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Market Potential for (M)VAS: Mobile Value Added Services in the Middle East

Market Potential for (M)VAS: Mobile Value Added Services in the Middle East



Market Potential for (M)VAS: Mobile Value Added Services in the Middle East

Market Potential for (M)VAS: Mobile Value Added Services in the Middle East



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Market Potential for (M)VAS: Mobile Value Added Services in the Middle East Market Potential for (M)VAS: Mobile Value Added Services in the Middle East Presentation Transcript

  • Market Potential for (M)VAS: Mobile Value Added Services in the Middle East SHARIQ FARAZ [email_address]
  • Contents ( M)VAS : Industry Background & Functionality Importance of (M) VAS for Broadcast & Telecom sector Market Potential for (M) VAS companies in Middle East
  • M-VAS was created as a result of convergence between Media & Content firms MVAS
  • Industry Background
    • What are Value added services and (M)VAS ?
    • Value Added Services (VAS) are those services that are not part of the basic service offer and are availed separately by the end user. Mobile Value Added Services (M)VAS are those services that are not part of the basic voice offer and are availed separately by the end user They are used as a tool for differentiation and allow mobile operators to develop another stream of revenue.
    • Composition (Products/Services) of Value added services
    • Mobile value added services span a wide range and include:
    • (a) in-network services such as: ring back tones, and voice SMS
    • (b) Voice based portal services such as ringtones, sports updates, stock updates, news and jokes.
    • (c) User generated content services such as contests, auctions, audio streaming etc
    • (d) Interactive media solutions such as tele-voting (SMS to TV), mobile auditions, etc
    • (e) Mobile commerce solutions such as mobile ticketing, bill payments, prepaid recharge and virtual shopping on the telephone.
  • MT2 Etisalat or Du Value chain and revenue sharing model of VAS industry MBC, Rotana Music ADMC’s www.getmoarabia.com Mobile Game content creators www.glu.com Revenue Revenue
    • Content developers/owners: the first stakeholders in the VAS value chain. Such companies have agreements with content aggregators, telecom operators and even handset manufacturers to provide and share content. All music production houses and TV channels etc fall under this category. Example MBC, Rotana, Showtime etc
    • Customized content creators : It refers to companies which create customized contents for users. Mobile games creators such as www.glu.com fall under this category.
    • Content aggregators: These are companies which gather content from different content providers and distribute them according to customers need. Content portal of ADMC www.getmoarabia.com fall under this category.
    • Technology enabler: These companies provide the technology which make the access to various content possible. They provide the platforms that plugs into telcos network and act as a bridge between the aggregators and telecom companies. Platforms for ringtone download, CRBT, IVR, etc fall under this category. Example targeted BP MT2
    • Network operators: These are the mobile service providers who form the interface between rest of the entities in the VAS value chain and the end-consumer. They provider service delivery and support to user of content. For example Etisalat & du
    Value chain: description
  • End user Network Operator Aggregator Content Application owner End user pays for the content Operator keeps 60-70% of the revenue Aggregator gets 20-25% of revenue Content owner10-15% revenue Aggregator Revenue Platforms in VAS industry
  • VAS Value Chain Members and their functional relationships
  • Description of services offered by (M)VAS provider
    • Voice Protocols- Voice Portals are the voice equivalent of web portals, giving access to information through spoken command and voice responses. Ideally a voice portal could be access point for any type of information, services or transaction found on the internet
    • RBT: Ring back tones- Ringtone is the Ring we hear when the phone rings and ring-back is what the caller hears while waiting for the call to be picked up ex some song
    • IVR- Interactive Voice Response is an automated telephony system that interacts with callers gathers information and route calls to appropriate recipients. An IVR system accepts a combination of voice telephone input and touch –tone keypad selection and provides appropriate responses in the form of voice, fax, callback, email.
    • SMS (P2P): Person to Person communication the most common form of communication after voice
    • SMS (P2A): Person to Application SMS inclusive of message sent by end users for contests & for seeking other information like news & updates
