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Indian VAS market is huge and effectively receptive

Naveen Bhandari
MD and CEO, TechZone
  TT Correspondent |  | 04/03/2013
depending on operator) and SMS contributes to 7% to 12% of revenues. Hence, voice still contributes to more than 80% of revenue. The most optimistic predictions can be VAS and Data contributing to 30% of total revenue. A similar trend is being observed in the VAS mature markets.

However, there are chances of data revenues exceeding more than, rather cannibalizing voice revenues dramatically if Facebook's road map of integrating VOIP becomes a success story. This is being anticipated by most of the industry players.

As far as SMS is concerned, VAS and DATA would certainly cross SMS revenue. The messaging revenue has already taken a hit from applications like WhatsApp and Blackberry messenger and is expected to deepen down further in future with increase in mobile internet penetration.

Q. How do address the VAS related needs in the rural areas to improve APRU?

A. VAS related products in rural areas might not help in increasing MVAS ARPU (as products have to be made accessible at prices lesser than other VAS products) but would definitely increase overall ARPU. The entertainment requirements are already getting addressed to a large extent with the existing bouquet of products. In fact, a good portion of song, video and wallpaper downloads come from sub urban and rural areas as avenues of entertainment are limited and access to internet is mostly through mobiles. One of the major roadblocks is of educating the rural customer about VAS products, its modes of activation and usage. Another big concern is ensuring the participation of rural customers in various contests and gratifications that the suburban and urban VAS users get regularly exposed to.

The challenge and the opportunity lie in conceptualizing utility VAS products for the Indian rural consumer and educating them about the same. One of the big ideas can be to tie up with brick and mortar brand to reach the customer or tie up with a fertilizer company and provide a weather update VAS product for farmers. It will be a winning situation on both the sides.

Q. Currently companies working in VAS segment are facing challenges like high cost of VAS, limited availability of content in local language(s) and non-availability of enough high-end mobile phones. Will these challenges hamper the growth of VAS market in India?

A. High cost of VAS, limited availability of content in local language(s) and non-availability of enough high-end mobile phones are three different issues. High cost of branded content is obviously affecting the market. The high cost of content along with the traditionally low revenue shares leave no room for the VAS player to invest on quality product development. It is resultant to this that the entertainment VAS in India has hardly seen any flashing innovation in the last decade.

It would be wrong to say that local language contents are unavailable. In fact, VAS content available in India is an authentic example for localization of content considering the richness of content available An evident upliftment of the VAS industry has been slow due to lack of investments but nevertheless, the growth has been there. The reasons for slow growth can also be the low revenue shares (which constrict the room to experiment) and the push centric approach of the business. But this problem is being addressed over the last few years. For example, we at Techzone have tie ups with more than 220 labels in Kerala, Tamil Nadu, Rajasthan, UP, Bihar, Orissa and other states which give us rights to local content. We are also in talks with various folk singers and regional artists for similar tie-ups. We feel this is also an innovative way of promoting local talent and will go a long way.

As far as the availability of high end mobile phones is concerned, the mobile industry has miraculously turned its revenue statistics around in last 3-4 years. Now, web enabled handsets are available at as low as 1, 500 INR, touch pad handsets are available for as low as 3000 INR. Combine this with the prevalent data speed, we do not see this as a challenge.
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