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. The SMS generation in India is making its presence felt and the VAS industry is 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 poll. Almost one out of 320 TV channels in the country holds an SMS poll every hour. Recently, a TV channel organized a singing competition in which the participant with the maximum number of SMSs was declared a winner and handed out a recording contract. SMS voting for the show named Indian Idol amounted to thousands of messages per day and it became one of the most popular shows in the country.
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 January 31, 2006, was about 83 million – over 63 per cent of the total phones.
The mobile subscriber base in the country crossed the 100-million mark in the month of May, according to latest estimates. With 100.6 mobile phone users as of May 2006, India is ranked fifth in the world in respect of the number of cellular subscribers. This has put the country in the league of China, US, Japan and Russia.
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. “In India, the mobile data services are estimated to be between 7 and 10 per cent of most operators’ revenues. By 2010, various reports estimate mobile data to be a $5-billion (Rs.20,000-crore) market in India,” says Ajay Vaishnavi, Vice-President & Head – Business Operations, Cellnext.
The global VAS market is projected to grow at a CAGR of 22 per cent during the 2005- 10 period from Euro 5 billion to Euro 36 billion. The market for mobile value-added services (VAS) in India has seen a stellar growth over the past few years. From just a trickle of SMSs in the not-so-distant past, the country’s more than 101 million subscribers are sending text messages at a frantic rate.
Vaishnavi expects the wireless VAS market in India to grow at a phenomenal rate. He estimates the total market revenue of mobile VAS to be around Rs.350–Rs.500 crore. “The mobile VAS in India is one of the fastest growing industries. Estimated to be growing at a rate of 40–50 per cent per annum, the market could easily be two–three times its current size by 2008,” he adds.
At the recently held VAS India 2006 Conference, Dilip Singh, CEO, Telenity, said value- added services were providing 10 per cent of the total revenues for telecom operators at present, but it is expected to be 20–30 per cent per annum in the near future. Globally, the mobile phone industry was already raking in $585 billion as revenues from value-added services. “Location services, messaging, entertainment and business productivity were the four areas in which VAS was making a huge difference to work and leisure,” said Singh.
But how fast the VAS market is growing is a matter of opinion. Arvind Rao, CEO, OnMobile, puts the VAS market in India at Rs.2,000–Rs.2,500 crore. “In the next three years, the market will continue to grow at 70 to 80 per cent a year. The market will grow to Rs.10,000 crore in the next five years,” says Rao. “Five years from now, it is very difficult to predict because there will be some new technology coming out which could substantially change the landscape. I do not have visbilitty for more than two to three years at the maximum,” he adds.
According to an estimate by Juniper Research, the global content market will be worth a gigantic $45 billion by 2009, games and gambling overtaking ringtones to claim the lion’s share, taking over 60 per cent. India is an information-hungry country and mobile phones have come as an additional opportunity to those who want to satisfy their appetite for information. Currently, VAS accounts for about 16 per cent of a mobile operator’s total revenues.
Short messaging service (SMS) tends to rule the roost among all comers in the value-added services, accounting for 80 per cent 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. According to the estimates by Nasscom, the Indian software industry body, and the US research firm InStat/MDR, India’s wireless-game market will generate annual revenues of $336 million by 2009.
According to a recent Pyramid Research survey of mobile phone users across the BRIC (Brazil, Russia, India and China) countries and the UK, India ranked as the top mobile game market.
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, with the vast majority offering traditional P2P SMS services.
Since its incorporation in 2000, OnMobile has become a major player in the mobile entertainment market in India supplying a wide range of products to over 110-million million mobile subscribers.
“In India, OnMobile has around 90–95 per cent of the market share in the voice-based Value-Added Services market,” says Rao. The company offers end-to-end, turnkey solutions including platforms, applications, content and professional services to deploy and operate high-margin, high-revenue Telecom VAS for telecom operators, media houses and content providers.
In 2003, Onmobile launched RingBack Tones that are now being used by over two million active users and integrated with Nokia, Siemens and Ericsson MSCs. Among the Voice Portal & WAP offerings of the company include Ring Tones, Music Jukebox, Sports, Jokes, Horoscopes (including Live astrologer), Contests, Radio FM-on-mobile, Musicards, Karaoke, Contests, etc. Videotones are also under development.
