B D A    Mo Mo    Exec  Pres 2008 01  F I N A L
Upcoming SlideShare
Loading in...5
×
 

B D A Mo Mo Exec Pres 2008 01 F I N A L

on

  • 3,594 views

 

Statistics

Views

Total Views
3,594
Views on SlideShare
3,592
Embed Views
2

Actions

Likes
0
Downloads
270
Comments
0

1 Embed 2

http://www.linkedin.com 2

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    B D A    Mo Mo    Exec  Pres 2008 01  F I N A L B D A Mo Mo Exec Pres 2008 01 F I N A L Presentation Transcript

    • Future of Mobile VAS in India January 2008 Mohit S. Gundecha Prof. Tom Kosnik Kunal Bajaj Research Associate Fenwick & West Consulting Professor Director – India Stanford University STVP, Stanford University BDA © 2008 Stanford University & BDA
    • BDA Team: • Girish Trivedi – Principal Manager • Deepshikha Garg • Rahul Gupta • Smita Sharma Our special thanks to: • Eric Allen – Wireless Advisor • Veerchand Bothra – Author, MobilePundit • Nitin Brahmankar – Director, IDT © 2008 Stanford University & BDA
    • Table of Contents • Indian Telecom Overview • Introduction to VAS in India – VAS Value Chain – Key Challenges & Hurdles Today • VAS Outlook for India – Addressing Challenges & Hurdles – Assessment of Applications & Services • Projections 3
    • Indian telecom overview Operator Market Share (Nov 2007) Population 1.112 billion Others Idea 7.7% Airtel 9.0% 23.5% Fixed Subs 39.31 million (Nov 2007) Tata Teleservices Mobile Subs 225.46 million (Nov 2007) 9.3% Internet Subs 9.22 million (Jun 2007) Reliance BSNL 17.5% 15.9% Broadband Subs 2.87 million (Nov 2007) Vodafone 17.1% Interesting Market Facts • Despite the continued record growth over the last 12 months, only 23.64% of the country’s 1.1 bn population owns a telephone, which points to a situation where growth is expected to continue and even accelerate • The Big 4 continue to lead in market share, but BSNL is losing ground to the other 3 quickly Source: TRAI, COAI, AUSPI, BDA Analysis Note: Mobile subs data includes fixed wireless customers 4
    • Market continues to show a trend of 8 million net subscriber additions in a month Launch of INR 777 handsets / Record additions in a month Lifetime prepaid below INR 500 9 Launch of 999 scheme 8.3 8.4 8.1 8.0 Verification of 7.8 8 subscribers s 7.0 cle 6.8 7 CC ir 6.7 6.8 6.6 & 6.5 ff B 6.2 6.1 so io n in 5.9 6.1 6 ke ra t ta 5.4 t 5.3 aid ne p Pe re 5.0 4.8 Million 5 cr op 4.4 4.5 Mi 4.3 3.9 4 3.5 2.9 2.6 3 2.5 2 1 0 Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- 05 05 05 05 06 06 06 06 06 06 06 06 06 06 06 06 07 07 07 07 07 07 07 07 07 07 07 • Net new additions in November are the highest up to now, averaging over 8 mn for the past 5 months • With aggressive rollout targets by operators such as Bharti and BSNL who plan to expand coverage to rural areas, the trend of new subs additions will continue Source: TRAI, Morgan Stanley Research, Telecom Watch, BDA Analysis 5
    • Rules of the game Declining Tariff Improved Regulatory Structure Innovative Pre-Paid Tariff Plans 500 Wireless Subs (mn) 400 300 200 100 0 2003 2004 2005 2006 2007F 2008F 2009F 2010F Declining Handset Prices Unprecedented Growth Source: BDA Analysis 6
    • Over the recent years, most new subscribers being acquired have been low- end users, resulting in falling ARPU • ARPUs are dropping as volumes increase – With increased competition, tariffs of voice calls have gradually declined over the years – Most of the subscribers added are from the bottom of the pyramid with low usage resulting in reduced ARPU • Operators are focused on acquiring customers. The fall in ARPU will continue unless operators look at alternative revenue streams like VAS – It is unlikely tariffs will increase given aggressive competition between operators to add subs – Spectrum allocation based on subscriber linked criteria has pushed operators to focus more on acquiring subscribers Mobile ARPUs are Declining Precipitously 1,500 200 Subscriber Base (mn) ARPU (INR/Month) Subscriber (mn) 150 ARPU (INR) 1,000 100 500 50 0 0 2000 2001 2002 2003 2004 2005 2006 Source: Company Information, TRAI, BDA Interview and Analysis 7
    • Operators and handset vendors must adapt their strategies to serve the Bottom of the Pyramid Growth is fastest at the Bottom of the Pyramid Growth is continuing in Growth is continuing in Growth is taking off in semi- Growth is taking off in semi- USO will help continue to USO will help continue to metros and urban metros and urban urban and rural areas urban and rural areas drive coverage gains drive coverage gains Operators and vendors must adapt their Operators and vendors must adapt their strategies and distribution to meet this new growth strategies and distribution to meet this new growth Source: BDA Analysis 8
