mVAS – The Brave, New World of Opportunity

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The mobile Value Added Services (mVAS) industry has gained momentum, due to low-cost smartphones enabling Indian entrepreneurs to innovate banking, education and healthcare.

The earlier posts in this series dwell on the exponential growth of affordable smartphones in India and drill down into the various kinds of smartphones currently available. This article explores the effect of this growth on the complementary mVAS industry. mVAS is an umbrella term encompassing all services that are not a core offering of telecom providers i.e. that go beyond the standard voice calls, text messaging or data access. By target customer, the three broad divisions of mVAS are

a)     Consumer VAS: Services directly addressing the end user – JustDial, Zomato, OlaCabs
b)     Enterprise VAS: Services for organizations – Mobiquest, Mobien
c)      Network VAS: Platforms for telecom providers like USSD, IVRS, digital content – One97, Mobme

mVAS fostering inclusive growth

Although it is a multi-billion dollar industry with strong user interest, consumer VAS has yet to see high penetration with regard to the paying customer. The primary reason for this is lack of innovation and customization coupled with the easy availability of equally good free services. Nevertheless, trends indicate that the Indian consumer is open and willing to pay for mobile services. Enterprise VAS is transforming the B2B world as organizations wake up to its benefits, and is already at the centre of the mVAS industry. Network VAS has matured a great deal and is comparatively less interesting, although an effective means to achieve impact as OnMobile has shown. The mVAS industry is expected to have a CAGR of over 20% and will be close to US$10 billion (≈60,000 crores) by 2015.

In terms of impact on the end user, the emergence in this market is broadly made up of three broad kinds of service areas across three major verticals as shown below. The highlighted areas are most relevant as these are especially driven by growing smartphone penetration and are promising from both an impact and return perspective.

Screen Shot 2014-03-31 at 3.02.13 PM

Another aspect of mVAS is mobile advertising. The Indian smartphone user is not quickly vexed by ads as long as services get cheaper; consequently, mobile advertising is fast becoming a viable source of monetization for mVAS providers. It is encouraging that large internet companies like Google, Facebook and Twitter have put India at the top of their marketing radar for its huge mobile advertising and user acquisition potential.

A hotbed of entrepreneurial activity becomes apparent

In the face of tremendous growth and interest in this sector, many new businesses have come up recently that are trying to solve local problems in a profitable manner.  The figure below highlights some of the regions that entrepreneurs have started exploring.

Screen Shot 2014-03-31 at 3.02.27 PM

For instance, in the enterprise VAS space, Zipdial, a mobile marketing company, has developed simple and innovative solutions to increase business reach such as missed call marketing, customized IVRS, SMS-Social media integration and recharge gratification. With these, they can enable greater access to information and services that people from BoP otherwise do not have. Another B2B company, EzeTap has developed hardware that works with an application to enable mobile POS payments along with a host of other services. They have worked with microPension to allow unbankable Indians to save, spend and manage their accounts without having to physically go to the bank in the nearest town. Yet another creative organization, Artoo has created a platform to track, train and interact with field agents and thus boost workforce productivity, especially for BoP businesses. Many other organizations are offering ERP, CRM and mobile automation solutions to empower your employees and enable businesses to create a more mobile, distributed, low-cost, higher productivity workforce to deliver products/services to the masses. Innoz is an innovative direct-to-consumer venture that provides an SMS search service and has developed an SMS Appstore which makes a crude version of popular apps to run on text messaging alone. Other companies leveraging the power of mVAS include MobiSir, Cashpor, NextDrop, mDhil, and many more.

However, the road is not without its hurdles

A big challenge facing Indian mVAS providers is customization and localization. India, rightly called a sub-continent, is a melting pot of varied cultures and languages. Most of rural India is still unfamiliar with English and will prefer to pay for services that use their vernacular as a medium. Another challenge is poor consumer awareness – a big part of the population can afford a smartphone in the current scenario, but has no idea of the benefits of having one. It doesn’t help that the services we have today have low usability and reach. They are either too expensive, or too basic or too difficult to understand.

There are also external deterrents.  Telecom providers have been focusing on urban areas and the rest of India faces bad network coverage and low speeds. As infrastructure improves, this sector will eventually realize its true potential and will be a crucial component of India’s development.

We are enthusiastic about the scale and potential of opportunities presented by the proliferation of low-cost smartphones to create new disruptive business models reaching the masses in India. We’re actively seeking great entrepreneurs who are building startups around this new and upcoming space. Reach out to us if you are an entrepreneur or know one working in this area.

Resources

Affordable Smartphones – Disrupting Indian Markets >
India: The Meteoric Rise of Smartphones >
Getting Funded >
More in Tech for Development >

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