Growth of mobile revenue
The Mobile industry in India is young and evolving, and its landscape is changing. The typical value chain in the MVAS industry incorporates content creators, providers, aggregators, technology enablers, and operators. Present trends lean towards traditional VAS as driving revenue, with growth taking place in low ARPU sections. Device-related challenges are declining, thereby aiding movement towards handsets able to support advanced VAS. The key focus remains on the continued development of traditional VAS and the movement of advanced services from niche to mainstream, developing as the national user base matures in size. Cricket and Bollywood remain the top pan-India popular content. In the future, India is expected to replicate the revenue sharing model of developed MVAS markets such as China, Japan, and Europe.
Mobile revenue in the industry evolves with the initiatives and business models employed. At the most basic level, mobile revenues for traditional VAS such as SMS as well as ringtones, screensavers and downloads, are skewed in favour of the operator, with content not proving to be a differentiator. Moving up the value chain to WAP, the revenue is driven by advertising, and in this sphere, critical mass is yet to be reached. Finally, at the top lies Mobile-specific content and Mobile TV. Here, rich media content becomes the differentiator, operating on a subscriber model.
Looking at MVAS revenue in India, the market is expected to grow at 70% for the next two years and by June 2010, the VAS market is expected to stand at Rs. 16,520 crore. MVAS currently contributes around 9% of an operator’s revenue, which is expected to increase to 10.4% in the next year and to 12% by June 2010. Currently, operators retain the largest chunk of revenues, followed by content aggregators, and then content creators.
The NDTV play
The consumption habits of mobile users in India are constantly evolving. There is a desire for immediacy of news and mobile technologies have created additional touch points for the user to view NDTV content. Through triple play, NDTV provides a synergy of content: TV, Web and Mobile. The core of this synergy is in providing exclusive, premium NDTV content on mobile screens, such as through NDTV Active, a full service mobile portal. In addition to this, there is syndication of premium video content with telcos/aggregators, whereby content is populated by NDTV across all operator decks. NDTV has also undertaken a mobile 2.0 initiative, MiSMS. It is the first of its kind in India, with the purpose of making traditional SMS users more comfortable with WAP.
WAP based mobile revenues are experiencing explosive growth with rising mobile penetration and GPRS usage. Currently, WAP is being monetised through advertising which is the only source of revenue; higher click-throughs are driven by targeted niche campaigns, for example the Kingfisher campaign, which saw a CTR of 1.26%. As the mobile sector evolves, video advertising with pre-roll/post-roll and a larger portfolio of video offerings will help in harnessing rich media content, cutting across genres.
The challenges in the mobile arena are multiple. In terms of revenue, lack of payment mechanisms increase reliance on telcos, and revenue share is skewed in their favour. Advertising therefore presents a viable way of generating a new revenue stream for VAS players. This development is however currently in its nascent stage given the unfamiliarity of advertisers with mobile as a medium.
User awareness of VAS is in need of development, as operators spend more on subscriber acquisition than on educating customers. This will be addressed by the growth in the low end user base through the traditional VAS market. Awareness through marketing is critical for the growth of advanced VAS services.
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