Key Trends on Mobile VAS (value added services)

I. Sites or channels content driving the mobile VAS market are Maps, Sports, Entertainment
(Movies) and Finance -- News/Research

II. Pure SMS revenues are going down while voice based VAS (Ringtones/CRBT) is showing an uptake.

III. Minutes of Usage (MoU) in India is already the second highest in the world behind only to USA.

IV. Approximately 60% of mobile content downloaded in South India is in local languages.

V. Music claims one of the largest shares of India’s mobile VAS market size in India. It accounts for around 50-60 percent of the revenue from VAS as of now. Music drove the first set of users but to get the next set of users one has to look at other areas of VAS.

VI. Instead of traditional Walled garden approach an open strategy is more successful as shown in case of Vodafone.
60% of its traffic is generated through its open strategy.
60% of VAS revenues for Vodafone are from non SMS based services. Vodafone commands 30% CRBT penetration, the highest amongst all GSM operators. 

VII. Network Operators dominate the revenue sharing among VAS operators;
End User: End user pays for the content
Network Operator: Operator keeps 60-70% of revenue
Aggregator: Aggregators get approximately 20-25% of revenue
Content/Application owner: Content/Application owners get 10-15% of total revenue

Revenue Sharing among stakeholders has to be more transparent.
The literal monopoly of mobile operators over the entire value chain makes it a bit of a problem to have a level playing field among various stakeholders. In case of China for example the difference lies in the revenues sharing wherein almost 70 to 80% of the revenues are shared by the VAS providers. This happens probably due to state intervention but it helps the industry as a whole and creates a level playing field for stakeholders. 

VIII. Walled Garden Strategy has to go.
The industry has to forego walled strategy wherein the entire control over the value chain rests with the mobile operators. The last link in the value chain that is between the values added services providers and the users is also controlled by the operators. Instead of monthly downloads based models the operators will have to slowly migrate towards an advertising based model. Instead of traditional Walled garden approach an open strategy is more successful as shown in case of Vodafone. 60% of its traffic is generated through its open strategy. 60% of VAS revenues for Vodafone are from non SMS based services. Vodafone commands 30% CRBT penetration, the highest amongst all GSM operators. 

IX. Our research indicates that content that offers finishing stages of a particular process or offers other similar instantaneously gratifying touch points will be a hit with the users. For example, mobile check-ins to airports, instant stock quotes and other related services are already doing great in overseas VAS markets. It may be noted that mobile handset manufacturers already face huge challenges to constantly innovate new models that are capable of accommodating more and more new user friendly features.

X. VAS comes at a price which is on the higher side for consumers.
For example, buying an audio CD of an album would be more cost-effective than downloading a single track on the mobile. Under the current pricing model prevalent in the industry, telecoms operators keep up to 70 percent of VAS revenues, the remainder being shared by the aggregators and the content owners, adding to the final price.