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Industry Classification. Industry Segment Description. Value Chain. Key Players and Market Share. Industry Growth and Changes Going Forward.
1|Page Report Made by: Vijay Kr. Singh, Start Enterprise.
Industry Classification & Segment Description
------------------------------------------------------------Basic Definition of a M-VAS: Value Added Service (VAS) in telecommunication industry refers to non-core services, the core or basic services being standard voice calls and fax transmission including bearer services. The value added services are characterized as under: Not a form of core or basic service but adds value in total service offering. Stands alone in terms of profitability and also stimulates incremental demand for core or basic services. Can sometimes be provided as stand alone. Do not cannibalize core or basic service. Can be add-on to core or basic service and as such can be sold at premium price. May provide operational synergy with core or basic services.
Note: A value added service may demonstrate one or more of these characteristics and not necessarily all of them. In some cases, the value added service becomes so closely integrated with the basic offering that neither the user nor the provider acknowledge or realize the difference. A classic example is of P2P SMS.
With over 660 million mobile phone subscribers ( July, 2010) & having the second largest subscriber base in the whole world – Indian Telecom Industry has started witnessing an era when users buy mobile phones not just to be in touch, but to express themselves, their attitude, feelings & interests.
2|Page Report Made by: Vijay Kr. Singh, Start Enterprise.
The current Mobile VAS industry being expected to touch Rs 16520 crore by the end of 2010 from the level of Rs 9700 crore in 2008. (According to Gartner Report).
M-VAS industry is currently increasing with 12.5% CAGR in India.
MVAS industry is attracting wireless operators, handset manufacturers, content developers, game makers and music, gaming, SMS based contests and streaming audio & video.
Telecom Industry is contributing 2.7% in GDP of India. (According to Financial report 2009).
M-VAS is contributing 13% to the revenue of telecom. ( for FY 2009).
Currently SMS & CRBT is contributing 55% & 26% respectively to the total M-VAS revenue.
Currently the revenue sharing between Telco & M-VAS companies is 70:30.
3|Page Report Made by: Vijay Kr. Singh, Start Enterprise.
Pillars of M-VAS:
Pillars of M-VAS defines the basic structure upon which the M-VAS is depend on. It has four main structures as: Technology. Access Device. Infrastructure. Content.
Access Modes / Platforms:
4|Page Report Made by: Vijay Kr. Singh, Start Enterprise.
The modes that are available to the end users for the growth of M-VAS. There is basically five types of Access Modes that are: SMS with 49% Market share. IVR with 40% Market share. GPRS / WAP with 8% Market share. USSD with 3% Market share. MMS with < 1% Market share.
Access Mode Market Share
3% 8% 49% 40% SMS IVR GPRS/WAP USSD
Note: The above percentages shows the Market share of access modes only.
5|Page Report Made by: Vijay Kr. Singh, Start Enterprise.
VAS Industry Classification: Broadly the whole Mobile VAS Market is divided into three main segments: Infotainment. Entertainment. M-Commerce or Mobile payment.
Infotainment: These services are characterized by the useful information it provides
to the end user. The user interest comes in from the personal component and relevance of the content. Apart from mobile, alternate modes are available to access Information VAS like Newspaper, TV, and Internet. E.g. of Info VAS is information on movie tickets, news, banking account etc. They also include user request for information on other product categories like real-estate, education, stock updates, etc. Example of Infotainment: SMS marketing. Short Code. Long Code or Virtual Number.
Entertainment: The key differentiating factor of Entertainment VAS is the mass
appeal it generates. These provide entertainment for leisure time usage. These not only generate heavy volume (owing to its mass appeal) but also heavy usage. An example of these kinds of services is Jokes, Bollywood Ringtones, CRBT (Caller Ring Back Tone) and games. These services continue to be popular and have been key revenue generators for the Indian mobile VAS market. This is a high value MVAS and will continue to show growth. Other popular Entertainment VAS driving the market are dating and chatting services. The service was first introduced 2 years back and is now being offered by all the operators. This service is not only growing fast but also witnessing less churn as
6|Page Report Made by: Vijay Kr. Singh, Start Enterprise.
compared to other MVAS. Owing to its sticky nature, it requires comparatively less marketing efforts and cost. Entertainment VAS has the potential to remain a key contributor to Mobile VAS industry. To sustain the MVAS growth, it is the responsibility of the industry to keep discovering/innovating killer applications like CRBT (Caller Ring Back Tone) at regular intervals.
M-Commerce or Mobile payment: These are the services which involve some transaction using the mobile phone. Example: Buying movie tickets using mobile phone or transfer of money from one bank account to the other. These can broadly be classified into 2 types: Mobile banking. Mobile payments. Almost all the operators are conducting pilot exercises for mCommerce services using different access modes like GPRS, USSD, STK, etc. A big boost to mcommerce has come from the RBI which recently came out with some guidelines. m-Commerce penetration continues to be small but awareness is increasing. Operators are betting on technologies like USSD to make the service handset agnostic. The current marketing focus is primarily on mobile bill payment and m-banking. Industry is betting on tripling number of m-Commerce users within this year.
