India is the second largest mobile market in the world after China. Also it is poised for tremendous growth in the mobile content market better known as VAS. In the present scenario its revenue stands at about Rs. 4 billion and growing, and is expected to cross approximately Rs. 50 billion by 2010. Globally, mobile VAS will account for 25 to 30 percent of the total value of what operators generate.
However, the VAS community is under constant threat and scrutiny. Even its burgeoning status does not give it the position it demands. There have been lots of discussions about the challenges faced by the community. Let’s discuss a few of them. To begin with the first problem faced by the developers is less payout. They give ample content to the service provider but the revenue sharing model is currently skewed towards the operator. While developers are providing operators a wide array of mobile content, extended periods to get compensated and at the same time biased revenue sharing puts a dampener on their efforts.
Another challenge is that operators do not value VAS as a common man service and the premium charged has a disconnect with return on investment, thus very few opt for it. Analysts feel that the basic reason for this is acceptability. Indians always favour a secure environment and are not great risk takers. Thus till now there have been gret talks for VAS services, even applications have been developed but have not been rolled out for the sheer risk factor involved with it. Even if a good solution is aimed for VAS, distribution is the real problem as the domain is occupied and closed by OEM and the operator.
Will the situation change? It certainly seems a proposition if VAS grows at an unexpected momentum. We just hope it does. The recent 5th MoMo event organised by Perot Systems actually makes me wish that VAS grows leaps and bounds within the next few years. The kind of applications showcased at the event were so breath taking that made me wish I was a developer myself.
There is one strong argument that stands in favour of VAS, and this point kinda sums up why service providers are turning to content developers for products, are decreasing ARPU’s (average revenue per user), which is forcing them to lay emphasis on these services and seeing developers laughing their way to the bank. The ARPU’s in India are amongst the lowest in the world, and the only hope for an increase in these numbers would be to provide the consumer a wide range of VAS i.e, ringtones, wallpapers, m-comics, mooks (mobile books), games, movies, videos, etc.
Adding to the same Ajay Jain, director, telecom and mobility practice, Perot Systems says,“As the average revenue per user decreases from voice drops, and voice becomes commoditized, Telcos are increasingly looking at data as an additional revenue stream. The end users have also embraced VAS and it contributes a major part of the revenue. Thus Mobile VAS has become an important element in the growth of mobile telephony in India. “
Also it is a known fact that the usage and consumption of VAS is limited to the urban market, but with subscription levels approaching their saturation point, rural and semi-urban markets will probably offer tremendous growth for the VAS industry. Well, an increase in VAS spending would serve to arrest the rapidly declining ARPU being currently faced.
So, can we expect the situation to change? With the growth in consumption power, interests and applications of VAS services the demand for the same is increasing. Also now developers are catching the nerve of the people, as in understanding their needs and developing applications to fulfill those needs. However, the only hindrance is getting acclaim and pay out for it, out of the claws of OEM and operators. And the actual figure will surface when OEM and operators co-operate and give VAS as VAS rather than PIS( Price intensive services).
Till then all we can do is wait and hope that the new year rings in the happy chords for the VAS developers.
By: Anakin
