interesting document is currently doing the rounds among key players
in the mobile data content business. Film producer Ram Gopal Varma
has floated a tender of sorts inviting bids for exclusive time-bound
ringtone, wallpaper, and image rights among other mobile phone content
for the next 10 films to be released by him. The stated reserve
price is reportedly Rs 20 lakh per film. The document in circulation-a
draft contract with blanks to be filled in by prospective bidders-has
created a buzz in the mobile content business circles.
Welcome to an all-new revenue stream. And it's
not just for the movie business. Think mobile operators, portals,
content developers and aggregators, managed services providers,
why even mobile phone manufacturers. They have all taken their positions
in a complex galaxy of activity that has come to be known as the
'mobile data content business'. "The phenomenon (of a rapidly
growing market) is less than six months old and is largely due to
the fact that there are many more interested parties today to promote
this phenomenon. It's an entire ecosystem," says Kunal Ramteke,
Head of Marketing at BPL Mobile.
Pegged at about Rs 350 crore (in terms of revenues
through downloads), an estimated 8 million subscribers in the GSM
market have already warmed up to this medium, if one were to adopt
the conservative estimate of an average of 30 per cent (See Penetration
Of Mobile Data Services) of the total cellular subscriber base having
downloaded content on their mobiles. Ringtones alone currently fetch
a revenue of Rs 50 crore, which is expected to double by the end
of this year, according to Vipul Pradhan, CEO, PPL, which is the
company that administers all ringtone licensing for the music industry.
Yahoo! India, a key player, has seen about a million ringtone downloads
last year alone, according to the company's Associate Business Development
Director, Samir Saraiya.
Mobile content ranges right from ringtones
and games to wallpapers, screen savers, images, logos, news and
finance as well as communication services like messenger, 'send
a song or greeting card'-basically any content that is eventually
being paid for by the subscriber. As for the market itself, it is
estimated to be growing at a blazing 150 per cent per annum. These,
of course, are the GSM market numbers alone. Add the Reliance IndiaMobile
numbers and an estimated 70 per cent of rim's 7 million-odd user
base is addicted to the operator's 'R World' service, claim Reliance
officials. However, since rim has not started charging for its content
services, putting a number to the size of the business is practically
|Balu Nayar, Associate
VP, Orange: There's a whole category
of wallpapers and ringtones for GPRS downloads
Meanwhile, the GSM brigade is homing in on this
growing revenue stream. Apart from the revenues through downloads,
there is money to be made through promotions. "We've provided
wireless marketing solutions to a host of companies, some of the
more recent ones being Kelloggs, Bacardi, Virgin Atlantic, and Coke.
They have all realised that there are about 36-38 million mobile
subscribers waiting to be reached," says Rajiv Hiranandani,
VP (Sales & Marketing) at Mobile2Win, the mobile marketing business
of contesting site Contests2Win. Mobile2Win, which offers a complete
mobile marketing package wherein the advertiser gets to reach out
to all GSM operators at one shot, has seen a 300 per cent growth
in mobile business revenues since July 2003, claims Hiranandani,
though he isn't willing to share numbers.
Indiatimes, one of the largest aggregation
service providers, closed the last fiscal with $2.4 million in revenues
from the mobile content business. The previous fiscal the business
fetched a bare $1 million. Delhi-based ActiveMedia Technologies,
an aggregation service provider that has bagged major clients in
the media business like Sony TV, MTV, Indian Express, CNBC, Discovery,
and Ten Sports and provides them with an interface to all the mobile
operators, is seeing a topline growth of 100 per cent year on year,
according to Raj Singh, the company's Business Director.
While advertisers are targeting the widest
possible subscriber base, which effectively means content creation
for the entire range of phones, the segment that really promises
to take off soon is the GPRS-enabled phones, which allow internet
access. An estimated 3 lakh GPRS games are being downloaded currently
across operators, priced at anywhere between Rs 20 and Rs 99 per
download. Says Balu Nayar, Associate VP (vas and New Applications)
at Orange: "Hutch has about 162,000 GPRS subscribers and the
segment is growing at about 12 per cent per month. There's a whole
category of wallpapers and ringtones for this segment."
A simple case in point is that a monotone ringtone
costs anywhere between Rs 7 and Rs 10, while a polyphonic ringtone
downloaded typically on a GPRS phone could cost up to Rs 15. This
is clearly the side of the bread that is buttered since GPRS phones
instantly spell larger revenues for the operator, especially given
that SMS is the delivery mechanism for content and the subscriber
spends on SMS each time he requests for any form of GPRS content.
"People seem to be downloading a disproportionate amount of
GPRS content. About 1 per cent of the total GSM base is GPRS, yet
10 per cent of all downloads is for GPRS phones," points out
Ajoy Krishnamurti, who heads the mobile content business at Rediff.com.
Handset manufacturer Nokia has spotted the
trend and is already chalking out aggressive marketing plans to
push this segment. Says Sanjeev Sharma, Managing Director (Mobile
Phones), Nokia India: "Limited awareness about the possibilities
offered by GPRS is a big impediment that is coming in the way of
exponential growth for this segment." Nokia plans to initiate
roadshows to showcase the multimedia features of Nokia mobile phones
and deploy 'Nokia Vans' in tier B and C towns to educate users.
