As a part of our #Outlook14 series, we asked heads of three mobile VAS companies – Shotformats, Mcarbon, OnMobile and Spice Digital about their focus areas for 2014, and the challenges that the mobile VAS ecosystem needs to address.

MediaNama: What are the top developments in the VAS segment in 2013? Why?

Saket Agarwal, Spice Digital*

– In one word, data, data & more data.
– Of course traditional VAS more or less wiped out with only utility VAS sustaining with the final implementation of TRAI regulation in – letter & spirit across the board.
– Key focus back on consumer & thus on the product offering.

Sanjay Bhambri , OnMobile*

–  Regulatory restrictions were introduced whereby consumers were required to provide additional explicit consent before subscribing to VAS.  Given that the user experience has changed, this has impacted the total number of activations. As a result, all operators and VAS providers have had to re-evaluate the engagement, content quality and communication of their services.
– An increasing number of operators have opened up billing interfaces and have offered better remuneration to service providers to market their services without operator support. This, in a way, has democratized the entire innovation process and we are increasingly seeing quite a few operators adapting to this approach
– By offering Music/videos at Re.1 al-a-carte or launching self-branded consumer applications like music streaming and games, operators are making an attempt to compete and co-opt in some other cases with OTT players. Given the subscriber base that exists in India today and operators’ capability of reaching out to these consumers, this could prove to be advantageous in the near term.

Niyati Shah, Shotformats

– Clean VAS and consumer interest is the biggest development of 2013 because of the TRAI regulations coming very strong on the industry.
– Second biggest development is D2C which was initiated by Vodafone and the turn around of revenues share. This is but of course that the VAS companies can reinvest into advertising and build strong services.

Rajesh Razdan, CEO, mCarbon

– Consumer Centricity: Emergence from push to pull in all realms of products and services.
– Strong Regulation: Pro regulation that resulted in the way these services were offered.
– Advent of OTT: an entity that created a parallel player which had a major influence of the non-telecom wallet of the customer.

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MediaNama: How did the situation change from 2012 to 2013?

Sanjay Bhambri , OnMobile

– The degree of discretion in the way services are marketed and activation/charging is done has increased manifold. Almost all interfaces are now in direct control of the operators
– Operators have become more flexible in adopting different business models like off-deck models
– The shift away from legacy VAS in the revenue mix has increased  due to the significant surge in revenues from data services and applications that consume data

Saket Agarwal, Spice Digital

– It has been a constant deterioration and early signs of data VAS were set in 2012. Full impact came in 2013 only and with revenue shares in place, it’s only got better in 2013.

Niyati Shah, Shotformats

–  All rules are being rewritten again – content, product, promotions, placement and the biggest of all consumer interest.

Rajesh Razdan, CEO, mCarbon Tech Innovation

– From a Telco perspective lack of segmentation among the consumer spends.
– More smart phone users hence more drift towards data and hence easy access to content which was been channelized through operator channels.
– More demanding customer /more awareness.

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MediaNama: What are some of the VAS consumption patterns that you observed in 2013?

Niyati Shah, Shotformats

– I will not comment on this because 2013 was extremely rough, the entire year was full of experiments. But yes the market is growing towards data consumptions but yet services like CRBT continue to sell and it will.

Sanjay Bhambri, OnMobile

– There is a 10 to 15% increase in the average age on service for all consumers who were activated post the consent gateway migration in most of our services, including caller ring back tones
–  The rotational churn has decreased steadily which is a result of more informed activation
–  There is also an increase in voluntary churn mainly due to consumer awareness on deactivation through a common short code across operators leaving the onus on service providers to improve the offerings so that consumers stay engaged for longer and derive value out of this.

Saket Agarwal, Spice Digital

– For now too much happening for any specific trends, except on data consumption patterns showing significant jumps.

Rajesh Razdan, CEO, mCarbon Tech Innovation

– Segmentation across ARPU levels – at a certain level of ARPU users were very interested in products that immediately fulfilled the need.
– Segmentation across access types of voice, data , SMS and USSD
– Huge transformation towards data – be it due to OTT services, content and social

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MediaNama: What are the likely trends that you expect to see in 2014? Why?

Saket Agarwal, Spice Digital

– Fewer players for traditional VAS with for sheer sustainence point of view & clean up drive for consumer benefit with fewer better products as destination stores for variety of content.
– Hopefully with better data networks (besides the very growing smart phone at affordable prices), great innovation on mobile internet products should come to fore in India.
– Lot of mobile Internet will become pipes in times to come.

Sanjay Bhambri , OnMobile

– One of the key factors that will contribute to the growth of the MVAS marketing is the increasing adoption of smartphones and tablets.
– We see a consolidation of services being offered by operators and only services that have engaged users will assume precedence.
– MVAS players will not only focus on opening new verticals but will also identify alternate means of revenue streams from the current/traditional verticals.
– Anticipate the move towards customised mobile applications, where the utility on the services can be clearly differentiated vis-à-vis what is currently being provided by the OTT players.

Niyati Shah, Shotformats

– Only consumer driven services and innovations will survive be it data, IVR and on RBT only good music, considering there is bare minimum promotional bandwidth only good product will be pushed and also one will be dependent on consumer demand.

Rajesh Razdan, CEO, mCarbon Tech Innovation

– Products will be offered based on consumption patterns, ARPU levels and user engagement.
– Data will continue to proliferate and smartness around the pipe will be a key in service differentiation.
– Market places will get stronger traction where Telco assets will be used.

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MediaNama: What are the challenges in the VAS segment that would need to be addressed in 2014?

Sanjay Bhambri , OnMobile

– Discovery of services remains the biggest challenge for the industry. There is no unique destination where consumers can evaluate the services being offered.
– Communication of value, both in terms of price and utility of these services, has been an area of concern. There have been instances when tremendous value has been offered but wasn’t communicated to the end user.
– Building trust with consumers is vital to any enterprise – MVAS industry is no different.

Niyati Shah, Shotformats

– Since the rule book is in place, keeping all of that in mind the industry needs to work on
– New Consumer Acquisition Modes, Operators and Content Partners need to work more closely on creating pull
– Media more accessible to consumers,
– Operators need to invest in more mediums of awareness.

Saket Agarwal, Spice Digital

– Business modeling around B2C & mobile internet is necessary.

Rajesh Razdan, CEO, mCarbon Tech Innovation

– Environmental – better policy whether its spectrum or M&A that will put Telco attention back to consumers.
– User behavior and analytics driven products that trigger more cross sell and upsell opportunities.
– Usage and retention will be a key area to watch for and all the value added services will service the need emanated from this.

Note: Answers have been edited for for brevity

Disclosure: Spice Digital and OnMobile Global are advertisers with MediaNama