Mumbai: Mobile value-added service (VAS) providers are preparing to offer cellphone applications delivering live news and movies to medical diagnosis and tutorials after the release of 3G spectrum, which is expected to give a boost to the estimated Rs16,250 crore VAS market.
Nine telecom firms including Bharti Airtel Ltd and Vodafone Essar Ltd are participating in the government’s auction of 3G radio spectrum, which will enable video calls and high-speed data transfer, spawning a whole new ecosystem and creating a new revenue stream for media agencies.
Bids for an all-India licence reached Rs8,380 crore two weeks after the auction started on 13 April.
“Some of the media service companies in the domestic market are creating mobisodes already,” says Lloyd Mathias, president and chief marketing officer of Tata Teleservices Ltd. “With 3G, there will be enough bandwidth to download whole television shows at one go.”
Mobisodes are half-hour TV shows broken into five to seven minute segments. Mathias adds that for VAS providers, there will be opportunities in areas such as video-chatting and video-aided phone ringtones (video and real music sounds when one gets a call).
India’s VAS market has been projected by the Internet and Mobile Association of India (IAMAI) to almost triple from Rs5,780 crore in June 2008 to Rs16,250 crore by June 2010, riding the coattails of a wireless market that has expanded to more than 500 million mobile phone users.
“With 3G rollout, we estimate the $1.7 billion (Rs7,582 crore) VAS business in India to experience a growth of $5 billion over the next three years,” says Neeraj Roy, managing director and chief executive officer of mobile and digital entertainment firm Hungama Mobile. “The estimated revenue through Internet-based advertising in India may reach $700 million potentially by 2012.”
Television channels say they’ve already been dabbling in mobile-specific content whose development will accelerate with the introduction of 3G services.
Zee Entertainment Enterprises Ltd has had mini-versions of its soaps—half-hour slots condensed into three to seven minutes. Star India Pvt. Ltd has an application called Star Player on its website, which loads half-hour slots of its popular shows.
Nearly all the content consumed on Star Player is by computer users; few people access it by mobile phone, according to Anupam Vasudev, Star India executive vice-president, marketing. Then again, he adds, this could be because of slower speeds that will be addressed once 3G services are available.
Star is prepared to usher in new audiences via 3G with the help of its digital and mobile capabilities in-house, as long as demand is there for such content, says Vasudev.
Saregama India Ltd, a firm that has one of the largest music catalogues in India, says it is looking closely at 3G. It will launch a website in June that will allow consumers to access its catalogues and download and buy music from the site through mobile phones.
“This is beyond the existing VAS content such as ringtones that are available to consumers,” says Apurv Nagpal, managing director of Saregama.
“I think, global trends are already showing that the availability of 3G has a substantial impact,” he says. “If you look at markets such as Hong Kong or Kuala Lumpur, consumers are already accessing everything from soap operas to movies on their mobile phones.”
Kunal Dasgupta, former chief executive of Multi Screen Media Pvt. Ltd, is also looking at the 3G space. 3G would only make entertainment bigger, he says. “Tomorrow you could order a movie on-the-go (on mobile),” he says.
The leap from second-generation to third-generation mobile phone services is “a bit like the difference between dial-up Internet services and broadband,” says Prasanth Mohanachandran, the former director of digital services at OgilvyOne. “You wouldn’t be able to watch YouTube on a dial-up connection, would you?”
Mohanachandran says that developed markets use 3G for education and health services. “Abroad, they have laws that restrict the first diagnosis (with the doctor) via mobile video. But you can do follow-up (medical consultation) via video on 3G. Similarly, you have educational experts connected with students on mobile.”
R. Gowthaman, leader, Mindshare, GroupM India Pvt. Ltd, says that mobile ad spends are at Rs120 crore currently and are likely to see 70-80% growth on the back of 3G. “It will bring in a whole new revenue stream for media broadcasters in the area of content rights. The potential is huge,” he says.
3G is also seen as an opportunity for screen-specific advertising, helping brands to target their audience better. They could target consumers in a specific geographical area as well.
For instance, a Kentucky Fried Chicken outlet in Bandra (in Mumbai) could reach out to consumers around the store through a tie-up with the telecom operator with a 3G licence, offering them afternoon discounts, says Jatin Ahluwalia, chief executive officer, vRock Mobile Communications Pvt. Ltd, which has partnered with the Indian Premier League for global messaging rights.
“3G will give us that outstanding platform which allows us to deliver not just text-based content but also full motion video transfer or live streaming on the go,” says Ahluwalia.
To be sure, the euphoria could be premature. It’s not clear how long it will take consumers to embrace the technology, and whether the business model will be advertising-driven or based on subscriptions.
“Even in markets (with more 3G and broadband penetration), television is the dominant medium. The demand has to come from consumers (for mobile content),” says Vasudev of Star.
Manish Agarwal, chief executive officer, UTV New Media Ltd, however, thinks that applications, subscription and advertising can co-exist. “Applications are the way to go now as they are interactive and customized to the individual as well as the device. As the number of users and the time spent increases, the ad-model will evolve,” he adds.