In 2005, Indiagames came out with a mobile game for an all-time Bollywood blockbuster Sholay which was declared by BBC the “Film of the Millennium”. The game, like the film, was an instant success. Another Indian game developer released a game based on India’s first full-length animated feature film, Hanuman. The game also became very popular, clocking between 20,000 and 30,000 downloads a month. Since then, the SMS generation in India has been making its presence vigorously felt and the VAS industry has been on a roll.

The convergence of mobile and media can be seen in the rise in popularity of reality TV shows such as Indian Idol, which has afforded to the viewers an increasing amount of interaction with their televisions from their mobiles. It is now commonplace to see the TV stations holding SMS polls. Almost one out of 400 TV channels in India holds an SMS poll every hour.

The recent growth in wireless telephony shows that India has become a mobile-dominated telecom market. Mobile services have been the flywheel of telecom growth in India which is the fastest in the world. The number of mobile phones, as on February 28, 2009, was about 375 million. The figures are really mind-boggling.

"The Indian mobile market, which is recorded as the second-largest subscriber base in the world with 375 million subscribers for the year 2008, is witnessing growth at an alarming rate, so is the MVAS,” says Nitish Mittersain, CEO, Nazara Technologies Pvt. Ltd., a VAS provider.

What is of interest is that not all this growth is in voice. It is expected that, from the current 7–10 per cent, value-added services (VAS) could comprise more than 25 per cent of the Indian cellular revenues by 2010. “Currently, the operator revenue in India is 9 per cent, which may go up to 12 per cent in 2010," adds Nitish Mittersain.

“The potential of Mobile Value-Added-Service (VAS) in India is immense as mobile penetration is very high and growing exponentially,” says Shantanu Dash, CEO & MD, Mospay Infotech (India) Pvt. Ltd.

The telecom industry estimates that VAS generates around Rs.5,500 crore currently, with SMS making up the major chunk of the pie. Ringtones and music downloads, gaming, videos, wallpapers and caller-back ringtones are other VAS revenue earners, contributing around 10–14 per cent of an operators' revenue.
Vijay Mukhi, Chairman, IMC IT Committee, says, "Although in its evolving stage in India, MVAS is growing rapidly and expected to generate huge revenues in future. In India, the revenue from MVAS is expected to increase by $348.8 million in 2009.”

“The MVAS market in India is facing tremendous growth drivers such as the advent of 3G and penetration in rural India. Mobile VAS companies will have to focus on creating new opportunities for themselves." “Similarly, it will take a joint effort of all concerned to unlock the true potential of Mobile VAS in India and address significant roadblocks in order to make India the leader in mobile marketing and communications globally."

Value Added Services are increasingly becoming a growth area which help the operator to maximize revenue and grow his ARPU’S as well. And propelled by the need to bring in service differentiation, operators are bringing new value-added services in order to satisfy the growing demand of Indian consumers. The growth of this market sector has attracted wireless operators, handset manufacturers, content developers, gaming, WAP, wallpapers, SMS-based contests, etc.

Talking about mobile marketing, Mittersain said, “Mobile marketing comprises SMS campaigns, regeneration, contests, brand promotions, and others. Mobile marketing serves effectiveness by personalization and language freedom. It is targetable as segmentation of customers is possible and it is highly interactive. In India, it is at a nascent stage specially as compared to Internet marketing, but it is a growing market and India being mobile-centric, rather than Internet-centric, can expect faster growth.”

Vijay Mukhi said, “Although in its evolving stage in India, MVAS is growing rapidly and expected to generate huge revenues in future. In India, the revenue from MVAS is expected to increase by $348.8 million in 2009. The MVAS market in India is facing tremendous growth drivers such as the advent of 3G and penetration in rural India. Mobile VAS companies will have to focus on creating new opportunities for themselves. Similarly, it will take a joint effort of all concerned to unlock the true potential of Mobile VAS in India and address significant roadblocks in order to make India the leader in mobile marketing and communications globally.”

Elaborating on Mobile Commerce opportunities in India, Mukhi said, “With the mobile phone market having been accepted very well throughout the country and still blossoming even in the remotest parts of our land, we can expect a gratifying subscriber base to Mobile Commerce since it helps people get better control over their money. In India, though M-Commerce is at an early stage of growth. But keeping its usefulness, relevance and huge potential in mind, only sky seems to be the limit for its growth.”

Nanik Rupani, Chairman, Electronics & Telecommunications Committee, IMC, said, “Worldover, Mobile Communications sector is witnessing revolutionary technological advances. After 2G, 2.5G, GSM and CDMA, it is now 3G, which is expected to bring in sweeping changes the way people communicate. India is poised to usher in a massive growth in the global mobile arena. India currently has both GSM and CDMA technologies operating successfully and 3G technology is on the verge of being introduced in a big way. In order to leapfrog to a pre-eminent position in the mobile arena, it is necessary for India to adopt clear strategic approach.”

Good VAS solutions are necessary to sustain subscriber’s interest, while we expect SMS-driven applications (like voice SMS) and mobile commerce to set cash registers ringing.

Short messaging service (SMS) tends to rule the roost among all comers in the value-added services, accounting for majority of India’s VAS market. SMS is followed by ringtone downloads, games ranking third.

But, of late, there has been a surge in demand for more diversified content, including mobile chatting, exclusive ringtones and picture downloads, location-based services and MMS.

Mobile game is another segment in the Indian VAS market whose growth defies imagination. India is now being seen as a land of opportunities and entrepreneurial spirit. There are now scores of content providers riding the VAS wave in India.

Within the VAS value chain, operator’s share is decreasing and is projected to decrease further. As a result, dependency on the content companies will increase. At present, the operator’s share stands at 10–20 per cent in the most developed mobile market in the world. To differentiate their services from competitors, telecom firms are also increasingly entering into tie-ups with content providers. Last month saw at least three deals – Vodafone signed up with Amar Chitra Katha, Idea Cellular with Bharat Matrimony and Reliance Communications installed global major Flytxt’s marketing platform on its network. In India, there is a need for a more specific, targeted output. The local content is much in demand. “It would be wise for manufacturers and carriers to focus attention on handsets specifically designed for gaming and on the development of gaming content, particularly if it is custom-made for the Indian market,” says Senior Analyst Nick Holland at Pyramid Research.

With 3G services round the corner, telecos expect data to gain prominence over voice, and this again brings VAS companies to the fore.

There are an estimated 50 VAS firms in the country. One such VAS provider is MosPay. Founded by seasoned entrepreneurs with large and varied experience in technologies and markets globally, MosPay focusses on innovative Mobile based Software Products and Solutions.

“MosPay has end-to-end capabilities for mobile and Internet technologies for products. Strong management and technical team having vast professional experience. It has vast experience in platforms like J2ME, Symbian, BREW, Windows Mobile, Mobile Linux, etc. and works on MMI, systems / devices, etc. It has also strong experience in system testing of various mobile handset applications and platforms,” says Shantanu Dash.

“We have developed a mobile learning product to learn through mobile phones to cater to all the segments of learners. We cover topics like competitions, Exams, Sports, Stories, Health, Schools, Education Info, Education Finder, Cooking, Film-based info, IQ, know about anything, mind games and many more,” adds Shantanu.

Notwithstanding the slowdown in the economy, Mobile Value Added Services market will continue to proliferate. While the mobile VAS space is set to grow rapidly, all the stakeholders will have to work together and create a self-sustaining system to sustain this growth.