7|Page Report Made by: Vijay Kr. Singh, Start Enterprise.
The revenue generation and popularity of any MVAS revolves around 2 factors:
ENTERTAINMENT VAS INFOTAINMENT VAS
These are the services which provide some useful information to the end user. The user interest comes from personal or relevant component of the content Information VAS is getting popular with different categories depending on the relevance. Entities using mobile as another channel to deliver information is driving information VAS. E.g. stock updates, bank account information, travel information, etc. Marketing is the biggest challenge since Information need differs across different segments. Credibility of the source is another challenge since there are alternate channels available to get Information VAS.
These are the services which involve some transaction non mobile
These services provide Entertainment for leisure time. These services usually generate mass appeal. Entertainment VAS is driving the VAS market both in terms of volume and revenue Industry focus is on Entertainment VAS with new players coming from media and movie houses e.g. STAR, Rajshri
mCommerce is currently in embryonic stage
RBI guidelines is expected to give a big boost to mBanking.
Currently, music is the biggest component. Challenge is to drive the usage of other content /services like games.
Identifying the best access mode to provide mCommerce is a big challenge. Handset penetration and usage of the key access mode (GPRS) of mCommerce is low in India Allaying security concerns mCommerce has the potential to emerge as a key VAS component once security concerns are addressed.
Entertainment VAS is expected to remain the VAS driver for the next few years.
Information VAS is going to be key to address the needs of growing rural market.
8|Page Report Made by: Vijay Kr. Singh, Start Enterprise.
Market Share of the various M-VAS segments: Broadly M-VAS market is being divided into three main segments, namely Infotainment. Entertainment. M-Commerce. The market share of the total M-VAS market (According to FY 2009), can be shown asENTERTAINMENT CRBT & Ringtones 35% 42bn INFOTAINMENT SMS (A2P & P2P) 55% 66bn M-COMMERCE M-Banking & M-Payment <10% <9bn
Note: The total VAS Revenue in FY 2009 is 121bn.
9|Page Report Made by: Vijay Kr. Singh, Start Enterprise.
According to the survey by KPMG in the end of FY 2009, some predictions are made as: 86% of Indian People will like Mobile TV in FY 2010. 63% of Indian People will like Mobile Gaming in FY 2010. M-Commerce will remain a problem child up to 2013. As it requires large subsidiary. Security is a prime concern. Inconvenience is also a major problem. Lack of awareness is the main hurdle for its growth.
Perceived & Practical value of various categories of MVAS: Perceived & Practical value of Entertainment VAS Entertainment VAS has been responsible for fueling the growth of Mobile VAS in India and continues to do so. It has been able to capture the imagination of the end consumer and is being used not only for self entertainment but also for self expression as in the case of forwarded P2P messages, CRBT, etc. The key component in Entertainment VAS is music which is responsible for popularity of FM channels, devices like iPod and even preference of FM enabled mobile phones by the end consumer. This is another reason that we are witnessing creation of new stakeholders in the MVAS industry which are emerging from media houses like STAR mobile entertainment and movie production houses like Rajshri Productions. Note: Entertainment VAS has a very high perceived value but scores low on practical value.
10 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Perceived & Practical value of Infotainment VAS: The key characteristic of Information VAS is that most of it caters to specific segments within VAS users and is seldom of mass appeal. This makes the task of marketing these services difficult. Note: These have a moderate practical value and low perceived value. But it has the potential of high practical value in cases such as stock updates, etc.
Perceived & Practical value of M-Commerce: M-Commerce in India is at an embryonic stage and only a small percentage of the mobile users are even aware of availability of such services. Note: Though it has a low perceived value, the practical value of m-Commerce has the highest potential among all MVAS.
11 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Some Facts about SMS: SMS contributes 55% in the VAS Revenue. SMS is a powerful marketing tool, with 5% interaction rate & 32% success rate. (Rest 68% SMS’s are either being deleted or ignored). An average Indian sends 29 SMS in a month.
Note: The above facts are according to Gartner M-VAS Report.
12 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
----------------------------------------------------------Overall Value Chain of M-VAS:
Value Chain of M-VAS is shown above that includes six stages as End Client or user send request to the Server. From the central server request goes to Platform Enabler. E.g. Jatayu system. Platform enabler co ordinate with the Service provider like Airtel. Content aggregator like Start enterprise, take contents from the Content Providers like Hungama Mobile, Mauj Telecom etc. Service provider reply back to the end client by using the same channel.