    • SMS (A2P) : Application to person SMS inclusive of service push (promotional text messages) by companies.
  • Projected split of (M) VAS sector Globally by 2010
  • (M)VAS Sector Dynamics
    • Innovation is the Key in this sector
    • High Entry Barriers (because of technical infrastructural costs)
    • Inorganic growth strategy
    • Demand driver of the industry is the search for alternate revenue streams by broadcasters
    • In International markets investment by foreign companies is restricted in many markets
    • Several VAS companies are listed on NASDAQ
    • Network operators are tightening their control over the entire value chain (vertical-horizontal integration) by releasing their own services.
    • Revenue sharing model described in earlier slides are likely to change in the future as Network Operators are going to provide marketing on behalf of service providers
  • Contents Importance of (M) VAS for Broadcast & Telecom sector (M)VAS: Industry Background & Functionality Market Potential for (M) VAS companies in Middle East
  • Importance of (M)VAS sector to Broadcasters & Telecom operators
    • Value added service are crucial both to Broadcasters & Telephone Network Operators
    • Shift of value from conduit to content and services in recent years
    • Telephone operators have very low operating margins 1-2% *
    • Phone companies can not sustain themselves with basic telephone services
    • Fee based additional telephone services such as : voice mail, text & image messaging, number & voice info services, games, ringtones, news notification services, information audio, video are crucial for profitability.
    • Mobile telephony including music, games, ringtones, interactive TV is worth more than US$ 45bn globally
    • Till late Middle East market for SMS to TV was estimated to be around US$ 80mn. Given the onrush of new entrants and channel number selling to 450+ broadcasters are keen to exploit this revenue stream.
    • * This may be higher in Middle East given oligopolistic market structure
  • Demand drivers for the (M)VAS sector
    • SMS Contests: The proliferation of TV channels in Middle East has changed TV viewing from a passive to and interactive activity. Daily soaps, music and contest shows provide the option for viewers to participate through SMS.
    • Music: Mobile music has over taken music sales major Music labels are generating 50% of their revenues from ringtones offered through their catalogues likewise mobile rights of movies are being sold in millions.
    • Video/TV and game: Increased use of services such as mobile TV (DVB-H) full motion videos, wireless teleconferencing, multi player online games, and Mobile commerce are all contributing to the growth of VAS (Value Added Services) sector .
  • Int’l example: Overview of VAS market entry process in China
  • Contents (M)VAS: Industry Background & Functionality Market Potential for (M) VAS companies in Middle East Importance of (M) VAS for Broadcast & Telecom sector
  • Growth of Free to Air Satellite Channels in Middle East 2009
  • i-TV (SMS 2 TV) Market in Middle East * Middle East market for SMS to Television chat estimated for US$ 80mn
  • i-TV (SMS 2 TV) Arabsat Nilesat 2007-08
  • Business Indicators Rankings 2009 IPTV Market in Middle East Lebanese company for development of Beirut Solidere IPTV is commercially launched Lebanon Integrated Telecom Provider Orange IPTV is commercially launched Jordan Integrated Telecom Provider Qtel IPTV is commercially launched Qatar - No commercial launch Fiber optic option being considered by Omantel, Nawras Oman - No commercial launch Batelco incumbent service provider Bahrain - No commercial launch Government backed Fiber to Home project Kuwait - No commercial launch Several service providers ITC, STC, GO KSA Integrated Telecom provider Etislat, Du IPTV is commercially launched UAE Description Service Provider Offering IPTV IPTV availability/plans Country .
  • Market Potential for VAS companies in Middle East
    • Market universe for VAS service providers is 45% of the total number of channels *
    • Close to 193 channels have i-TV or SMS to TV business model in use in the Pan Arab market.
    • 45% of the TV market + Telecom service providers (IPTV-market) creates healthy market space and potential for growth to VAS companies interested in establishing in DSC and Middle East.
    • Regional channels and telecom operators millions of dollars over recent years with SMS 2 TV business model
    • “ My channels (Rotana) pay for themselves through these (sms) messages and advertising ” Prince Waleed bin Talal- owner of Rotana Channels
    • Middle East market for SMS to TV chat service currently estimated US$ 80mn where global market stands US$ 42.8bn
    • * This projection might be higher as channels count are duplicated based on their presence on different satellites such as Arabsat & Nilesat at the same time.