Adding Little Of Value

KPMG expects gaming to become a Rs 300-crore market. Providers of games usually develop them in-house. “We have almost 1,000 games on our IP (internet protocol) and all of them are built in-house,” says Jain of Hungama, which has a separate team for developing games. Many smaller players in the gaming business are only playing the role of a content supplier to service providers.

CanvasM, a VAS provider that started two and a half years ago as a joint venture between Tech Mahindra and Motorola, has tie-ups with most service providers, chiefly in multiple-gaming services and digital asset management. “Smaller companies are entering because everyone has an idea,” says Jagdish Mitra, CEO of CanvasM. “The challenge will be to market the concept — most players will fall out at that stage.”
 
The 3G Hype
While the addition of 3G (third generation) spectrum, which will be available after the soon-to-be-held auction, will change the way content travel over networks, it is not likely that data revenues will overtake voice. Some VAS players admit that India is a price-sensitive market and adoption of any service will take time. “Let us play with a little caution on 3G,” says Jagdish Mishra, CEO, Buongiorno, a new VAS player in India with an Italian lineage. “I would like to challenge the assumptions that 3G will become the solution for the VAS industry.”

In fact, a lot of dissonance can be expected in user experience. “It will be interesting to see how the industry shapes up in the next three years,” says Sangeet Chowfla, executive vice-president of Comviva, a Bharti enterprise previously known as Bharti Telesoft. “3G is over hyped.”

Nevertheless, “Once 3G happens, there will be more access to more content over the internet and on the phone,” says Patel of EY. Increased internet usage will also bring in more users. But, though 3G might enable things at a faster pace, it is “better content that will give better revenues, not speed”, says Durbha.

What Next?
Apart from a few location-based services, movie ticket booking and financial inclusion (banking the unbanked, providing loans and insurance), not much can be done over a mobile phone, which is yet to take the form of a converged device. Hungama is of the view that there is now greater interdependence between services such as SMS to manage financials.

With average revenue per user going down, data will gain prominence. Services such as Tata Teleservices’s (TTSL) English Seekho for rural consumers is one of the more innovative utility-based services, where voice service is used to teach English at Rs 30 per month. VAS contributes 13 per cent of TTSL’s revenues. “We have also come out with a location-based service called Ask Me, through which people in smaller cities can find a doctor,” says Lloyd Mathias, chief marketing officer, TTSL.

Some start-ups are trying to differentiate themselves from the larger ringtone providers. For instance, once a paid service starts, it becomes difficult to stop it. Now, for the first time, a particular service can be disconnected with a single SMS. VAS provider mCarbon has partnered with Airtel on the ‘start and stop’ service. “It is high time there is governance in the system,” says Rajesh Razdan, co-founder and director of sales and marketing at mCarbon.

Rather than spamming a consumer’s inbox, VAS players should approach them keeping their profile of usage in mind. “Segmentation will lead to higher conversion and penetration of VAS, helping the operator to save on marketing money,” says Jain. In the years to come, more meaningful content is expected to emerge. “A lot of VAS companies are not growing because the canvas is huge and it is difficult to innovate continuously,” says Milind Pathak, co-CEO of Buongiorno.

Even though there is no dearth of ideas, the ability to sustain them in the market is challenging. And despite being around for some time now, VAS vendors are still surviving on low margins. Yet most of them are bullish about the future. Indeed, in an industry full of confusion, everybody has a different story to tell. “In this run, there will be hundreds of VAS players. Only some will survive the consolidation,” says Chowfla. “The industry is reaching the hill of hype, heading towards the valley of despair, and then there will be an upward spiral of growth.”

sunny(dot)sen(at)abp(dot)in