In the area of Corporate Value-Added Services, Onmobile offers Email, VAD, Corporate mobile portals, Vertical market solutions, Mobile m-advertising and promotions. 2005 saw the launch of M-Commerce services by the Bangalore-based company. Among the M-Commerce services ticketing, lead generation, liquidate inventory, direct marketing, bill payment, prepaid topup, post-paid bill payments are most notables.
In 2005, Onmobile launched Call Interactive Media Portal. “We are doing many television shows: such as ‘Kam Ya Jyada’, ‘Kaun banega Croropati’ and Sony Idol Super Singer. The mobile version of all these has been done by us,” says Rao.
This year, the company has launched voice SMS. All the company’s products are compatible with GSM, CDMA and landline. In fact, one of the companies has BSNl landline subscribers as a major chunk of its coustomers.
“We are going to roll out lots of new services. During the next two years, we would be launching all sorts of location-based services. Apart from these, some advanced video streaming and vide ringback tones are also in the pipeline,” adds Rao.
OnMobile has recently expanded overseas operations in Singapore (SingTel) and Australia (Optus). Other international projects initiated by the company are in an advanced stage of development.
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.
“Almost a third of the Indian mobile data users were restricted from mobile gaming for lack of sophisticated handset availability,” adds Nick Holland. In India, handsets do not satisfy the customers’ appetite for data capabilities. This is thanks to the reason that 94 per cent of mobile handsets in India operate on either GSM or CDMA standards that do not have much data capabilities. As the new handsets are entering the market, the mobile gaming market has all the potential of growing 700 per cent by 2010.
The findings of the Pyramid survey show that approximately a third of the mobile users in India play games on their cellphones and gamers are showing a growing preference for the local content.
A step in the direction of content localization was taken by Tata Indicom which recently launched a popular homegrown comic strip called Uncle Pai. The application was made available in both English and Hindi. Later, the strip was extended to other regional languages also.
Mauj Telecom, which recently received $10 million in venture funding from Westbridge, IntelCapital and Sequoia Capital, has jumped onto the games bandwagon using regional languages. The company is expecting to generate 40 per cent of its revenue from the games over the next couple of years.
“Mobile gaming has gained momentum in the last few years. One reason is that it’s always carried an innovative, creating a difference. Mobile phones fascinate the younger generation. Therefore, it has taken an edge in comparison to other gaming options,” says Vaishnavi of CellNext.
Cellnext Solutions is a leading operator in the mobile value-added services space. Having worked with major industry players, the company provides mobile services and solutions over SMS, IVR and GPRS to meet customer demands. Among its SMS-based Services are included Contests, Updates, Polls, Surveys, Content Services, Chain Messaging, m-banking, Multilingual messaging, SMS Alerts, InsuranceManager, GlobalManager, etc.
Its IVR-based Services include Tambola, Music Messaging, Movie-Tel, Hum-it ringtones, Song Contest, Voting, Cricket, Railway Info and Yellow Pages, while GPRS- based services comprise M-Newspaper, Mobile Locator, Picture downloads, JAVA- enabled content and games.
Vaishnavi says his company is in the process of expanding aggressively in the areas of and mobile gaming, location-based services and mCommerce.
“Cellnext is all set to provide innovative solutions over SMS/IVR/MMS/GPRS for complete infotainment and entertainment services with the use of more interactive applications to enable two-way interactivity with the customer for his involvement,” says Vaishnavi.
“In the area of voice-enabled services, we are actually the global leader. In fact, I do not think there is any country in the world that has as many rich applications based on voice services as in India. Many of the services we have launched in the voice-enabled services are second to none in the world,” says Rao.
Finally…
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.
“The fast-changing VAS industry in India is transforming itself once again. The content providing companies are looking at innovation as a strategy to achieve higher growth and revenues,” adds Vaishnavi.
As competition is constant in the telecom market, VAS will continue to be the best bet by which the carriers can set themselves apart.
