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Intense competition in the Indianmobile market is prompting the industry to look at value-added services or VAS to boost average revenue per user (ARPU).

A recent report by the Internet and Mobile Association of India (IAMAI) says the current VAS market will grow by 60 per cent in 2007 to around Rs 4,560 crore by the end of the year.

There are some hurdles in the way - absence of utility services, lack of transparency in revenue sharing, an underdeveloped WAP/GPRS market, lack of infrastructure, and a preference for low-feature handsets.

Industry watchers believe the solution lies in regionalisation. This would mean taking VAS, a predominantly cosmopolitan feature, into tier-2, tier-3 cities, and into the rural mainland of the country itself.

Simply put, regionalisation would mean operators reach people in rural geographies - and serve them services using their local language and cultural flavour.

`Regionalisation inevitable'

Says Salim Mobani, COO, Hungama Mobile, a provider of mobile marketing applications and publisher of mobile content, "regionalisation of VAS is an inevitable reality. As operators go more into the smaller-ARPU base, they will have to target pockets that have been so far unaddressed."

According to the IAMAI, regional content is getting popular in both voice applications (that operate by means of verbal rather than textual communication) and non-voice services, especially in the entertainment category.

Do, know and enjoy

At Hutch, VAS has been categorised under three heads: Do - Services and applications that we use, such as phonebook backup; Know - News, location-specific information such as movies, restaurants, taxi services, etc, available on, for example, PlanetHutch; and Enjoy - music, movies, games, etc.

"Out of these, Know and Enjoy would form the core part of regionalisation of VAS, wherein the content is specifically tailored to location-specific information and local taste," says Harit Nagpal, Marketing Director, Hutch.

Agrees Rajiv Hiranandani, Country Head, mobile2win India (provider of VAS), "Consumers in rural India want entertainment on their phones given the lack of other options. This entertainment will obviously be in their local languages carrying the regional flavour."

Who wants it, and how

Though it is difficult to quantify the scope of regional language VAS, Nitish Mittersain, CEO, Nazara Technologies, believes the regional VAS market would not be less than Rs 200 crore.

Some players say that regionalised VAS content should appeal to two kinds of people. The first kind lives in a particular rural region and hence can follow only a particular language. "For this segment, which mostly comprises people from the low-income bracket, both the handsets and the application need to be cost-effective," says Amit Zaveri, CEO, Enable M, a company that provides content in the community-building and utility-based application space.

The second kind consists of people who use a particular language out of choice and not necessity. These customers — who account for a miniscule percentage — have a preference towards a particular language and hence want high-end content in that language.

Sometimes it is content itself, and not merely the language alone, that needs to be given a regional flavour. "It is not only about serving news in Tamil to the regions of Tamil Nadu, but it is about highlighting news that is relevant to the State and hence would interest the population," reckons Mahesh Prasad, President, Applications and Solutions Group, Reliance Communications.

According to market players, effective regional content can be created only after studying the dynamics of the lower tier cities and rural regions. However, there hasn't been a conscious effort to profile the rural user to understand his tastes, avers Mittersain of Nazara Technologies. "We can generalise a few things about the metros, but not about the rural populace," he says.

The ABC of use

Regional users will continue to flock towards regional and local content revolving around ABC (astrology, bollywood and, cricket), says Nagpal of Hutch: "Music, casual games, regional videos, news alerts in regional languages (such as the daily prices of pulses) would be the key drivers of region-based VAS." He further believes that innovative content that is based on regional festivals, regional contests and `music theme packs' in various languages would be the way forward.

Even digital gaming, mythological content and a focus on regional celebrities are bound to pick up. The pie for regional VAS is expected to be along these lines: Music - 60 per cent; Gaming - 5 per cent; Mythology and others -10 per cent and Graphics - 25 per cent, according to Mittersain of Nazara Technologies.

"The scope of regional language-VAS is proportionate to the subscriber base and hence South Indian languages, Gujarati, and Bengali content will lead the pack," says Prasad of Reliance Communications.

Problems in the way

Complicated content and non-feasibility of usage seem to be the major bottlenecks in promoting VAS to the lower ARPU regions. For, despite the growing popularity of mobile messaging, handsets are still not easy to use for messaging or for multimedia. This is because a vast majority of the customers are unclear on how to download content on their handset and use it.

Says Prasad of Reliance Communications, "Even in cases where people don't understand the language, people engage in visual navigation, which further demands content to be simple".

Though handset costs have significantly dipped in the last two years, price points are still an issue.

Language-handset compatibility is also an issue. "Voice-specific content is phone agnostic, but the handsets may not support text in so many different Indian languages," says Nagpal of Hutch. This could possibly be due to lack of digitalisation of local content, making it incompatible with mobile handsets.

Mobile surfing must become as easy as operating a remote control to enable access to the smaller ARPU bases, stresses Mobani of Hungama.

SMS and beyond

Another school of thought believes that SMS-based products cannot sustain business by themselves. "Rich media content (such as video clips of cricket matches) is going to be a major driver, especially in the sports content segment," says Sricharan Iyengar, Vice-President, Sales and Marketing, ESPN Software.

Rich media is well suited to cater to the needs of the Indian subscriber - a subscriber who is an avid TV viewer and not tech-savvy or extremely fluent in English and Hindi, according to a report from Pyramid Research.

Revenue models

Skewed revenue sharing models, on which content developers and aggregators work with the operator, are also seen as a possible deterrent. "A lot of investments and resources go into creating and developing regional content.

This can only be covered if telecom carriers give us a higher revenue share, " says Hiranandani of mobile2win.

Typically, operators mop up 60 per cent of revenues with the remaining being distributed between aggregator (15 per cent) and owner (25 per cent.). A fair position for the Indian context would be sharing 60 per cent of the revenues with the content developers and aggregators, believes Mittersain of Nazara.

However Nagpal of Hutch, says: "Revenue shares are defined based on type of content, quality of content/service, or on demand. Revenue shares are also defined on what the respective parties bring to the table."

Players in the mobile space, having anticipated the trend, are focusing heavily on regional content development.

Hungama Mobile, which acquired about 13 regional labels in 2007, seems to be leading the pack. The company will be setting up 12 more offices in the next 2-3 months to focus on regional content.

ESPN software India is working on a pilot project to bring SportsCentre (ESPN's sports news) in Tamil and Bengali soon, says Sricharan Iyengar.

"We will be recruiting about 10-12 content developers in various parts of the country so that they can bring in the regional flavour," says Mittersain of Nazara.

Hutch uses localised mediums such as PoP and FM radio to promote regional content, according to Nagpal. Reliance provides bollywood, hollywood, cricket, mobile banking, exam results and guides on the mobile.

adith@thehindu.co.in

Graphics: S. Kannan

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