The Indian mobile value added service (MVAS) market is set to reach $6.106 billion (Rs 33,280 crore) by 2013 at an estimated growth rate of 28 per cent. The market is currently at $4.771 billion (Rs 26,000 crore) and it grew 32 per cent from $3.615 billion (Rs 19,700 crore) in 2011. This basically means that while the market size will continue to increase, its growth rate will mellow down.
Also, while the average revenue per user (ARPU) has declined over the years, the per user spent on MVAS alone has gone up by 28 per cent in the last one year and is now 27 per cent of the ARPU, according to a report by Internet & Mobile Association of India (IAMAI). This clearly shows that the users’ dependency on voice services is reducing, while their interest in MVAS in increasing, which is not that surprising since a recent study showed that making calls is the least favourite activity of smartphone users.
As of now, the MVAS market can be divided into two major categories — current MVAS that has a 63 per cent market share and emerging MVAS that accounts for the rest.
The current MVAS category primarily consists of ringtones, caller ring back tunes and SMS services like live cricket updates, horoscope updates, voting, contests and wallpapers, etc. These can be accessed on basic phones and do not require higher bandwidth or high handset specifications. Also, due to the convenience and ease of usage, current MVAS accounts for the highest share of the MVAS market and will continue to grow strong.
Emerging MVAS category consists of mobile apps and games that have enhanced content. These require higher data usage and need phones with an ability to download applications and process them, like smart phones and hence the low share of the MVAS market. But with the new innovations in technology and the affordability of data plans (almost all operators have already reduced the prices of 3G), these emerging MVAS will gain momentum in the near future. The increased penetration of smart phones and the increasing number of mobile Internet users will also help. As of March, there were 48 million mobile Internet users in India
Apart from these categories, m-Commerce needs a special mention among the MVAS services since more than being an application or service, it will act as an enabler for the user to make payments from their mobile devices.
Uptake in MVAS spend
As of now, pre-paid consumers account for 96 percent of the Indian mobile telecom market, which has over 919 million mobile subscribers. And almost 80 per cent of their monthly mobile expenditure is spent on voice services. Of the rest, majority goes for SMS and Caller Ring Back Tune (CRBT) related MVAS services and a very small amount is spent on other MVAS apps. The percentage share of per user spend on MVAS in the total ARPU has been increasing gradually and currently the per user spent of MVAS stands at Rs 24 per month per user, as per the report.
Future of MVAS
The MVAS industry has been one of the major drivers of growth of the Indian telecom industry over the last few years and it will continue to be so, with a lot of action expected in some areas.
Improved connectivity will allow better and more interactive ads instead of the current boring SMS based ones. Due to the linguistic diversity of India, content in local languages will be a must to better appeal to a larger group of users.
The rural MVAS market has a lot of untapped potential and location based services and local language content will be the key to serve this market.