Indian VAS market to touch Rs 200 billion by 2015

Mumbai: The Indian Value Added Services (VAS) industry is expected to log in a turnover of over Rs 200 billion (Rs 20,000 crores) by the year 2015 noted telecom experts during the 4th International Conference and Exhibition of VAS Asia 2008. The event was organized by Bharat Exhibition.

Currently the industry, which is pegged around revenue of $1.2 billion, will see major growth in the music and mobile gaming segments suggests PricewaterhouseCoopers report. According to the report, for the moment the Indian VAS industry is being driven by SMS with about 44% of the share, followed by new applications ringtones, RBTs, GPRS, CLI and other VAS.

OnMobile CEO and co-founder Arvind Rao said, "Ringback tones alone have a market of 40 to 50 million users and constituted almost 50 per cent of the VAS market in India and this trend will continue in the near future also."

According to various telecom experts, as a reality in the near term, the mobile phone will soon double up as a smart card, replacing plastic cards.  Remittances of funds through mobile phones is expected to fulfil the gap in rural banking infrastructure, this would be yet another growth driver for the Indian VAS industry.

In the context of India rolling out 3G services shortly, the analyst report said, "Wireless operators see 3G customers more willing than 2G customers to use a variety of multi-media services."  At present music and games are downloaded on GPRS or 2.5 G platform.  One of the factors that foretell a huge market for VAS in India is the lowering age profile of mobile handset owners and falling costs of handsets with ever-richer features.

While Rao emphasized the "R-factor", the expanding of mobile services to rural areas as the future driver of the VAS market, suggested that about 40 % of VAS revenues in this category will come from villages & small towns.

Tata Teleservices VAS president Pankaj Sethi found the "bottom of the pyramid" customers to expand their use of VAS and drive revenues of operators. Entertainment led services and personalization were some other areas that were pushing VAS use, according to Sethi.  The other two areas of growth, which the experts suggested, included mobile and social networking.

Idea Cellular chief marketing officer Pradip Shrivastava emphasized international mobile money transfer as a "huge challenge" as it provided quick and efficient service in India with millions of remittances to homes from migrant workers and white collar labour. Annual remittances were now touching the 30 billion dollar mark.

"Consumer must be allowed to try out many more services at zero or low cost.  Then only this would expand.  Operators would have to work out new solutions to engage customers," said Srivastava.

Bharati Airtel 3G senior vice-president Abhay Savargaonkar envisaged total revenues from VAS to rise faster than that from voice services in future.  "In India the missed call has become the biggest innovation.  T-20 is tailor made content for the mobile."   However, he felt scalability of services would be a big problem in a country of India’s size.

"It is required for the industry to come together and have an informed view about the existing state of VAS in India. The future lies in the rural India, and we see that besides money transfers, the other two areas would be video and mobile advertisements," said One97 managing director Vijay Shekhar Sharma.

"There are very encouraging trends that facilitate the evolution of the India VAS market. From co-marketing initiatives with operators to the focus on youth and visibility, we are very excited to be a part of this development," said Buongiorno CEO/COO Simone Ranucci Brandimarte.

"The customer focus will clearly be the differentiator and a quality, reliable and consistent delivery is seen as a critical need apart from innovative and exciting offerings," said the PwC report. , the industry analyst firm report said.  "Add value to life through VAS," suggested BSNL planning and new services director R K Agarwal.