    • Table of Contents • Indian Telecom Overview • Introduction to VAS in India – VAS Value Chain – Key Challenges & Hurdles Today • VAS Outlook for India – Addressing Challenges & Hurdles – Assessment of Applications & Services • Projections 9
    • India’s VAS market estimates show aggressive growth and decreasing relative importance of text-based offerings VAS Performance Data and Voice Breakup 2005 2006 2% 4% 5% 5% 5% 6% 8% 7% 0.6% 0.5% 1.0% 0.5% 0.5% SMS (P2P) 1.5% 1.0% 3.0% SMS (A2P P2A) 3.6% CRBT / 13.2% 5.0% 40.0% 98% 96% Ringtones 95% 95% 95% 94% 92% 93% 9.6% Voice 35.0% Games 70.0% Data 15.0% E-mail 2000 2001 2002 2003 2004 2005 2006 2007 F Others 100% = USD 438 mn USD 678 mn Voice VAS • VAS services presently contribute 7% of the total telecom revenue for Indian operators • Non voice revenues have been increasing since 2000. The revenue growth is driven by SMS (including P2P, A2P, P2A), contributing over 55% of the total revenues in 2006 • Over the last three years the % share of revenues coming from SMS is on a decline as other services, primarily CRBT / Ringtones gain Source: COAI, IAMAI, BDA Analysis 10
    • VAS today comprises of primarily SMS and content focuses on Bollywood & Cricket • SMS has been recently driven by voting based TV shows. Indian Idol alone received more than 5,400 SMSs per SMS SMS minute during the last 9 voting days • SMS has been reinvented and adopted for mobile data services used by enterprises as well • Bollywood is the killer content and is being used for ring Bollywood/ Bollywood/ tones, CRBT, games and wallpapers Cricket Cricket • It is followed by cricket, around which most of the rest of content is built and marketed • Niche applications like IVR have just started to emerge and have been successfully used in some of TV shows, as IVR IVR well, for auditioning participants • Rural application initiatives have started primarily in pilots, but with innovative services like commodity pricing, their Rural VAS Rural VAS utility is potentially very high in less developed geographies Source: BDA Analysis 11
    • Table of Contents • Indian Telecom Overview • Introduction to VAS in India – VAS Value Chain – Key Challenges & Hurdles Today • VAS Outlook for India – Addressing Challenges & Hurdles – Assessment of Applications & Services • Projections 12
    • The VAS value chain consists of six entities primarily involved in the flow Software Developer Content / Application Owner Technology Handset Enabler Vendor Aggregator Telco Internet Pipeline SI/NI Content Flow Process Flow Consumer Source: BDA Interview and Analysis, Industry Feedback 13
    • Network operators dominate the revenue sharing arrangement in VAS today End user pays End User End User for the content Operator keeps Network Operator Network Operator 60 - 70% of revenue Aggregators get approx Aggregator Aggregator 20 - 25 % of revenue Content / Application Content / Content / owners get 10 - 15% Application Owner Application Owner of total revenue • Overall revenue share split of 70:30 between operators and VAS players applies for both GSM and CDMA operators Source: BDA Interview and Analysis, Industry Feedback 14
    • Table of Contents • Indian Telecom Overview • Introduction to VAS in India – VAS Value Chain – Key Challenges & Hurdles Today • VAS Outlook for India – Addressing Challenges & Hurdles – Assessment of Applications & Services • Projections 15
    • VAS challenges … Operator Challenge Operator Challenge User Challenge User Challenge •• Operators focusing on Operators focusing on •• Operators not driving user Operators not driving user subscriber acquisition with no subscriber acquisition with no awareness to promote various VAS awareness to promote various VAS incentives to push VAS in light incentives to push VAS in light offerings offerings of current spectrum allocation of current spectrum allocation •• Ease of use, user interface and Ease of use, user interface and criteria criteria familiarity with medium of access familiarity with medium of access •• Spectrum constraints and delay Spectrum constraints and delay such as GPRS, IVR etc are some of such as GPRS, IVR etc are some of in 3G roll-out has substantially in 3G roll-out has substantially the challenges for the end user the challenges for the end user limited high-end VAS take-off limited high-end VAS take-off Value Content Localization Challenge Content Localization Challenge Revenue Challenge Added Revenue Challenge •• Operators haven’t done much Operators haven’t done much Services •• Ongoing tussle between operators Ongoing tussle