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Behind The Third Screen: 

Behind The Third Screen MVAS CONNECT Venture Intelligence Oberoi, Bangalore, 12th Dec 2006


The Mobile Screen has now become the “third screen” in consumer lives after the TV set and PC screens. Mobile phones can become mobile companions when they are able to leverage full power of the internet, and not just voice Jay Highley Senior VP, Sprint,2004

VAS takeaways - Global: 

VAS takeaways - Global Globally VAS revenues expected to be 1/3rd of total service revenues by 2009. Total VAS revenues will reach $160 billion in 2009 Asia Most of the growth in Telecom Services likely out of data services Currently, data accounts for ~ 20-25% of total service revenue (at around $45 billion) Expected to increase to around 35% in another 3-4 years (at around $80 billion) Messaging & Entertainment are the key drivers of Data Revenue growth in Asian Region - together accounting for 80% Source: Telenity

The Net’s new ‘Avataar’: 

Real-time Gaming IM Video MMS Blogging MP3s The Net’s new ‘Avataar’ For many Indians, their first taste of e-apps is via mobile GSM 15mn mobile internet users, Reliance’s RWorld has 15 mn subs

VAS Market Lifecycle - India: 

VAS Market Lifecycle - India The definition of the Telecom VAS Market has evolved ……From Itemized billing, CLI Stage I ……To SMS (essentially P to P) Stage II ……To SMS (P to E), MMS, RTs, RBTs, Wallpapers Stage III ……To mCheque, m-Commerce,m-payments Stage IV Consequently, the market size numbers vary significantly….. Estimated to be about 9-12% (~$ 500 Million) of the total Mobile Service Revenues (~ $ 5 billion in 2005-06) SMS (P to P) continues to dominate : about 60% of VAS revenue Stage III ‘Premium’ VAS Market – Currently estimated to be between $220 Million presently India at US$5/8 per month has the lowest monthly cost of a 300-min basket

Premium VAS will drive topline: 

Premium VAS will drive topline 25 bn sms sent by consumers (180bn – 2010) 365 mn Ringtones & images 2.5 mn games @ 40c–$4 = $40 mn ($350 mn by 2009 ) Mobile data content US$ 1bn by 2009 Source: Weisel+SSKI Research

Components of Mobile Entertainment: 

Components of Mobile Entertainment SMS Alerts Contests/Vote ins/Polls/Quiz Ringtones(mono, poly, real) Ringback tones Interactive SMS (pull) Games Logos Wallpapers/Screensavers MMS Streaming/clipcasting Video/TV E


So is Content King ?

‘Success’ Landscape: 

‘Success’ Landscape Asia has high data adoption rate Vs others, but mainly sms centric, therefore it is low ARPU,specially India less than US$ 10 /month Success in Japan and Korea indicate drivers Viz.News,Info,Sports,Broadcast,Video and Ringtones DoCoMo, SK Telecom, KDDI have 70: 30 mix between voice:data and ARPU’s at US$ 100/month 70 % M&E content; 30 % information/transactions/directory Hutch UK has a 30% CAGR on ARPU growth for data Japan 40 % of ARPU is data

God is in the details…: 

God is in the details… Biz Models for getting content out there Revenue Models for CP’s User Interface User experience Contextual relevance of content Getting the message out there

…the Devil too!: 

…the Devil too! Lack of content Low critical mass for pick up Poor user interface Business users with data cards make a bit of a dent, but not much MCE’s- Role not recognized Walled garden Vs open deck/off portal approach

VAS is the Emperor, but with no clothes!: 

VAS is the Emperor, but with no clothes! Business Models, Need to generate demand “Build, and they will come model”, not relevant IP’s, Standards, DRM, Billing,Collection LIFO Vs FIFO

No Marketing. No Comment! : 

No Marketing. No Comment! Targeted content and pricing Importance of Marketing, Identification of TG e.g 13-18 NTT has several segments from children to white haired people to SME; 11 segments UK 3 G experience with 9 % 3 G penetration, 41 % still use it only for voice & texting! In India & China, roughly 20% of the wireless subscribers hadn’t been educated by their carrier about mobile data services

Game Deck: 

Game Deck

A Dating App: 

A Dating App

User Profile - Geography: 

User Profile - Geography North contributes to 50% of the audiences


Segmentation 70 percent of Indian users are male. 17-18 years age group account for half the traffic. Rest made up by 20- to 35 years age group. Traffic is event-driven. Segmentation drives campaigns


Observations Whenever service provider has advertised, the games/apps downloads has gone up. Wap portal needs to display games/apps up-front. Operator relations need to be leveraged. Our experience indicate a direct increase in downloads. Voice and SMS drivers (97% use SMS) WAP/GPRS (7 % have ever used) Advertising does matter

Somewhere over the rainbow…: 

Somewhere over the rainbow… Ideal wap site operator branded storefront+ open access. ‘Long tail’ viz small volume of txns but over a large selection of service offerings Bundling of content. Story time With Uncle Pai application bundles free wallpapers with the stories. Nurturing of CP’s and MCE’s Growing the VAS Eco-system


Payments… Addressable Market Size at around 6000 crores (Source:ET) Key drivers airline tickets, rail tickets, movies, bill payments, utilities The emergence of SMS/GPRS/J2ME based payment mechanisms/platforms that allows consumers to transact conveniently. E.g. SMS Based mobile payment gateway platform enables mobile phones to function as virtual credit cards/ debit cards or bank accounts Allows merchants to accept payments from subscribers/ consumers for goods or services Merchants could include online, travel, utilities, retail...bill payments, just about anyone who’s customer owns a mobile phone and has a bank account!

Consumer Proposition: 

Consumer Proposition Single click ‘SMS’ feature Compatible with any handset and operator Transact without revealing any card details Unique ‘alpha code’ makes virtually fraud proof Pay on the move Use as a debit card or credit card No service fee or registration cost (except SMS) Simple one step registration process

Merchant Proposition: 

Merchant Proposition SMS to buy/ top-up the ‘Virtual Value Cards’ Offer customers a more convenient and secure payment option Enabling consumers to buy from where they are, hence, more sales Activating the so far redundant debit card base Zero set-up cost and minimal integration time Co-promotions to incentivize customers to come to the ‘stores’ and transact using Mobile Incentives could include freebies or free content etc Costs towards the same could be agreed upon mutually

End Game: 

End Game Wireless VAS market expected to witness rapid growth to $1000 Million by 2009 Revenue from VAS growing at 40-60% (100% for P2P SMS)annually Cellular operators belatedly now turning to VAS to boost revenue in both data and value-added voice services VAS to play a key role as a service differentiator & important revenue stream to cushion pressure on overall service revenues Emergence into Stage IV of the VAS Life Cycle




CRBT/Ringtone/Video 600 crores Gaming 62 Logosetec 54 Mobile advtg 125 P2p 1300

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