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Mobile VAS (MVAS) presents tremendous opportunities to build new businesses in India. A lot of new VAS vendors have emerged in the industry in the last several years but there have not been more than a handful of MVAS companies in India breaking the $10 million revenue mark (Note crossing $10 million mark is not necessarily a “success” yet as far as venture investments go but is a significant milestone for purposes of this article) What kind of MVAS companies have been successful in India? Platform Plays: Onmobile, Comviva, Cellebrum, IMI, One97 communications (The top 5) are Platform plays. Although revenue shares are low, overtime these companies have grown volumes which may be delivered via multiple applications running on the same platform. Examples of such services are IVR Platforms delivering content or direct marketing or customer service, chat services etc.

Mass Market Plays: Mass market plays have generally garnered greater mindshare of the operator and led to better monetization. Its no surprise that the top 5 play primarily in the voice services space which is mass market access medium. Controling your Destiny: Companies (like Indiatimes) that take destiny into their own hands and do not rely on the operator to market their products and service. They do have billing relationships with the operator but have greater control over the value chain leading to better revenue share with operators. Entertainment Rules: Entertainment focused companies have been one of the earlier successes in MVAS in India (although it is getting tougher to play this game)Companies providing Music content/services (Ring tones and Ring Back tones) have been successful. Super aggregators of music like Hungama ; players that provide both music (content) and a technology platform to deliver it have done well. However Music services have worked largely over the SMS and voice channels. Over the Air downloads of music and retail model for music have not seen much success yet.

Gaming has also been a significant revenue generator on the content side although only a few Indian companies like India Games have done well. Gaming is a hits business and therefore requires you to be patient, have good game design and processes for strong development pipeline. What kind of companies have struggled? The barrier to produce VAS products or services is very low as a result we have a number of largely undifferentiated players. The large Mobile industry (multiple operators, 20+ circles, large consumer base) ensures that most of these companies have enough to survive but not enough to grow into a large player. The overdependence on operator to grow (marketing, billing) and the essentially undifferentiated product offering has led to poor revenue shares in favour of the vendors. There are many more reasons that have led to an MVAS ecosystem that favours the operators, large VAS players and penalizes the smaller ones. But there are some commonalities amongst companies that have struggled. Those developing single / few applications without leveraging a common platform loose out to those that have an installed base. Companies that develop undifferentiated products/services. Small content aggregators tend to get squeezed out between the operator and content owner and pure technology providers tend to get commoditized quickly. 

Companies that have built their business around WAP or application downloads have also generally not been very successful due to the poor GPRS penetration, application compatibility across handsets etc. Looking forward: Despite the difficulties mentioned, there are plenty of reasons to be optimistic about MVAS in India. Mobile has seen an unprecedented growth in the country and has brought about significant changes in lives of people across all sections of the society. It is the most indispensible object that we carry and offers tremendous scope for information access, entertainment, communication, productivity enhancement, personalization etc. We have highlighted some of the characteristics of successful MVAS plays in India. However the mobile environment is changing rapidly and the successful MVAS companies of the future will need to leverage the opportunity created by the changing mobile landscape, regulation both in India and around the world. Clearly the move towards 3G, location based services, m-commerce, growth of mobile data, Application marketplaces will offer scope for innovation and success. But this would have to be the topic of another article. The author is an Executive Director at Canaan Partners