THERE was a time, about ten years ago, when the value added services (VAS) industry really took off. The installed base of mobile phones in India had multiplied, and the explosion in the numbers of subscribers offered VAS companies a really big monetisation opportunity.
What exactly is VAS? Your ringtone, your missed call alert, your wallpaper, your cricket score alert and many, many more services on your mobile phone, provided by your operator, are what are commonly understood to be VAS.
In 2003, India’s largest operator, Airtel, had a base of 10 million subscribers. Today, the same operator has 210 million subscribers. When mobile telecom services were launched in 1994, both incoming and outgoing calls came for a fee. An outgoing call was R16 per minute just 20 back! But what really changed the Indian mobile industry was the introduction of prepaid cards around the year 2000. It made mobile calling both affordable, and ubiquitous. This also opened up an entire new set of consumption habits for the new consumers of this new genre.
You could now choose your ringtone, you could choose your wallpaper, you could get to listen to bhajans, you could receive cricket updates, you could watch videos on mobile. And to service all that, an entire new industry sprung up.
But then followed the excesses so common in every industry. Customers started to complain that they were being charged for services they neither asked for, never subscribed for, never actually perhaps even got. So the Telecom Regulatory Authority of India (Trai) stepped in and set guidelines that ensured that no one could “cheat” customers. The bottom fell out of the market. Suddenly, all the glitter of the VAS industry vanished.
But change is a part of life.
In the last couple of years, the market moved substantially towards smartphones. Hence, much of what was earlier “value added” could now easily be accessed by using the internet. So, you could easily get yourself minute-to-minute cricket scores, either through an app, or through streaming by the content owner. This meant that the previous providers of such services were no longer required.
So, where do we go from here?
The new era is about “value enhanced services”. It is about LoCoMo (Local-Content-Mobile).
It is possible today to use location-based-services to fulfil an array of customer requirements using the ever popular “apps” or using the towers of the telecom operator. So, as a customer you can be made aware of discounts, offers, sales and more as soon as you enter the shopping mall. Or, your nearest Pizza Hut can send you a coupon of “one-on-one free” knowing full well that you work or live in the immediate neighbourhood of the outlet. Or, you can be pinged right at the airport as a flyer by an Ola cab or by the nearest Ibis Hotel offering you a cheaper ride into town, or a better deal on a room. Location is becoming more and more robust in the emerging new reality of mobile usage.
Gone are the days when you paid to download a song or a video on your mobile. That VAS product today stands replaced by easy access on the internet to YouTube. The customer now pays for data charges and has unlimited access to unlimited content. It doesn’t end there. The way you shop has changed dramatically in the past few years.
What started out as an e-commerce revolution is fast metamorphosing into a mobile commerce world, so much so that most big players in this space are either gearing to be “mobile first” or “mobile only”. In short, very soon on your favourite e-commerce site, there will be no option to even access through the laptop!
The content game doesn’t end here. In fact, it just begins as it encompasses categories like travel, almost wholly.
Today, the physical world of the travel agent has nearly disappeared and your mobile is your instrument to check, compare, book, pay, and if you have had a bad experience, even criticize.
The revolution that came about with the arrival of Facebook, has today been exponentially increased by an equal amount of usage of Twitter and WhatsApp on the mobile. This juxtaposed with usage of Facebook itself, largely again onto the mobile device, means that “chat” and “communicate” have become far more instant, here and now.
Does that mean VAS is dead? Perhaps, no. While smartphone penetration is growing really fast, a large part of the population is still using basic feature phones. These phones cannot access the internet and hence the advantage of LoCoMo is lost on them. But the issue with VAS was not merely of product but of profiteering by a few vendors and telecom operators who were unscrupulously charging customers for services neither desired nor delivered. That menace has largely declined.
The opportunity for tomorrow in the “value enhanced” space lies in finding opportunities that resonate positively with mobile users. The KaanKhajuraTesan (KKT) rural radio station on mobile created by Hindustan Unilever (HUL) is a great example of a win-win for both the customer as well as the content owner. The day is not far when an HUL will perhaps create a video equivalent of KKT for free film clips and songs for customers across the spectrum.
The same HUL could use the mobile device to reach younger and more affluent customers through a Twitter programme or engage them through retail coupons for better bargains.
LoCoMo has just arrived. How it will grow, or where it will go, only time will tell.
The author is chairman of Mogae Media.