Mobile Entertainment Growth and 3G

Entertainment through mobile phones have been present since the time when mobile handsets were equipped with monotone ringtones and the user had the ability to personalise them. Today mobile entertainment have evolved by leaps and bounds. Current generation premium handsets are equipped to perform as a digitalcamera, personal media player and a portable internet device.

India, although boasts of 585 million subscribers, still uses mobile phones primarily for voice calls. With spiraling voice call rates, it is no surprise that India along with Brazil are the countries with lowest ARPU’s in the mobile wireless communications sector[1]. Therefore it is of critical importance that VAS (Value Added Services) market is monetised.[2]

The VAS market in India contributed to 7% of the total revenues for the mobile operators in 2006. It was $679 million at the end of 2006 with non voice revenues increasing every year.[2] In 2009, the VAS market contributed Rs 6000 crore accounting to 10% of the operators revenue. The figure is predicted to go up by 18% by the end of 2010.[3]

A pattern regarding the growth of mobile entertainment can be derived from the following data:

VAS Performance- 2005[2]

Value added services in mobile networks

VAS Performance- 2006[2]

VAS Performance- 2009[1]

Value added services in mobile networks 2009

The most noticeable trend is the shift in the SMS usage by the mobile consumers. The year 2005 had 80% of VAS being used for SMS (P2P,A2P P2A), 2006 had 55% and 2009 has 49% of the VAS being used for SMS. This phenomenon is due to consumers engaging other VAS products such as CRBT, Games, Email and Data. CRBT’s has had an appreciable rise in terms of percentage consumption. 13%, 35%,49% for the year’s 2005, 2006, 2009 respectively.  Another area of promising growth on the VAS front is data. Email, data and GPRS usage has grown over the years. From an insignificant 1.5% in 2005 and 2006, GPRS has grown to a significant 8% in 2009. Games had a noticeable rise from 1% in 2005 to 3% in 2006. The above figures indicate the consumer’s deflection from the voice model to more data oriented applications.

Data and Voice Break up[2]

Data and Voice Break up

The above bar graph indicates the penetration of VAS in the Indian market. Although the growth has been gradual, the VAS intake may go up with the introduction of 3G. According to Mr. Pankaj Sethi, Tata Teleservices, Data services have been contributing to 10% of the VAS market. With 3G, the data consumption could go up. Pricing is also important as India is a price sensitive market.

Currently the EVAS (Entertainment VAS) has been contributing in the fashion as stated below : [1]

Entertainment Value Added Services

The Hindi film industry is the biggest driver as far as EVAS is concerned, followed by regional content, cricket and devotional.

The influence of 3G on the mobile entertainment growth could be accurately studied by analysing the pre 3G and the post 3G scenarios. Unfortunately 3G is yet to be fully functional in the country. Although this is a limitation, few logical predictions can be made about the changes in VAS and EVAS with the introduction of 3G.

  • There is a fair chance that data usage would significantly increase. This means that the consumer would be able to stream audio – video content whenever he or she wishes to. BSNL, currently in its 3G offering facilitates the user to watch television content (ex: reality shows) on mobile phone.
  • With adequate data bandwidth available, the content creators may not hesitate to invest in made-for-mobile content. These are content that are specifically designed and produced to be accessed on a mobile screen. A current example for made-for-mobile content is Airtel Talkies which provides audio clips of hindi films for its subscribers.
  • SMS’s are one of the mediums to  facilitate access to content in mobile phones.  Provided the right pricing, there is a major possibility of SMS’s contributing less in the VAS revenue mix when 3G is established. We may ape the ‘American model’ wherein Emails are use over SMS’s for accessing content as well as text communication.
  • A major hindrance to accessing content on mobile phones are the mobile devices themselves. As per Mr. Subash Ghosh,UTV New Media, of the 500 million subscribers in the country, only 10%- 12% have high end handsets. Still a smaller percentage above use data services. On the other hand, Mr Pankaj Sethi believes that this issue would be bypassed as OEM’s (Original Equipment Manufacturers) like Micromax have come up with 3G enabled mobile device priced conservatively at Rs 3500- Rs 4000.

Even before the introduction of 3G, there was a pattern change happening in the VAS market. With low voice call rates and lower ARPU’s, the fraternity has to think of alternate ways to generate income. This makes VAS and EVAS a logical choice. As per my opinion the VAS market in India will continue to evolve gradually with newer and innovative products/services coming in. 3G may will make the process quicker.

References.

1.  Mr. Pankaj Sethi, Tata Teleservices

2. Future of Mobile VAS in India, December 2007, Mr.Mohit S Gundecha, Prof Tom Kosnik, Stanford University/ Mr. Kunal Bajaj, BDA India

3. Mobile VAS summit 2009 Report, September 23- 24, 2009

4. Mr. Subash Ghosh, UTV New Media

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