13 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Value Chain of SMS ( A2P):
Value Chain of SMS is shown above that includes five stages as End client made request to the service provider via server. From the server it will go to the platform enabler through Service provider. Service Provider contacts the Content aggregator & Content provider for the requested service. After aggregating the service properly, it reply back to the end user with requested service.
14 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Value Chain of Short Code:
Value Chain of Short Code is shown above that includes five stages as End client will make request and send it to 56363 through the service provider. Content Aggregator (Start Enterprise) that has taken short code from the Short Code provider (Nazara Telecom), forwarded the request to the Client (e.g. Reliance Life). Automatic response will go from the Client to the End user or Request maker through Content aggregator (Start Enterprise).
15 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Value Chain of Long Code or Virtual Number:
Value Chain of Long Code is shown above that includes Five stages as Pull Mechanism: Message is pulling from the end user & send it to the Client. Push Mechanism: Client send the reply to the end user through the Bulk SMS process.
16 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
----------------------------------------------------------Content Aggregators in Infotainment segment & their brief detail: SMS Country Networks: SMS Country's Core Messaging Platform provides an easy, efficient and flexible option to integrate with your website / application, facilitating auto-generated SMS Text messages to be delivered to the intended recipient’s mobile phones. This method does not require SMS Country's Software Platform at Enterprise/Data Center site. Supported Protocols: SMPP. HTTP.
Route SMS: Route SMS Solutions provides Bulk SMS dedicated Routes to various companies who looking bulk SMS as marketing tool. The Gateway Service provides full end to end solution as far as third party integration is concern. Supported Protocols: SMPP HTTP
Planet41: Planet41 provide a specialized engine for text messaging for bulk users, Mobile Marketing and for integration with various web links. We provide solutions for all mobile networks. Our engine support Voice SMS and video SMS too. Supported Protocols: HTTP. SOAP/XML. SMTP.
17 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Each SMS account has access to SMPP service and access is both SMPP 3.3 and 3.4 compliant. MySMSaddress.com supports 2 way communication and return delivery reports with the error or status codes of your messages/ You can bind your gateway or application to our SMSC as transceiver or transmitter and receiver. Send Normal Text, Unicode, Binary, Ringtones, pictures, logos, V-cards, V- calendar, Flash, WAP Push, and OTA provisioning along with other formats. Mobile Originated (MO) Virtual number Short code messages and delivery reports for messages sent, are sent to your application using the receive or transceiver channel. Supported Protocols: SMPP HTTP SMS GupSup: SMS GupSup is a global wireless messaging service provider in India. We are a leading end-to-end mobile data solutions provider that caters to corporate and individuals throughout the world. To increase support to our clients, we also do provide value added services such as customization and integration. Supported Protocols: SMPP HTTP SOAP. DLL.
18 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Industry Growth & Changes Going Forward
-------------------------------------------------------------Future of M-VAS in India: Mobile VAS industry in India is undergoing a lot of structural changes. Mobile VAS industry is poised to grow and contribute greater revenues to the telecom industry. Consolidation of MVAS content provider’s market: Currently, the MVAS market is fragmented and consists of a large number of small content providers. Consolidation of MVAS market will happen, leading to emergence of few strong content providers. This would enable content providers to command greater share of revenue in the MVAS ecosystem. Rational revenue structure: With the growth of MVAS market in India, more rationality will emerge in the revenue structure. The revenue structure would be dependent on the value added by the respective stakeholder in delivering the product to the end user. This would enable the growth of MVAS market in India. Rural MVAS market: MVAS market in India is largely dominated by urban population, with rural constituting around 15% of the total market. Rural MVAS market would witness marginal growth and would grow to around 20% in the next couple of years. The growth drivers would be availability of vernacular content, entertainment services and voice based services. Growth of M-commerce market: M-commerce has tremendous growth opportunity in India. High penetration of mobile phones would give a boost to this industry. The stakeholders need to work in tandem to ensure that issues like low awareness, security constraints, user friendliness and pricing of the services are aligned towards the consumers. The services that would provide boost to the m-commerce market in India are mobile marketing, mobile banking and mobile payment. A major step has been taken by RBI in issuing the m-Banking guidelines.
19 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Differential pricing of content: The telecom operators have already taken a step in this direction. Further, in an attempt to cater to the expanding mobile subscribers in India, the telecom operators will price the content in a manner suitable to the target respondent. Number portability: Government of India is planning to launch number portability in the metros by end of 2010 and in all the remaining circles by 1st quarter of 2011. This would enable users to change service providers while retaining the mobile number.
