Once the darling of Indian wireless segment, the MVAS service providers are now facing identity crisis. Late 90’s and early 2000’s, the immense underlined potential around Mobile Value Added Service (MVAS) caught many eyebrows and subsequently few innovative minds turned Entrepreneur dived into MVAS bandwagon to make the most of it. The unprecedented Operator driven and controlled mobile subscriber growth offered MVAS service providers to collaborate with Indian wireless service providers based on wireless service providers favored financial agreements.
The On Net deployment environment governed by wireless operator offer MVAS providers an opportunity to focus on product more than servicing. MVAS service providers such as Onmobile Global, Hungama, Comviva, Hungama and many more achieved impressive YoY growth. Observing quick success through bundled or replicated product line on basic SMS and IVR based mechanism attracted many small companies to try their luck in MVAS segment. The auto recurring revenue stream with double digit growth assured MVAS providers regarding Technology and Consumer trend but missed to read continuous indication of Indian government and regulators to cash on to growing wireless subscriber base.
MVAS ecosystem players as well as Industry analysts came out with very aggressive forecast and equity market that also rewarded listed MVAS service provider’s equity investors. The induction of new wireless service providers brought cheers within MVAS service providers but changed the ecosystem of MVAS segment the most. The tariff war initiated by Regional and Challengers with Incumbent Indian Wireless Service Providers impacted MVAS providers the most. The freebies such as free voice minutes, SMS, Music service offered by new entrant created buzz with Subscribers and Incumbent experienced more than 7-8% churn rate as both rural and urban subscribers opted for low tariff based services by regional and challengers.
The sudden tariff assault on Incumbent forced them to restructure their service assurance and delivery and thus pressurized MVAS service providers to surrender more revenue, resizing VAS service portfolio as well as servers, removal of VAS services with low user uptake. Incumbent changed their strategy and in order to keep the cost lower; initiated Off Net service ennoblement for their subscribers to counter regional and challenger service offerings.
The Off Net service ennoblement by Incumbent acted as “MVAS FDI for many innovative MVAS companies spread across different geographies to tap into vast Indian subscriber base”. The move also impacted dearly to Indian Wireless Subscriber Provider but that will be part of another article.
The above move quickly changed the MVAS dynamics with feature and technological superior unified messaging, unified communications, rich communications etc. The incumbent MVAS tried to match new entrant product line but met with another onslaught in the form of MVAS regulation. It is highlighted through many articles for the last many years that fall in MVAS revenue is primarily driven by MVAS regulation but the reality is mentioned above. The “government and regulators move to bring in additional wireless service providers without setting ecosystem centric guidelines”. The knockout punch came out on cancellation of 2G license by honorable Supreme Court of India. It sent the ripple factor on MVAS players with higher cost than revenue and in-turn initiated unprecedented recession in Telecom sector. The MVAS regulation and its amendment should not be blamed for the downfall of Indian MVAS ecosystems instead MVAS players must take the onus due to lack of strategic and tactical moves with dynamically changing industry dynamics.
