Mobile 2.0 is all about VAS…

Apologies for having disappeared without notice…
The fact is, I am inducted into a new role in my organization and have started traveling pretty often. Since I am writing after a long time, this is just a post to cover up my writers block here…

The details provided on various parameters and players in the industry, introduced in my previous posts, can be analyzed in great depths but I would want to cut this short and move on to newer horizons of analyzing the various happenings and the buzz across the industry. People may have discussed this on forums and their blogs but I am trying to spill out my thought process rather than aping somebody else’s mindset.

There is a lot of talk about web 2.0 and now the mobile arena is looking to replicate the same experience. There are a lot of views on the definition of itself. Some are of the opinion that it’s about web on the mobile providing you the freedom of internet access on the move. Whereas, some are talking about the technology convergence and offering multimedia specialties on the mobile. In fact most of the players in the value chain would want to perceive it in the manner that would be most beneficial.

But I have a different perspective to the same scenario. Whatever the industry is trying to believe whether convergent devices or web on the move; it’s all about “Mobile Value Added Services“. There is a variety of subscribers that the mobile industry caters to and each one has their evident needs and wants. All of those would be addressed by mobile 2.0 services portfolio.

People have compared applications on the web to their counterparts on mobile and have also gone ahead to compare the existing applications to what can replace them in mobile 2.0.

All that I believe is Mobile convergence providing the subscribers the strength and reach of web and the convenience of a mobile is the next generation of mobile – trying to be termed as Mobile 2.0.

My thoughts –

Mobile 2.0 is much more than broadband access on the move. This is not about accessing the web in the mini browser and hanging onto web 2.0 through your mobile. This is much more than that to my understanding.

Mobile 2.0 is more about getting personal about your most personal device ever. Although I remember that the earliest talks of Mobile 2.0 have started way back in late 2005, but I am unsure on how much India progressed on this front. I understand that hindrances are many and players are trying to find way-around to provide the subscribers the experience they would have never imagined.

Jatin Madan
jatinmadan@aol.in

The Moolah Movement – Revenue Flow in Offering Content Based Applications (Part 2)

2. The Content Experience Applications

2.1 The Applications

As discussed in my previous post the content is playing an important role in the entertainment and infotainment based value added services in India today. This post is focused on the various aspects of applications wherein the customer can experience content but does not require downloading it.
The major advantages of such services is they are independent of the handset used making it reachable to all and not a particular target segment. This is the reason that I believe they are important as the next set of acquisitions in India would be in the low ARPU subscriber segment using low cost handsets.

The following applications in this category have been welcomed by subscribers in India:

1. Caller Ring Back Tone (CRBT) – The subscription of these services allow you to make the caller to your number hear your chosen song/voice clip rather than the boring tring-tring. This has become a rage in VAS industry today and has seen a subscription of as high as 25% subscriber penetration at places.
2. Music Radio Services – This service allows the customer to all a particular short code and he/she can listen to a large number of songs of their choice made available under various categories. Songs can not only be listened to but dedicated to your number of choice as well.
3. Back Ground Music – This service allows the subscribers to play a chosen voice clip/Music in the background while the conversation is going on.

I would use the example of Caller Ring Back Tone (CRBT) wherever required since this has been the killer application in this segment. There are companies surviving on this single product and a lot more is about to happen than we have seen in this arena.

1.2 Current Value Chain Entities

1. Mobile Operator
2. VASP/Platform Owners
3. Content Aggregator
4. Content Owner

The VASP/Platform owners generally play the content aggregator role in this arena as the investment is very high as compared to the other content based applications. Since the investment is significantly larger, the margins need to be more for which the VASP take up the addition responsibility of aggregating the content as well.

1.3 Prevailing Business Model

Subscription Model: To my understanding the, the subscription model is the only prevalent model that is offered to the subscribers today for CRBT and Background music service. Subscriber pays out a monthly subscription fees to the operator for availing the services. This revenue is also appended with the content sampling charges and the content uptake charges (change of clip for the service).

This revenue is shared generally in the manner explained in the previous posts. But the payout can be higher for latest and exclusive content being provided by VASPs.

Whereas, the revenue flow for Music Radio Services works in a very similar manner for the content download services.

1.4 Future Possibilities
I would again want to believe that what I foresee happening is in the right light but I may also want to stand corrected in case this volatile and unpredictable industry takes a different turn. The future possibilities are enormous.