Growth driver of M-VAS Industry: Increase in User Base: On an average about 8.5 Million mobile subscribers are being added every month and therefore the mobile industry is witnessing an unprecedented growth. With increasing growth rate of low end subscribers Traditional MVAS (P2P and P2A SMS) will have a huge growth potential among the low end mobile subscribers. Price Decline of MVAS services: Looking at the high growth rate of low end mobile subscribers the MVAS services are being offered at attractive prices such subscription packs of free SMS or news alerts etc. New Technology Adoption By operators: From 3G, new services for premium MVAS consumers will come like video services which use fair amount of bandwidth, (live TV, cricket match). Today because of lack of data speed it just does not work. Impact of 3G: The Ministry’s decision to open up the bidding to all player for 3G spectrum, gives a chance to the foreign players like Deutsche Telecom, AT&T and new Indian players such as Unitech and Hindujas to enter the high growth telecoms market. Players who would get 3G spectrum would have an upper hand as relative to other players. Entry of foreign players would encourage the growth of mobile VAS services for additional revenues.
20 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Growth of SMS Marketing: SMS Marketing: In the last 3 years, mobile has become the greatest media for communication in India. Marketers are utilizing this to promote their service using mobile. Mobile advertising is a form of advertising where marketers target mobile users for marketing of their products and services. While using traditional media of marketing such as print, television, etc, the marketers are not sure whether the consumer would take notice of the promotional campaign or not, the main advantage of mobile marketing is that since the marketing message is delivered on the mobile phone, a personal device, and the target respondent ends up taking notice of the campaign.
Mobile marketing services can be pull-based or push-based. Push based mobile marketing: In this mode, the service providers send mobile based advertisements to the users. Presently, this is the most popular mode of mobile marketing in India. Many companies are using this as an effective medium for reaching out to their users. Pull based mobile marketing: In this, the users can access content by simply sending an SMS or calling a number. For example, such mobile marketing is adopted by Pepsi, Kwality Walls’ etc. the users are allowed to access the content available with the service providers.
21 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Drivers to the Growth of mobile Marketing: High penetration of mobile phones: Currently, there are 660 million mobile phone users in India. With such a huge subscriber base, mobile is a very effective medium for marketing goods and services to the end user. Mobile marketing would enable marketers to develop customized campaigns as per specific target respondents’ profile. This would increase the effectiveness of marketing. Consumer oriented business model: Mobile marketing model is consumer centric. The telecom operators charge the marketers and thus the consumer is benefitted. In some models, like mginger, etc. the consumer is even paid to receive advertisements on his mobile. This model would stimulate the growth of mobile marketing in India. Usage of voice as a media for mobile marketing: Usage of Voice for mobile marketing would help the marketers to reach out to the rural subscribers also. This can be achieved with deployment of regional content for mobile marketing.
22 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
Issues facing by Mobile marketing in India are: Lack of customization of mobile advertisements: Mobile marketing is at a nascent stage in India. The current mass marketing efforts by the marketers are not generating the required impact among the consumers. The need of the hour is to have customized marketing of products and services as per the consumer requirements. Since this is a new concept, the stakeholders are playing safe by adopting mass marketing in the beginning. High penetration of cheaper handsets: Presently, mobile advertising space in India is dominated by SMS. Gradually, voice is also taking up. Parachute was among the first ones to use voice for mobile marketing. Reliance Mobile World users were able to listen to ‘Gorgeous Hamesha’ jingles through voice portal services. But development of video based mobile marketing has a long way to go in the Indian Market. This is due to the fact that the higher penetration of cheaper handsets restrains the growth of video based mobile marketing. Limited usage of GPRS/WAP: Mobile internet can be used as a very effective medium for marketing of products and services on mobile. This would enable users to view video as well as audio content. Limited GPRS usage is a hindrance to the growth of internet based marketing on mobile phones. Do-Not-Disturb Registry and spectrum requirements: The Do-Not-Call registry move by the government would hamper the growth of mobile marketing in India. It would restrain the service providers from using voice platform for mobile marketing. Also, using voice for mobile marketing would increase the load on the spectrum of mobile operators. Mobile marketing in India is growing and has huge potential in India. The increasing pace of adoption of mobile marketing by telecom operators and marketers indicates a bright future.
23 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
M-VAS growth after 3G: Comparison of VAS revenue with & without 3G
TELECOM WIRELESS REVENUE 936bn 1050bn 1500bn
2009 2010 2013
BEFORE 3G 121bn 136bn 191bn
AFTER 3G 121bn 136bn 450bn
It is expected that once the 3G hold the place in Indian market, the scenario will be different as: The Revenue sharing between the Telco & M-VAS will be 60:40 as compared to current 70:30. VAS will contribute 30% in total Telco revenue. VAS will grow with 30% CAGR once the 3G take place.
Note: All the data’s are according to Gartner report FY’09, IMRB Report ’09 & KPMG FY’08 prediction.
24 | P a g e Report Made by: Vijay Kr. Singh, Start Enterprise.
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