Says T.N. Prabhu of Indiatimes: "Content is driving the growth
in the GPRS market, which is going to see a lot of development.
But the real growth in my opinion will be in the voice-based services
segment, which is handset-neutral."
|Players on the content development and aggregation
side have realised that collaboration is the way forward. Arch
rivals Rediff.com and Yahoo! India have come together to share
content and shopping infrastructure
The Revenue Model
"It's a bhaji (vegetables) market out
there if you ask me," says Vishal Gondal, CEO, Indiagames,
which pretty much sums up the market scenario, where a slew of content
aggregators, developers, and IPR holders battle for their share
of revenues with the most powerful player in the business-the cellular
operator. Moreover, content providers are also starting to undercut
one another in order to gain a foothold in the market.
First, the economics of the business. How does
the operator rake in the revenues? It's basically the subscriber
who pays for all the content one way or the other. Straightforward
downloads like ringtones or games mean that the subscriber pays
anywhere between Rs 7 and Rs 99 per download, depending on what
he opts for. Another source of revenue for the operator is the amount
the subscriber spends on SMS whenever the SMS is used as the delivery
mechanism. Thirdly, when the subscriber asks for information on
interactive voice or sends music or greeting cards from his phone,
he pays about Rs 6 per minute, give or take a few rupees, again
depending on the pricing for the service by the individual operator.
The data business is gaining a lot of prominence
among operators also, given the fact that rates in the voice business
have fallen dramatically and non-core revenues like data are fast
presenting themselves as alternative revenue streams. "As the
market evolves, these don't remain peripheral services, they become
part of the core service itself," says Orange's Nayar.
As for how the revenues are split between the
various market constituents-the cellular operator straightaway bags
a lion's share of 50 per cent and sometimes up to 75 per cent of
these subscriber revenues following a 15 per cent revenue share
deduction by the government. The others, namely the aggregation
service provider, content developer, and IPR holder typically, are
left to share the spoils between them. The remaining 50 per cent
is typically split equally among them. If it's just one entity that
controls the business right through that value chain, then the proposition
obviously changes and the company bags more than just a third of
the spoils. The rules seem to evolve with every new deal in the
"Globally, operators are known to share
even as much as 90 per cent of revenues with content creators, aggregators
etc. I personally don't see an inflection point for the business
in India if the current model continues," says Neeraj Roy,
Founder of Hungama, a content developer. In some cases, there is
a fixed price to be paid to a managed services provider who develops
and maintains applications for the portals and other kinds of content
Several such technology partners have emerged
and business obviously looks good to them. Take the case of ITFinity,
which started its managed services business just over a year ago.
The company is seeing 40 per cent of its revenues currently from
this business segment. Or consider Delhi-based Handygo, which manages
mobile services for the likes of Yahoo! The company plans to hire
no less than 50 people this year, more than doubling its existing
headcount of 40.
Collaboration is The Name of the Game
While the mobile content market may look like
a fish market on the revenue sharing front, there's another area
where a clear pattern of collaboration has started to emerge. Players
on the content development and aggregation side have realised that
collaboration is the way forward. Why, even arch rivals Rediff.com
and Yahoo! India have come together in a deal where Yahoo's mobile
content is being shared with Rediff, who in turn will share its
shopping infrastructure with Yahoo. Both portals along with the
third heavyweight, MSN, are mobile content aggregators who partner
with all GSM operators to supply mobile content to subscribers.
"The idea is to establish a seamless stream between the internet
and mobile user base," says Rajnish R., Head of Marketing at
MSN India. MSN, which powers the content on Hutch's GPRS site and
also offers its Hotmail and Messenger services to the operator,
is currently talking with a "lot of telcos who find MSN's 12
million subscriber base very attractive".
Even smaller websites with domain expertise
in a specific area are quickly jumping onto the bandwagon-like Cricinfo,
the cricketing website that runs an initiative with Airtel. Subscribers
could log onto the site, play games and also download them on their
phones. "The web and the mobile complement each other very
well," says Mohit Bhatnagar, Head of mobile content business
The key attraction for the websites is the
ability to instantly monetise their content. Take the case of website
Bharat Matrimony, which offers its services on the mobile for a
payment of Rs 10 per download-an application powered by ITFinity.
"Websites have suddenly realised that here is a possibility
of service for micro-payments and thereby instant revenues,"
says Krishna Jha, co founder of ITFinity.
However, all the players are acutely aware
of the fact that collaboration taken to the extreme will result
in rapid commodification of content and operators are constantly
thinking up differentiation strategies. Hutch's recent application
'Mobile to print', where the picture taken on a camera phone is
actually printed and delivered to the subscriber by Kodak, is the
result of an exclusive tie-up with the photography major. Kodak
officials state that 25,000 prints have been delivered since the
service was launched in March this year.
Mobile operators clearly haven't lost sight
of the war for subscribers and that only bodes well for the consumer.
The bottomline, however, is that all the interested parties have
discovered a completely new section in the consumer's pocket and
it's in everyone's interest to keep the subscriber reaching for