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.
...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.