Ronnie05's Blog

MVAS: The next wave of growth (Part II)

Posted in Uncategorized by Manas Ganguly on March 30, 2012

Continued from my earlier post – MVAS: The next wave of growth (Part I)

A while back i had made a A-Z list of VAS services beyond the Astrology, Bollywood and Cricket favourites. Click here to read through the lists: Part I and Part II

What’s Hot
With the continuous erosion of voice revenues, the tendency of operators and vendors to explore alternate sources of revenue, is the main focus. With the trend moving from voice to non-voice, services like mobile TV, m-payment are picking up at a rapid pace. Apart from this, location based services, advertising solutions, personalized applications, and other services are also expected to rule the roost.
3G and enhanced smartphones penetration is only going to make it easier for content providers to reach out to a larger population with relevant content, specifically dedicated to users and making it directly available to them.

Challenges
There are many reasons that can be attributed for the lack of VAS take up in the country. One reason why the VAS industry in India has not done well is their complete dependency on an operator. The VAS players need to delink partially from the operator and start focusing on non-operator business in a big way-be it government, enterprise, and M2M applications.

The industry also calls for a policy framework for itself. A VAS policy framework can be understood as the underlying set of guidelines governing an industry, which serves to provide a vision and direction, taking into account the unique characteristics, needs, and impact of that industry.
For MVAS to have a far reaching and significant penetration, the ecosystem will need a robust supporting infrastructure of high-quality network infrastructure, coupled with adequate mobile phone penetration. Growth of mobile phones along with falling prices, coupled with entry of 3G is an encouraging trend. However low connectivity in rural areas (~23% penetration) and low penetration of smartphones continues to be a large constraint. An ecosystem which has an equivalent participation from all value chain players, and facilitates fair distribution of benefits ensuring the long-term growth and sustainability of the industry. Inequitable revenue share, lack of transparency between telcos and content providers, lack of innovation or lack of incentives for innovation, and ensuring relevance of application for the Indian populace are some of the major challenges for players.

Also, the consumers today are more from the prepaid segment, which comprises more than 50% subscribers whose prepaid balance is less than Rs.10. Therefore the segmentation needs to be done with which customers who do not have money to pay for VAS, wherein, brands will be paying for their advertising inserts.

Looking Ahead
The future of MVAS in India will be all about delivering the right stuff to the right person at the right time, based upon the right monetization model-be it fee based or ad-supported free offerings. In a vast and diverse market like India, this also means delivering VAS solutions in the right language and in the right format (audio, SMS, web, video).

Although there are a plenty of challenges that the utility MVAS space confronts today, however the opportunities are enormous too, given the increasing proliferation of mobile phones even in rural and remote areas and the rapid development of technology including the foray of 3G.
It is clear that the MVAS space is set to witness a high-growth trajectory, creating tremendous opportunities. However stakeholders across the value chain will have to work collaboratively to overcome barriers and create a business ecosystem that generates fair rewards for all the players.

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