The IAMAI-IMRB Mobile VAS Report


IAMAI and IMRB have released a report on Mobile Value Added Services in India. For the report, they referred to secondary data from industry associations and published reports, and also interviewed representatives of Telcos, Content Aggregators, Platform Enablers, Short Code Owners and industry experts. The findings:
– Mobile VAS in India at Rs.2850crore. Ringtones and Ringback Tones at Rs.1026 crore, Games and Data at Rs.171 crore, (edit: ) P2P SMS at Rs.1140 crore, P2A & A2P at Rs.428 crores, and others at Rs.86 crore. VAS is expected to grow at 60% to touch Rs.4560 at end 2007
– Revenue share for content (apart from P2P SMS): Telcos (60%), Aggregator/Developer (25%), Copyright Owner (15%).
– ARPUs and declined rapidly, and prepaid is around 80% of the market. Churn is high, and the need for additional services to prevent churn, as well as increase revenue streams will lead to an increase in VAS.
– Entertainment content and SMS contests are driving growth in VAS
They’ve also analysed the consumer demand and the value chain. There’s a fairly comprehensive list of challenges facing the VAS industry: Focus limited to youth and entertainment, piracy of content, lack of infrastructure, preference for low feature handsets, high cost to end user, transparency in revenue sharing, underdeveloped WAP market and spam.
They also believe that content aggregators will grow in promience over telcos, and the revenue share will shift in favour of the aggregators in the value chain. Regional content will drive growth and GPRS will pick up.

I don’t think it will be easy for the telcos to give up revenue share – they own the pipeline, and a lot of money is expected to be pumped into infrastructure (and spectrum) for 3G. The operators will expect their pound of flesh. At the same time, returns from 3G services will depend on VAS and not voice.

Download the “Mobile Value Added Services in India” report here (pdf).




The fact is that it is a big industry with even bigger potential.

As Nikhil says its in the VAS that the future lies and not in the Voice. The operators know it but unfortunately cannot do anything about it. The top management at most organisations dont know how. Those at operators that do are either too junior or buried in organisational design and therefore either reporting to marketing (like Idea) or crushed under the inefficiency of Commercial (like Airtel), huge structures with too many people and too little output (like Reliance) or happy to be pipes (like BSNL).

For VAS to grow and reach these numbers and beat them, what is needed is transfer of authority to the VAS teams within the operators and at the same time bigger better players with longer term ambitions in the content creation space (not just those who chase valuations like Onmobile). Indiatimes has done a great job so far now they need to lead the charge in demanding higher shares alongwith other content players.

Heres to the billion US$. Atleast there is plenty to go around!!

Vikram Bhardwaj

The numbers quoted in the report are on a higher side. Rs.6.8 billion for the year ending 2006 (excluding telcos share) is pretty high.

As per estimates:
" The total market revenue of mobile VAS as on year ending December 2006 is around: Rs 5.8 billion."
These figures have been reached after aggregating all available numbers publicly available on Mobile VAS and also refer to our own Mobile VAS report 2006-07.

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