At the #NAMA Conference, Vijay Shekhar Sharma, Founder & Managing Director, One97 Communications spoke about the prevailing mobile VAS (Value Added Services) situation in the country and One97’s plans for the future. The session was moderated by Nikhil Pahwa of MediaNama.

Here are some notes from the session:

Declining Revenues Of Mobile VAS Companies: Sharma stated that there was currently no blood bath in the mobile VAS ecosystem, since businesses were not killing each other’s businesses but were instead killing themselves. Citing a recent survey, he stated that there has been a significant decline in revenue across the industry, and the revenues were down by at least will be down by up to 60%, although there was no word on the survey report cited.

Mobile VAS Is Easy To Build, Tough To Scale: Sharma told that making money in the mobile VAS business was really a low-brainer job and one can start off a business if they partner with a few VAS managers of operators, making it a bad industry in terms of entry barriers. However, scaling such a business is very tough in the future, since scale requires a real need and a real business proposition. He stated that there will be more than 1000 players who currently generate monthly revenues in the range of Rs 10 lakh to Rs 1 crore, but there are very few players who generate revenues of more than Rs 100 crore annually.

– He stated that the industry currently has a classic problems of bad players still operating in the mobile VAS ecosystem and making money due to vested interests of some people and not yet getting blacklisted.

– He mentioned that telecom operators can act as are like a platform for several feature phone apps and content services to consumers, but it was relevant only for feature phones, since majority of the smartphone users now head over to their respective app store to download apps and the operator has a limited role in these areas. He believes that consumers will eventually change their spending habits in the future and the country’s telecom regulators will curb all drive initiatives to bring back consumer trust for various feature-phone based telco services in the next 18-24 months, although he said that he hopes that the regulator does it much faster.

One97’s Consumer-Centric Approach: In order to combat this, Sharma stated that One97 was slowly moving towards the OTT (over the top) distribution play and appear in the front of consumers directly, through consumer oriented services in Paytm. Sharma said that people doing Internet business are today as ignorant about mobile business as the people doing offline business were about online businesses.

– He stated that one of the most critical things while building smartphone services was to build a payment platform and replicate the telco’s impulse buying capabilities into its new world scenario. Since payments are sorted out in 2G services by the telco’s bottomless wallet, the mobile-first OTT play initially needed a few more options for payment. He noted that this led the company to build the Paytm (Pay Thru Mobile) platform, which according to him, was a smartphone’s true payment platform, where the payment not only comes from the operator but also from banks and other similar financial institutions.

Paytm To Offer Digital Goods: He further added that they soon realized the need to have a captive merchant base offering that could use this Paytm payment platform, because of which they rolled out the online top-up service. Going forward, Sharma stated that they plan to offer more digital goods like games, apps and deals to the users in the future. That being said, he added that Paytm will probably not directly offer license-based goods like music to users, since he believes that businesses based on royalties are like doing a charity for the other party. He also added that Paytm wallet will not be utitilized for content services, since lately, the players who sell content services are not trusted by consumers.

– Sharma claimed that Paytm currently has 2.8 million unique visitors and more than 1.6 million users were currently using Paytm’s Wallet functionality and more than 60% of its wallet customers were due to failed transactions. He stated that more than 3,000 people voluntarily deposit money into their wallet on a daily basis.

– He also claimed that the company’s Paytm payment platform has been made for the mobile platform and the company has already created a closed loop payment system. Sharma noted that the platform was currently an aggregator of bank payment gateways like other payment aggregators, but going forward they plan to introduce new features like analytics for merchants which could provide a significant value addition over other payment aggregators.

– Sharma stated that iOS is highest used platform for transactions on Paytm after the desktop version, followed by Java platform and Android.

India’s Startup Ecosystem: Speaking about the startup ecosystem in India, Sharma said that the problem Indian startups were currently facing was at the exit stage, since no company was currently buying other companies in the country. He also stated that one e-commerce company buying any other e-commerce company does not incentivize people to launch more startups in the country.

– Sharma stated that they try to invest in companies who are currently doing a better job than what they could assume, in segments they themselves weren’t good at some point. For instance, they invested in an app company, since One97 didn’t do a good job in apps at a certain point.

Update: There were some inaccuracies in the previous report. We apologize for the error and have updated the article.