between operators to customize content according to customize content according and VAS companies for revenue and VAS companies for revenue to consumer behaviour to consumer behaviour share continues share continues •• Limited availability of local web Limited availability of local web •• Since alternative models haven't Since alternative models haven't content and WAP versions of content and WAP versions of evolved yet, this has hampered VAS evolved yet, this has hampered VAS whatever is available whatever is available innovation innovation Device Challenge Device Challenge •• Providing feature-rich handsets at Providing feature-rich handsets at low cost is a big challenge with GPRS low cost is a big challenge with GPRS enabled handsets still around INR enabled handsets still around INR 2,599 (USD 63) 2,599 (USD 63) •• Pre-loading of applications by Pre-loading of applications by handset OEMs has not really caught handset OEMs has not really caught on yet on yet Source: BDA Analysis 16
    • Table of Contents • Indian Telecom Overview • Introduction to VAS in India – VAS Value Chain – Key Challenges & Hurdles Today • VAS Outlook for India – Addressing Challenges & Hurdles – Assessment of Applications & Services • Projections 17
    • VAS challenges – moving on … Operator Challenge Operator Challenge User Challenge User Challenge •• Regulatory uncertainty Regulatory uncertainty •• Traditional VAS – SMS, CRBT and Traditional VAS – SMS, CRBT and around spectrum is going around spectrum is going ringtones will continue to grow with ringtones will continue to grow with to continue to hinder to continue to hinder increased awareness increased awareness promotion of VAS promotion of VAS •• Awareness will remain a problem for Awareness will remain a problem for •• With 3G, operators will With 3G, operators will advanced VAS services unless advanced VAS services unless increase their focus on increase their focus on marketing is done by VAS companies marketing is done by VAS companies mobile internet VAS for mobile internet VAS for themselves to educate users themselves to educate users high end users high end users Value Content Localization Challenge Content Localization Challenge Revenue Challenge Added Revenue Challenge •• IVR will be a solution to local IVR will be a solution to local Services •• Advertisements will be a new revenue Advertisements will be a new revenue language support language support avenue for VAS players and could avenue for VAS players and could •• Creating the locally relevant Creating the locally relevant offer them the independence they offer them the independence they content will still require content will still require need to succeed need to succeed substantial investments substantial investments •• Mobile advertising will benefit Mobile advertising will benefit operators, advertisers, VAS players operators, advertisers, VAS players and consumers and consumers Device Challenge Device Challenge •• Devices are no more a challenge Devices are no more a challenge with more features getting added at with more features getting added at Challenge will be overcome lower price points lower price points •• VAS players and handset vendors VAS players and handset vendors Challenge may be overcome or are forming partnerships to embed are forming partnerships to embed could continue to exist applications applications Challenge will continue to exist Source: BDA Analysis 18
    • Table of Contents • Indian Telecom Overview • Introduction to VAS in India – VAS Value Chain – Key Challenges & Hurdles Today • VAS Outlook for India – Addressing Challenges & Hurdles – Assessment of Applications & Services • Projections 19
    • Industry sentiment gives a clear indication where the revenues are likely to come from Industry Application For Against Feedback • Enhanced messaging • Convince advertisers about SMS ads SMS SMS experience for users • Contextual advertising could be • Contextual targeting of users intrusive in nature • Micro payment for merchants • As a cash & cheque country, will take Mobile Mobile on the move, mobile vouchers time for mass market to adopt Commerce Commerce • Remittance and P2P transfers mCommerce • Full music download & • Pricing and network quality / speeds Mobile Mobile streaming over 3G critical for the success Music Music • Extension of current services • Platform for youth socializing • Bandwidth hampers content sharing UGC/SNC UGC/SNC • Online UGC/SNC gaining • Handsets deliver poor user popularity in India experience in viewing size & browser • Easy learning curve, regional • Not affordable for the masses, due to language content premium charging on per min basis IVR IVR • Capable of replicating info • Lack of refined digitized local service from SMS or WAP language content Source: BDA Interviews and Analysis, Industry Feedback 20
