Skip to main content

Mobile entertainment takes off

Businessworld has a cover story on the boom in the mobile data services sector and its beneficiaries.

The Opportunities
As these three main protagonists — media, mobile and aggregators — get together, a Rs 2,300-crore market has been created, says a Lehman Brothers report. (This includes texting and is not just operator share.) Media companies are using mobile phones to interact with viewers, listeners or readers and, maybe, generate a little money. They could be using it to entertain them or promote a myriad products or services. This is where aggregators such as Activemedia Technology, Mobile2win or Hungama act as a link between media and mobile companies.



..Australia and India are the only countries in Asia that have collecting societies — the Indian Performing Rights Society (IPRS) and Phonographic Performance Limited (PPL). According to rates prescribed by PPL, anywhere between 25-40 per cent comes back to music firms. That has helped Indian mobile operators quickly hook on to music — the most natural (and lowest bandwidth hogging) driver for data services globally. “In other Asia Pacific countries, you have to go to each music company and collect separately,” says Sudhanshu Sarronwala, CEO, Soundbuzz. The lesson will prove to be important for other industries eyeing the mobile data market. If licensing is difficult, it puts off aggregators and operators, and leaves the market open to pirates like in Indonesia.

...The big media firms — Star, Sony and BCCL, among others — have set up entire divisions to plug into these 80 million consumers. Compare that to the number of TV homes (108 million) or Internet subscribers (7.5 million), and you get a true picture of its size and potential.

...At Rs 6 per minute, Airtel’s 646 services make much more money than the average Rs 1-2 per minute that voice does. Typically, data sells at anywhere between Rs 3-30. The Lehman Brothers report says that as data share goes up to 60 per cent or more, the earnings before interest, taxes, depreciation and amortisation (EBITDA) from data revenue could go up to 65 per cent or more. Compare that to 30 per cent or so from voice.

The Challenges
...With the limit on spectrum, operators’ scope to offer broadcast quality TV or other things is restricted. Then there is a limit to handset capacity. Just 15-20 per cent of the phones in India have colour screens and/or cameras (though the number is growing very fast). And there is a limit to what music and SMS can do.



Operators do put a limit to what they share with media companies — about 20-30 per cent. There is already a feud going on about that.... Currently, the Indian market is split roughly at 60:30:10 between mobile operators, media companies and aggregators. Mobile operators argue that they make the investment and control the consumer, so they should keep a lion’s share of the mobile data pie. Prasad of Reliance says that internationally, operators pay revenue share only on the basis of actual downloads. In India, the figure on which this is calculated includes network usage and subscription fee and, therefore, the percentage that comes back to the operator has to be larger. Media companies protest about this but are largely helpless....

Eventually, this will change. “In most developed mobile entertainment markets, we have seen operator share come down to the 10-20 per cent range. It has in consequence led to fantastic growth,” says Sarronwala. In Japan, the operator share is 9 per cent, in the Philippines, it is 60-70 per cent and in China, the second largest VAS market after Japan, it is 15 per cent. As the total amount of data revenues go up, the operator share goes down and his dependence on the content companies increases. So, expect the friction levels to rise as mobile TV and much more richer content come closer.

Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Popular posts from this blog

VC Interview: Shailendra Singh of Sequoia Capital India

In a recent interview to Venture Intelligence, Shailendra Singh discussed some of the firm’s newer investments in the early stage segment including in the online payments space, the progress at a few existing portfolio companies and the active role the firm is playing in helping its portfolio companies scale and succeed in India and globally. Prior to joining the firm in 2006, Singh was a strategy consultant at Bain & Company in New York and before that, an entrepreneur in the digital media industry.

Venture Intelligence: How does Sequoia go about identifying potential early stage investments in India? Is there anything different you are doing today than, say, a couple of years back?

Shailendra Singh: There is a lot more focus on technology investing and early stage investing. In general, as you might remember a few years ago, we were doing primarily growth investing but in the past 18-odd months, we have had a very strong focus on early stage and that’s continuing. In terms of how…

PE investments in 2018 crosses $33-B to set new all-time high

Big Ticket investments in consumer apps Swiggy & Byju’s dominates year-end activity, even as investments in Core Sectors slow down
Private Equity (PE) investments in India rose to their highest ever figure of $33.1 billion in 2018 (across 720 transactions), according to data from Venture Intelligence (http://www.ventureintelligence.com), a research service focused on private company financials, transactions and their valuations. While PE investments have already surpassed the previous high - $24.3 Billion across 734 deals in 2017 - in the first nine months of 2018, the mega investments in Consumer Internet & Mobile startups such as Swiggy and Byjus towards the year-end, helped the 2018 total vault by 36% year-on-year. (Note: These figures include Venture Capital investments, but exclude PE investments in Real Estate.) The year witnessed 81 PE investments worth $100 million or more (accounting for 77% of the total investment value during the period), compared to 47 such transac…

ChrysCapital and Sequoia Capital India grab two awards at APEX’19 PE-VC Awards

Mumbai, India, Feb 27, 2019: ChrysCapital and Sequoia Capital bagged two awards each as part of the “Awards for Private Equity Excellence” (APEX)event organized by Venture Intelligence. 

ChrysCapital bagged the Private Equity Fund Raise of 2018 Award (Closed $850 M Fund VIII within 4 months of launch) and the Private Equity Investor of 2018 Award (for its Exits from LiquidHub with 4x in dollar terms (within 4 years of its $53-M investment), AU Small Finance Bank with 11.5x return,  Torrent Pharma with 2.95x, City Union Bank with 2.83x, L&T Infotech with 2.56x)

Sequoia Capital India won the Early Stage VCInvestor(the firm registered 10x+ exits in Byjus Classes and SCIOInspire) and VC Fund Raise of 2018 (the firm closed an almost $700-M Fund VI).


Award Winners at APEX'19 PE-VC Awards

The event opened with a Fireside Chat with Kiran Reddy, CEO of SPI Group interviewed by his long time friend and colleague Vineeth Vijayraghavan.



Snapshots of the Awards Ceremony: (L-R) Gopal Srinivasan, …