All players would be having a roadmap of features and functionalities they want to offer in addition to the existing services and also their innovation teams would be working hard to come up with new applications like CRBT that has a great Moolah factor.

I see this set of services as a great revenue potential for VAS industry. The reasons for my belief are:

1. The dependency on the handset is removed thereby reaching the entire subscriber base. This increases the target market and thereby greater uptake.
2. Next generation of mobile services are focused with customer at the centre of the ecosystem. This would make user generated content availability on these channels very important as services like CRBT and BGM are more of a personal statement.
3. Since these services can be subsidized to customers using the advertising model, the uptake would be further triggered.
4. Applications like Video RBT would be triggered with the advent of 3G in India. The personal video display is far more personalized than the subscribers can think today.

The move of the industry towards mobile 2.0 and bringing the web experience to the mobile would play an important role in this arena. It would give the content providers a run for their money and the application providers (read VASP) a mandate for innovation.

The future of these services can be seen from the perspective of innovation in terms of features and services and the evolution of business models.

Features and Services Evolution:

The content story is turning the web 2.0 way i.e. the user in again the KING and he picks only what he wants. This user generated content generation would have a direct impact on the service and application:

• The service innovation to offer UGC to subscriber via various means like mobile web or IVR to be provisioned for a service would be seen within next 12-15 months.
• Reverse CRBT and Video CRBT may make the net wave of applications inspiring innovative features and functionalities.
• The feature innovation like playing a user recorded message when busy or otherwise would add on to personalization factor influencing the uptake of services positively.
• User Generated Content (UGC) would be the next generation of content that subscribers would be hooked on to. This would give the content providers a run for their money and exclusivity would rule the roost for them. Features of CRBT would see enormous shift towards offering UGC as a part of the playlist.
• Ease of UGC uploading and tags would play an important role in defining the next generation of CRBT services.

Business Model Evolutions:

1. Freemium Business Model: Subscriber can hook on to services for free and the commercial jingles are played for such subscribers. Whereas, the high end segment is offered the royalty paid content at prevailing rates. This model will focus on the customization of the package for every subscriber segment.
2. Mobile Advertising Supported Model: Since the charges for these applications are as high as 10% of ARPU, there is a need for these services to be subsidized so they can be targeted to the low ARPU segment. This can be achieved by using it as a marketing tool by using commercial jingles as a promotion tool here. CRBT and BGM can be used as a promotions tool for B2C enterprises trying to promote their brands via the mobile way. I am hinting towards using it as a mobile marketing tool.
3. All-You-Can-Eat: The music radio services may see a completely subscription model evolving – One time service enablement appended with monthly charges and use as much as you want. Though I believe subscribers would be reluctant to take up such services with the cheap handsets available with radio functionalities.
4. Operators Eliminating Middle-Men – With a lot of movement by the players trying to take up additional responsibilities of other players in the revenue chain, the agenda is clear. They need additional revenue share for the content and services they are providing. This may lead to operators getting into direct relationships with various players at different levels for gaining access to premium content.

Jatin Madan
jatinmadan@aol.in

The “Moolah” Movement – Revenue Flow with Content Based Applications…

1. Content Download Applications:

1.1 The Application

The content based applications are a great revenue source for Indian operators. In India the new applications and services mushrooming at regular intervals have been focused on this type of content. I am trying to highlight a few of the application areas and have tried to collect and club as many related services under this category

I would like to put it simply by saying that selling mobile based content is as simple as A, B and C:

1. Astrology and related services
2. Bollywood Related content
3. Cricket

Astrology and Related Services

For providing the information based services to the end customers like daily horoscope, a continuous inflow of data is required from the content provider. This set of services has seen a good uptake from the subscribers and have had a positive revenue flow for all the involved entities.

For expert services, the VASP or content aggregators own a call centre like set up wherein the dependency on the content provider is eliminated. The reasons I see for that to happen are great ROI and the quality assurance.

Bollywood Related Content

This is entertainment services section that has all the content that is made available to subscribers for download. The biggest revenue generator has been music though other content like wallpapers; mobile themes have also seen a decent uptake.

Cricket

The game India lives for. This is the single religion of the nation. This is the single thread that binds every Indian despite the cultural, regional and language differences. Subscribers were hooked on to their television sets and then came the mobile revolution where they could SMS and get the scores or call up a short code and listen to the updates.