    • Industry sentiment about internet apps being ported to mobile are mixed, especially given low data enabled handset penetration Industry Application For Against Feedback • Access IM on the move & • Premium charging for messages IM IM replicate internet experience • Text entry, especially for local language • Across business segments will • Handset cost & overall investment in E-mail E-mail see increasing adoption of initial implementation is high e-mail on the move deterrent • Access to quick, actionable • Lack of digitized locally relevant Search Search information on the move content (e.g. listings, maps) in India • Useful for warehousing, field • Low level of business computerization force resource tracking and fleet • Lack of detailed mapping content LBS LBS management for businesses • User demand not significant Source: BDA Interviews and Analysis, Industry Feedback 21
    • Table of Contents • Indian Telecom Overview • Introduction to VAS in India – VAS Value Chain – Key Challenges & Hurdles Today • VAS Outlook for India – Addressing Challenges & Hurdles – Assessment of Applications & Services • Projections 22
    • In the medium term most of the current challenges will be addresses by both operators and VAS players… 2006-07 Trends Medium Term Growth Driver • Subscriber growth at the low end has led to • Overcoming challenges will rely on shifts in declining per capita VAS usage 2006-07 Trends 2006-07 Trends industry direction caused by regulatory changes • Declining prices induced volume growth like • Subscriber growth at the low end has ledNumber Portability per of Subscriber growth at the lowend has led to declining per – Mobile to declining • Cost • smart phones & features rich handsets – Allocation of 2G spectrum continue capita VAS usage capita VAS usage to decline, increasing adoption – Introduction of 3G • Non-regulatory changes like • Declining prices induced volume growth • Declining prices induced volume growth – Availability of payment systems other than the telco 2008-09 Trends • Cost of smart phones & features richAd-supported VAScontinue toand thus handsets continue to • Cost of smart phones & features richconsumers and VAS companies gain power – handsets gaining ground, • Continued low ARPU subscriber growth, forming decline, increasing adoption decline, increasing adoption majority of net adds will ensure growth of – Promotion of bundling data plans with voice traditional VAS – Large numbers of users experiencing internet for first time on mobile devices • Operators focus shifts from customer acquisition • And continuation of ongoing trends to VAS promotion, but very slowly – Product innovation and ease of use • Device challenge will start to decline – Device improvements allowing more “on the go” • Primary focus on reinvention of traditional VAS – Shorter VAS adoption cycles & early adoption of high end services Source: BDA Analysis 23
    • In the medium term most of the current challenges will be addresses by both operators and VAS players… 2006-07 Trends Medium Term Growth Driver • Subscriber growth at the low end has led to • Overcoming challenges will rely on shifts in declining per capita VAS usage 2008-09 Trends 2008-09 Trends industry direction caused by regulatory changes • Declining prices induced volume growth like • Continued low ARPU subscriber growth, forming majority of of Continued low ARPU subscriber growth, forming majority • Cost • smart phones & features rich handsets – Mobile Number Portability of – Allocation of 2G spectrum continue net adds will ensure growth of traditional VAS net adds will ensure growth of traditional VAS to decline, increasing adoption – Introduction of 3G • Non-regulatory changes like • Operators focus shifts from customerAvailability of payment systems other than the • Operators focus shifts from customer acquisition to VAS – acquisition to VAS promotion,Trends very slowly promotion, but very slowly 2008-09 but telco – Ad-supported VAS gaining ground, and thus consumers and VAS companies gain power • Continued low ARPU subscriber growth, forming • Device challenge will start to decline majority of net adds will ensure growth start to declinePromotion of bundling data plans with voice • Device challenge will of – traditional VAS – Large numbers of users experiencing internet for • Primary focus on reinvention of traditional on mobile devices first time • Operators focus shifts from customer acquisition of traditional VAS & early • Primary focus on reinvention VAS & early • And continuation of ongoing trends to VAS promotion, butof high end services adoption of high end services adoption very slowly – Product innovation and ease of use • Device challenge will start to decline – Device improvements allowing more “on the go” • Primary focus on reinvention of traditional VAS – Shorter VAS adoption cycles & early adoption of high end services Source: BDA Analysis 24
