software.
Historically, MVAS has been a largely unregulated market. However, the Telecom Regulatory Authority of India (TRAI) has called for comment on the issue of bringing VAS companies under a licensing regime.
“Although MVAS usage continues to rise, there are certain barriers such as revenue split, limited awareness of VAS services, complex VAS applications, high content prices and localisation of content in all rural languages which are restricting the growth of MVAS in India,” the report highlighted.
9 months ago