Though all the content is available easily on web but the aggregators/VASPs prefer to rely on the expertise of content providers for this.

1.2 Value Chain Entities

1. Mobile Operator
2. VASP/Platform Owners
3. Content Aggregator
4. Content Owner

1.3 Prevailing Business Model

As per my understanding, currently the following two revenue share agreements exist:

1. Pay per Use Model: Mobile operator charges the customer for accessing the services. Operator in turn makes a payout to VASP and other players based on previously agreed upon revenue share. The VASP or aggregators get a chance to ask for a premium in case of expert services. The voice calls and SMS services are charged at different rates to subscribers and
2. Subscription Model: Subscriber pays out a monthly subscription fees to the operator for receiving daily alerts or tips. This revenue is shared in the same manner as in the above scenario.

1.4 Future possibilities
The future can not be predicted but just discussed. It is just a matter of time when I would realize whether my beliefs would still hold good or are shaken away. I would like to discuss the future possibilities in the content driven business under two separate heads. The content related activities and the business synergies between the various players.

Future of Content:

• Type of Content – The future content would be much more matured in nature. Two important things to be highlighted here are the availability of regional flavoured content and the optimization of content for delivery to mobile handsets. User Generated Content (UGC) would grow leaps and bounds with the advent of Mobile 2.0 and content tagging would be of great importance in the months to come.
• Content Sampling – Subscribers want to hear or see the content before paying for downloading. The sampling requires getting cheaper thereby reducing piracy to some extent. With a lot of importance given to multiple access mechanisms the manner of sampling would also take a new meaning. The advent of 3G would enable the content to be sample on voice and requested to be delivered via mobile web.
• Content Delivery Mechanism – Content would be made available agnostic to the access mechanism being used. The content could be requested from web and delivered to mobile or vice versa. This has already started happening but to a very limited extent.
• Gaming Content - The mobile gaming industry has not yet picked up to a great extent when we compare it to nature of population who believe in sports. The mobile games need to be subsidized and with the advent of mobile advertising the sponsorship of games is not to far away.

Future Business Model Evolutions

1. Subscription Subsidized Pay per Use – Not sure on this being the future as I think someone would have already started offering this to subscribers. The value offering is subscriber to a set of services and access at a low cost. Eg. Subscribe to cricket updates on voice portal and call up at 50% call rates.
2. All you can eat – The bulk model can be looked into with subscription to a particular pack would let you download content to a specific number with no access charges. Eg. Subscribe with INR 100 ring-tone pack and download 10 ring-tones with no IVR browsing charges.
3. Mobile Advertising Supported Model – The content uptake would definitely be triggered with the content being subsidized with the advertising revenue inflow and the advertisers would be more than willing to brand the quality content. So this would bring to light what content is considered quality by the advertisers and lead to innovations on the content side as well. Eg. Car racing game by branded an automobile company would be available at INR 20 rather than INR 50.
4. The Retail Model - This has already started happening as the content owners are trying to gain more out of their content and approaching the customers directly via retail chains. The reason – low revenue share payouts from the operator end.
5. Operators Eliminating Middle-Men – With a lot of movement by the players trying to take up additional responsibilities of other players in the revenue chain, the agenda is clear. They need additional revenue share for the content and services they are providing. This may lead to operators getting into direct relationships with various players at different levels.
   

Jatin Madan
jatinmadan@aol.in

The Moolah Movement –Revenue flow of VAS Industry…

This is a sequel to my profiling post. I will try and bring to light the following things about specific set of applications/services in the following set of posts:

1. The Application Set – A gamut of applications that fall in this category that would help and define the category.
2. Entities Involved in offering the services – This is where I would depict how the different entities in the value chain are related in providing these services.
3. Current business models prevalent – This would be information about the revenue sharing arrangements between the various entities.
4. Future possibilities and their effects – This is where I would convey my beliefs of the future possibilities of business.

I would start with the Content Download Applications/services. This would be followed up with Applications wherein the user can’t download the content but experience of the application is completely dependent on content. I would focus myself on CRBT as a service.

Then in a separate post I would be discussing about the applications and services that are not dependent on the content provider and come straight from the VASP’s innovation factory.

Jatin Madan
jatinmadan@aol.in