A television ad with walking, talking, singing fingers will be aired from Monday to promote Star India Pvt. Ltd’s new venture into entertaining mobile-phone users. The commercial will showcase PLUS—a portal where mobile users will be able to catch a synopsis of last night’s soap opera episode of Kyunki Saas Bhi Kabhi Bahu Thi, play a game, bank with HDFC Bank Ltd or book a ticket on travel booking website travelguru.com.
The ad will be part of a marketing blitz on the Internet, on hoardings and in the mail, and there also will be on-the-ground support to help customers figure out how to get PLUS onto their phone.
The launch of PLUS marks a movement in the mobile content industry towards more interaction between those who create the entertainment and those who consume it. In the past, companies which specialize in creating entertainment for mobiles have not had much direct interaction with the young Indians playing their games and downloading their ringtones. Most of the interaction—be it advertising or selling—has gone through the mobile telephone companies.
But mobile content creators increasingly want to talk with their end-customers. “We want to go direct to the consumer by building our own brands, marketing and creating our own WAP portals,” said Ravi Garg, chief operating officer at mobile gaming company Nazara Technologies Pvt. Ltd, which has the rights to any mobile content using Sachin Tendulkar’s name.
Mainly, they want to increase their brand recognition and ultimately use that as leverage to increase their current 20-30% revenue share with the mobile operators.
They also want to help the mobile operators expand the entire market—which is dubbed in the industry value-added services (VAS) and includes SMS contests, ringtones, wallpaper, movies, music and games.
Star has tied up with the mobile operators for PLUS, but has its own marketing budget, and will work directly with consumers who have trouble figuring out this new technology (it requires the more advanced service called GPRS).
“The industry wants to go directly to the consumer in order to drive richer content and better revenue share,” said Viren Popli, senior vice-president of mobile entertainment at Star who is leading the charge for PLUS. “The first step is to build recognition as a destination with the consumer and then monetize that relationship in different ways.”
Star, a newcomer to the industry of mobile content providers, may help in paving the way for others to interact directly with the consumer.
“We have not been able to move the market in terms of revenue share,” he said. “But the operators have said, ‘we’ll give it a try and if it becomes popular we can talk again.’”
Garg of Nazara said revenue sharing in India has been inconsistent with international standards where the creators get as much as 80%. “I think VAS is skewed towards operators,” said Ninad Chhaya, executive vice-president at mobile-gaming company Jump Games Pvt. Ltd. “It is still a while before content providers get a decent revenue,” Chhaya added.
The content creators, like all others in the mobile space, are positioning themselves to take advantage of the mobile market, which they say has vast potential for growth with more than 150 million subscribers in India and growing at a pace of about six million additions a month.
The companies that consider themselves content creators include Indiagames Ltd, Hungama Mobile, Nazara Technologies, Mauj, Jump Games and Mobile2Win India Pvt. Ltd.
Mobile companies say they have seen huge revenue growth but, as the market has expanded, the revenue per user has declined. That is where the sale of games, ringtones and SMS contests come in—a chance to boost up the revenue per user.
According to a recent report from the Internet & Mobile Association of India (IMAI), the VAS market is at an early stage but the industry is expected to start taking off this year.
“The mobile VAS industry in India is estimated at Rs2,850 crore at the end of 2006 and is estimated to grow at 60% to touch Rs4,560 crore at the end of 2007,” the report said.
The entertainment creators have said that they seek to further open the VAS market by doing more direct advertising to their consumers and also expanding on-line and into retail.
“Direct-to-consumer action, especially in the first round, will happen more on the retail side,” said Saleem Mobhani, chief operating officer at Hungama Mobile. “If you want to download full songs or full movies, how else can you do it but use in a retail format?” he added.
For example, given that 80% of mobile users have a pre-paid plan, the time when they come into the shop to replenish the phone is the best chance to sell VAS.
Mobhani said his company is set to launch kiosks inside a consumer chain in line with this trend. And he noted that he has been given a target to get 10% of revenues this year from retail—a goal that he didn’t have last year.
Pankaj Sethi, vice president of value added services at Tata Teleservices Ltd, said that a potential problem with this model is that VAS is an impulse purchase, which may be hampered by a retail set up.
As for mobile content creators going directly to the consumer, Krishna Durbha, president of value-added services at Reliance Communication Ltd, said that the costs of mobile operation in the Indian market could not be compared with many of the other international markets.
The industry does, however, agree to take any action possible that gets more mobile users downloading the extras. “We are completely open to them providing the best content to our subscribers,” Durbha said. “We welcome any third-party content partners to help grow this business,” he added.
Rajesh Jain, founder and chief executive officer at software solutions provider Netcore Solutions Pvt. Ltd. said mobile content providers would find it difficult to go directly to the consumer because billing remains a problem and because of that, mobile phone operators will dominate.
Operators need to realize that “the market can only expand when you let a thousand flowers bloom,” he said. “Only with an open publishing platform is made open, will you see the next jump.”
In China, content providers get 80% and in Japan they get 90% of the revenue, noted Jain, whose company has its own mobile portal. “These changes are still a pipe dream.”