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Indian VAS market is huge and effectively receptive

Naveen Bhandari
MD and CEO, TechZone
  TT Correspondent |  | 04/03/2013
The Indian VAS market is going to see a huge upsurge in near future, though it may confront certain challenges. In an exclusive interview with TelecomTiger Naveen Bhandari, Managing Director and CEO, Techzone talks about such challenges, market growth and company’s success and its products. Excerpts from his interview.

Q. Tell us about the Techzone’s products?

Techzone is one of India’s largest aggregators, Developers, Publishers and Distributors of Entertainment content. We provide VAS services to 36 operators in over 24 countries including India. We have a presence in the international music market and with rights of over a million music and video titles, capture 90% of the international music market in India.

Techzone’s product offerings include Value Added Services (VAS) like SMS, WAP, USSD, Voice, Video and CRBT. Apart from this, Techzone also offers technology like Playground and Dethadi to the music labels through which they can ensure a hassle free delivery of their content to the consumer in various formats like RBT, full track downloads, wallpapers etc in a pull based format.

The content acquired from the music labels is further leveraged with exclusive dedicated movie/artist apps developed by Techzone. These apps are a one touch shop to all the VAS content and the music demands of the consumer.

Techzone is soon venturing into mobile advertising with its latest venture-Kratos. This will ensure a 360 degree utilization of the acquired content for Techzone and will also give the various content providers a suite of products to choose from.

Techzone enjoys exclusive rights to one of the largest library of music and video titles. With exclusive content rights for top brands such as EMI Music, Universal Music, Venus, Sony Music, Times Music, SaReGaMa, MTV, VH1, Colors, India TV, Radio City, Tips, NDTV and many more, Techzone powers more than two-thirds of all Mobile Digital Entertainment content in India and internationally.

Q. How do you look at your growth in Indian Market?

A. The Indian market is huge and effectively receptive. Our growth trajectory has been upscale since Techzone’s inception 15 years back. We have experienced a multi pronged growth in terms of technology, offerings, manpower, infrastructure and content acquisition. We had made many acquisitions in 2012, and 2013 is the year to monetize them. Also, we are looking at investing 10-15 million INR in application and advertising space to expand our product line. We are hopeful that this investment will help us lead the market through the mobile application route.

We are a young company and we believe that innovation is the key to excellence. We continuously strive to adopt innovative promotional methods to reach out to the customers directly, and make our content available to them proactively. In the Indian market, we see our growth through localization and segregation of the vast content we have in store with us. We have already started creating vast platforms of branded content under all major categories like Bollywood Music, Regional music, Lifestyle content, devotional content etc and these will be presented to the customer as an online store where they can browse the content at their own leisure and get customized music and other products. We have also brought in use the latest technological innovations like social media which is also playing a major role in allowing us to connect with our customers and promote the products.

Q. What are recent trends that you have observed in VAS industry?

A. The VAS industry has been under a transitional phase since 2000 but this transition gained momentum since 2011. Recently we have observed the VAS players have become more straightforward in their communication to their target audience and the offerings made to them. We have seen that the VAS revenues have been more or less dominated by the telecom operators till date. This along with the increased competition has made the VAS players to make more segregated and innovated offerings to the consumers. Thus, we have seen a value addition in the service offerings made to the consumers. The VAS products are eventually becoming more focused, fragmented and customized along with various pricing options to suit their requirements. With the consumers becoming choosier with every passing day, we will see that the push based business model of the VAS players will eventually vanish and the pull based VAS intake would take ground. Here, the consumers will be informed about the offerings via various advertising mediums, but accessing the same and utilizing it would be their choice. This will lead to the increase in the browsing time of the consumers. With the increase in VAS intake, it’s obvious that the purchasing will increase, but what will dramatically increase is the advertising driven revenue. It will be interesting to see the variation in the VAS content consumption during this phase.

This trend has already taken off internationally with the market being largely pull based. It went through the phase that developing countries like India, Indonesia etc are going through now, and has now matured. Around 12-15% of the operator’s revenue there comes from VAS, and you will not see much change in those markets in the next 4-5 years. In developing countries like ours and a few others, the push based market is now drifting towards the pull based market which is more customer oriented.

However, the under developed countries in terms of technology like Africa & some Middle East countries are going through the same phase which India was going through in the year 2007. The market there is still push based, and you will also see the same content providers operating in other developed and developing countries going there and pushing their content.

Q. In developed world, MVAS is thriving on 3G, 4G which are yet to take off in India. Do you see this as a challenge?

A. In terms of revenues, this is not much of a challenge. Surely, the absence of higher speed affects the quality of products in terms of features and experience. This limits us from rolling out high value products for the consumers. These products are highest revenue gainers for the top 20% of consumers who contribute the majority share of VAS revenues, like in other countries. Unlike internationally, The Indian VAS industry is a low ARPU, high volume market and hence does not follow the rule where 20% customers contribute 80% of the revenue. Hence, absence of high data speed does not have a huge impact on revenue, but definitely affects the quality of the offerings.

Q. Do you think the revenues from VAS will be bigger than voice and messaging in days to come?

A. If we are considering only the mobile space (not data card, tablet etc) for the next two year, it will be nearly impossible for VAS to overtake voice revenues but overtaking messaging is almost a certainty. Together, VAS and data contribute approximately 5%-8 %(
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