Mobile Vas In India
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- Slide 1: Future of Mobile VAS
in
India
December 2007
Mohit S. Gundecha Prof. Tom Kosnik Kunal Bajaj
Research Associate Fenwick & West Consulting Professor Director – India
Stanford University STVP, Stanford University BDA
© 2007 Stanford University & BDA
- Slide 2: BDA Team:
• Girish Trivedi – Principal Manager
• Deepshikha Garg
• Rahul Gupta
• Smita Sharma
Our special thanks to:
• Eric Allen – Wireless Advisor
• Veerchand Bothra – Author, MobilePundit
• Nitin Brahmankar – Director, IDT
© 2007 Stanford University & BDA
- Slide 3: Executive Summary (1/3)
India’s telecom market and VAS background
• India’s telecom market is experiencing explosive growth
– Crossed 217 mn subs by Oct 07 with net adds of nearly 8 mn subs / month over last 4 months
– Despite continued record growth over last 12 months, only 23% of 1.1 bn population owns a phone
– There are 6-7 telcos operating in each of 23 license areas. Airtel, Reliance, Vodafone & BSNL, who are “the Big 4”
have 74% market share
– Growth is expected to continue and even accelerate, reaching a projected 496 mn mobile subs by 2010
• Near term outlook shows a continuing focus on acquiring new low end customers
– Improved regulatory structure has lead to increased competition, and operators aggressively tailoring strategies to
acquire customers across all segments by making mobile services more affordable and increasing coverage
– Prepaid users comprise over 85% of total subs and over 95% of net new additions, further adding to the impact of
tariffs on falling ARPU
– Almost half of Indian mobile subs use low cost handsets and this is expected to increase further with new additions
– Further innovation in entry-level handsets and call tariffs will continue to drive growth
– Operators will need to look at alternative revenue streams like VAS as they mature
• Traditional VAS has been primarily SMS-based, with Bollywood and Cricket the largest content drivers
– VAS services contribute approx 7% of total wireless telecom revenues for Indian operators
– Total market size of VAS was USD 678 mn in 2006, projected to touch USD 926 mn at the end of 2007
– Most VAS services are provided over SMS, IVR and WAP. Revenue growth has been driven by SMS (including P2P,
A2P, P2A), contributing over 55% of total VAS revenues in 2006
– Bollywood & cricket remain the killer content, whether for SMS alerts, ringtones / CRBT, games, wallpapers, etc.
– Rural applications initiatives have launched in pilots, and are likely to grow quickly in less developed geographies
because of the willingness to spend on services which enhance livelihood
3
- Slide 4: Executive Summary (2/3)
Hurdles to growth of VAS & future direction
Current Challenges to Growth Overcoming These Challenges
• Revenue share between telcos & content providers / • Advertisements can be a major new revenue avenue for VAS
aggregators is 70:30, substantially more skewed in favor of players compensating for low rev share from operators
telco than in other countries
Revenue
• Lack of payment mechanisms increases reliance on telcos,
Challenge though VAS players are looking at advertising to support
service. This is at a nascent stage given the unfamiliarity of
advertisers with mobile as a medium
• Awareness remains a major challenge as operators spend • Traditional VAS – SMS, CRBT & ringtones – will continue to
more on subscriber acquisition than educating customers grow with increased awareness and larger low end user base
User