Mobile VAS revenues in India are estimated at $ 1 billion (end of ’07) and is growing substantially year. But everyone on the ground knows the realities very well.
- Much of that money goes to operators (60-70%). A large chunk of these earnings are pure SMSes and music based services
- 50% of what your aggregators is actually more like 12% of the actual sale price (not including tax deductions). Why? Because aggregators get only about 25% from a carrier and 50% of that 25% revenues is about 12.5%. Some of them re-publish to other aggregators (the chain of middlemen continues) thereby reducing the overall ROI for the publishers
- Much of that money never actually comes back to the content developer (minimum $100 revenue earnings, $25 required to wire this to you). Transparency is low in this business.
- Getting a product / service launched with a carrier (no matter how compelling you think it is) is next to impossible.
- Even if they do agree to partner with you, it would be purely on exclusive basis, no one wants to sign a contract and the carrier, aggregator will never actually commit, how much of funds they will commit to A&P.
And so what really is the scenario of the marketplace? With a large developer pool, India has barely scratched the surface in terms of realizing VAS to its true potential. There are a few cutting edge mobile services that have actually been commercial hits. Those companies who are successful have been mostly peddling ringtones, bollywood & cricket premium content, IVR services (call us and we will rip you off at Rs 6 per minute). A few offer managed services to telcos.
The real issue
Operator stranglehold over the ecosystem is one big issue. The established business model (pay for everything) is another. Today – mobile content and services ecosystem is where Internet was several years ago.
Is mobile advertising an option?
Mobile advertising is an important alternative option. A larger addressable audience (170+ million), and the fact that mobile phones are very personal and ubiquitous is driving advertisers to try mobile advertising. Today, mobile advertising is the answer to mobile content developers’ and publishers ‘woes. A sustainable revenue model, carrier independent and better revenues are drivers for mobile publishers. The success of Admob internationally has shown that mobile advertising works.
Mobile content developers should start early and realize the benefits of alternative revenue stream. This would not only help them to focus on their products, and launch innovative products and services in the marketplace, it would also benefit the subscribers. And, given the fact that the carrier is also going to gain by increased traffic and better ARPU’s, they won’t be complaining either.
At ZestADZ, our vision is to create this ecosystem of mobile services which like the Internet, provides free services, content, entertainment in return for strategically placed advertising. There is no such thing as free lunch but there should be free ringtones, free mobile email, free SMS and maybe even free calls.
ZestADZ offers a mobile publisher program that enables mobile publishers to tap into mobile advertising as an alternative and viable revenue stream. To know more information email us at publisher [at] zestadz dot com or register as a publisher at http://www.zestadz.com
Though we are at very early stages – a few months into the beta, I am glad to say that we have signed up several advertisers and making substantial progress every day.