RadioandMusic
| 07 Mar 2021
Buongiorno COO Simone Ranucci and India Country Manager Milind Pathak - The Indian market also offers low levels of margins

The value added services market is one of the most talked about industry at present in India. Though at a nascent stage, it is one of the most promising sectors. With the arrival of international as well as national players on the scene; the future currently seems nothing but bright. However, this sector has its own set of bottlenecks. With the regulatory framework yet to be decided by the government, the journey for VAS players has not been that smooth till now. Radioandmusic.com's Anushree Bhattacharyya, in conversation with Buongiorno COO Simone Ranucci and Buongiorno India Country Manager Milind Pathak, explores the current situation of VAS market in India and the company's experience on these shores.Excerpts-How does the VAS market look in India? Milind: If we take a look at the VAS market from the pure entertainment side, then the market would stand at $ 500 billion. And if we add SMS and various other services like ring tones to this, then the total VAS market in India would come to $ 1.5 billion as on the last financial year. How is the Indian market different from Western markets? Simone: In terms of turnover and margins, it's very different. India is a young market with high volumes, but when it comes to margins, it's still very low. While in terms of rate of growth, India is among the top three nations that promises big growth in the next one year. The Indian market is also very different in terms of services, as it's very SMS oriented while other markets are WAP oriented.
What are the challenges this market holds? Simone: Till now, we had entered mature markets like China and Brazil. India is a young market with huge growth potential, however; the models are not defined yet. Also, the regulatory framework is not clear and the Indian market also offers low levels of margins. Is there is a need to bring uniformity or clarity in the licensing conditions of mobile telecom operators or access service providers with regard to provision of value added services? Milind: I think the IAMAI (Internet & Mobile Association of India) is the best body to answer this. Having said this, you need to look at it as a complete paradox, which asks the question; where do we fit? If you talk about mobile internet, is it telecommunications or the Internet; if you talk about content, is it television or mobile or the Net? So, if at all if you want to apply regulations, which regulation should be applied? So, it's really something which bodies like IAMAI can take an approach at a holistic level. When do you see 3G coming into action; how will the dynamics change then? Milind: 3G commercial roll out in India is one year away, but it's a guess that is as good yours as mine. Also, with the entry of 3G, strong browsing patterns will change, like better WAP penetration and change in content from pure graphic and ring tones to full track videos, etc. Also, roll-outs of optimisation of voice data in metros to semi – urban to semi rural to rural finally will be seen. So that's the kind of percolation which will be felt.
The mobile VAS market, which includes about 25 per cent of the total music business in the country; how do you see that evolving? Milind: Music would continue to play a strong role as India is still a very content centric market. And this trend would continue for another year. However, it would be difficult to say whether popular Hindi films music or regional music would be more in demand; as both would have its own set of demands. For example, Southern markets will continue to have demands for regional music; whereas western and northern India will opt for popular Hindi music. So, packets of market would go for their genre of content. But the trend is not the genre of content - it's now the type of content; like a few years ago, it was only about monotones, and now it's about polytones and the future will see the trend heading towards true tones, MP3 tones and full track sound downloads. What should be the regulatory framework for content regulation? Milind: I think the most important segment in content regulation would be treatment of adult and lascivious content. Globally, including India, there has always been a strong feeling towards controlling this nature of content. And I am sure while drawing the draft for regulating content, this portion would be paid enough heed. At the same time, self regulation would also come into the picture. So, all these UGC and social networking sites that are coming up, apart from having advanced technical features, these sites would also report abuse. So, essentially it will be adult content that will be heavily guarded. Is there a need for revenue sharing models or should it be left to commercial negotiations? Milind: When it comes to copyright in the VAS market, everybody - whether the operator or the service provider - gets their due. However, when it comes to regulating revenue - it should not be controlled for the simple reason that nowhere in the world, such a revenue sharing model is controlled. I think the need of the hour is that companies should be encouraged to invest more so that market can grow from infancy to maturity. The situation in India has been such that at one end, the consumer has cribbed about the high price for VAS; and service providers too have complained about low margins. What do you think is the reason behind this difference in price and service? Simone: Actually, the billing models are evolving; there is a model of subscription that will give revenues. Through this model, the user can subscribe for a package of services rather than paying each time he or she uses two services. And the subscription package can been weekly, monthly or yearly, based on the consumer's preference. In this way, users get more services and service providers get more margins as this service provides more value to both. A market based on transaction offers low margins whereas a market based on subscription offers high margins globally. You have worked for clients like BPL, Samsung, MTV, Indiatimes, NEO sports; how has each experience been? Milind: It has been fantastic as each company has its own set of behaviours. While media companies like Neo or MTV take a spike in traffic when the viewership is good; whereas in case of online companies like indiatimes.com, traffic changes when the browsing habits are good; for example, these sites attract traffic late nights. However, an operator is more demanding as its service management is far more aggressive. Overall, I think we have been able to manage both kinds of operators well.
What do you think will be the drivers of growth for VAS in India? Simone: To grow further, one needs to concentrate on upgrading service, and mobile Internet facilities by increasing the bandwidth. And lastly, it is important to encourage more investments by pure mobile players.