    • In the medium term most of the current challenges will be addresses by both operators and VAS players… 2006-07 Trends Medium Term Growth Driver • Subscriber growth at the low end has led to • Overcoming challenges will rely on shifts in Medium Term Growth Driver Medium Term Growth Driver declining per capita VAS usage industry direction caused by regulatory changes • Declining prices induced volume growth like • • Overcoming challenges will rely on shifts in –industry direction caused by Overcoming challenges will rely on shifts in industryNumber Portability Mobile direction caused by • Cost of smart phoneschanges like handsets & features rich regulatory changes like regulatory – Allocation of 2G spectrum continue to decline, Number Portability – Mobile increasing adoption – Mobile Number Portability – Introduction of 3G – – Allocation of 2G spectrum Allocation of 2G spectrum • Non-regulatory changes like – – Introduction of 3G Introduction of 3G – Availability of payment systems other than the • Non-regulatory changes like • Non-regulatory changes like telco 2008-09 Trends – Availability of payment systems other than the telco– Ad-supported VAS gaining ground, and thus – Availability of payment systems other than the telco • Continued – Ad-supported VAS gaining ground, and thus consumersconsumerscompanies gain powergain power – Ad-supported VAS gaining ground, and thus consumers and VAS companiescompanies low ARPU subscriber growth, forming and VAS and VAS gain power majority of–net adds will ensure growth of with voice – Promotion of bundling data plans with voice Promotion of bundling data plans – Promotion of bundling data plans with voice traditional – Large numbers of users experiencing internet for first time onnumbersdevices experiencing internet for – Large mobile of users – Large numbers of users experiencing internet for first time on mobile devices VAS first time on mobile devices • And continuation of ongoing trends • And continuation of ongoing trends • Operators focus shifts from customer acquisition • And continuation of ongoing trends to VAS promotion, but very slowly ease of use – Product innovation and ease of use – Product innovation and – Device improvements allowing more “on the go” – Product innovation and ease of use • Device challenge willimprovements allowing more “on the go” – Device start to decline – Device improvements allowing more “on the go” • Primary focus Shorter VAS adoption cycles – Shorter VAS adoptiontraditional VAS – on reinvention of cycles – Shorter VAS adoption cycles & early adoption of high end services Source: BDA Analysis 25
    • How do the numbers stack up W-VAS Services Performance Forecast 2007 2010 CAGR% 5.9% 2.0% 3.0% SMS (P2P) 26% 8.9% 19.8% 3.0% 30.0% SMS (A2P P2A) 20% 5.0% CRBT / Ringtones 18% Voice 82% 13.9% 9.0% 7.9% Games 63% Data 141% 6.9% E-mail 138% 18.8% 35.0% 13.0% Others 82% 17.8% Overall CAGR 44% 100%= USD 926.3 mn 100%= USD 2,744 mn VAS Revenues Forecast 2007-10 4,000 VAS as % of Total Rev Revenues (USD mn) 12% 12% 9% 3,000 8% 7% 8% 2,774.1 9% 6% 2,000 5% 1,813.1 1,250.4 6% 926.3 1,000 678.6 3% 237.8 437.7 0 0% 2004 2005 2006 2007E 2008E 2009E 2010E Source: BDA Analysis 26
    • 2010 and beyond… 2010 and Beyond • Share of traditional VAS will decline to less than 50% in 2010 from nearly 80% today • Mobile Data / Internet, E-Mail, and IVR based services will achieve the highest growth rates • VAS companies will start seeing the environment favoring them • Operators will heighten focus towards VAS as a requirement to sustain revenue growth and monetize slowing user base expansion • Industry will witness much awaited hockey stick growth beyond 2010 Source: BDA Analysis 27
    • Contact Details Stanford University Team BDA Team Mohit S. Gundecha Kunal Bajaj Research Associate Director - India Stanford Technology Ventures Program kunal.bajaj@bdaconnect.com mohitsg@stanford.edu mohitgundecha@gmail.com Girish Trivedi - Principal Manager Deepshikha Garg, Rahul Gupta Prof. Tom Kosnik Smita Sharma Consulting Professor Stanford Technology Ventures Program India: +91 11 4700 3100 kosnik@stanford.edu China: +86 10 8529 6164 contactus@bdaconnect.com www.bdaconnect.com © 2008 Stanford University & BDA