Sky's the limit for mobile data
sales in India By Siddharth
Srivastava
NEW DELHI - Recently, Indian
Idol, a reality talent-hunt show licensed from
the American Idol format, selected a new
winner on Sony Entertainment Television. While the
program was an instant hit, the surprising factor
was the large number of people who chose to vote
by short message service (SMS) - more than 55
million during a five-month voting period,
generating revenue of more than US$4 million
divided between telecom companies and Sony.
Indeed, with the number of Indian
mobile-phone users set to cross 100 million before
the end of this year, the number and variety of
businesses being woven around the gadget continues
to amaze. In the fray are media companies, telecom
operators and more
than
a half-dozen aggregators (mobile content or mobile
solutions companies) offering a host of data
services such as contests, ring tones, weather
forecasts, games, banking and astrology services
and m-commerce. The subscriber base is expected to
grow to 300 million by 2010. The cellular industry
crossed $1.5 billion in revenues in the financial
year 2003-04.
In Europe, with its
widespread mobile-telephony usage, the mobile-data
sector accounts for a healthy 10-20% of most
operators' revenues (the operator's share is just
one part of the mobile-data market). In South
Korea and Japan, it forms 20-25%. In India, it is
between 7% and 10%, which is a level that China
reached when 20% of the population had mobile
phones. India has reached the same level at only
10% penetration. Based on these figures, Lehman
Brothers estimates mobile data will be a $10
billion market in India by 2010.
On
average, a mobile handset is used for less than
one hour in a day for voice communication
(incoming and outgoing calls) compared with more
than an hour a year ago. But SMS usage has
increased. This is due to various downloads such
as ring tones, bill-related information, contests,
exam results and messages received from public
services such as banks, railways and airlines.
Lehman Brothers estimates that a market of
close to $1 billion linked to cellular phones has
already been created in India. Last year, the
Indian music industry earned more than $35
million, or 20% of its revenues, from mobile
music. Media houses such as Star, Sony and BCCL
have formed separate divisions to tap into mobile
content. Star chief executive officer Peter
Mukerjee has said that mobile telephony should
eventually bring in 30% of that company's
revenues. While it took the print media 128 years
to achieve a target audience of 50 million
subscribers, it took mobile communications just 10
years to reach a similar target. Aggregators
Activemedia Technology, Mobile2win and Hungama
link media and mobile companies.
In 2005,
the number of legitimate music-download sites
reached 335, up from 50 two years previously. In
just two years, the volume of music made available
online by record companies has increased more than
sixfold, to more than 2 million songs, according
to the International Federation of the
Phonographic Industry's 2006 Digital Music Report.
Mobile music downloads in the Indian market are
currently valued at $50 million, according to
Soundbuzz India.
Royalties worth about $15
million were paid to the music industry in the
past 18 months. According to Shridhar Subramaniam,
managing director of Sony-BMG, "A hit film can
generate about 5% or more of an album's sale - on
mobile revenues.''
About 400,000-500,000
ring tones are downloaded daily. Internationally,
the size of the market for mobile ring tones is
estimated to have grown from $450 million in 2003
to $1.5 billion in 2004. In India, though, the
ring-tone market still stood at a modest $6
million in 2003, but is growing at more than 50%
annually.
Moving on from music, it is
estimated that an Indian mobile gaming market that
generated $30 million in revenue in 2004 will rise
to $336 million by 2009. The latest National
Association of Software and Service Companies
report on the segment concurs. The association has
said that India could earn as much as $500 million
in exports by 2010.
According to a report
by industry consultant ARC Group, worldwide mobile
entertainment revenues are forecast to grow to $25
billion by next year, driven by the games sector.
In the Asia-Pacific region alone, mobile gaming is
expected to generate nearly $2 billion in revenues
by 2008. In East Asia, mobile gaming has generated
more than $850 million.
Over the past
year, wireless games topped the list of
entertainment applications downloaded to cellular
phones. It is expected that the number of wireless
gamers will grow from 7.9% of all US wireless
subscribers in 2003 to 34.7%, or 65.2 million
users, by 2008. Mobile gaming is set to generate
$1.9 billion in yearly revenue in the US by 2009,
up from $204 million in 2004.
The growth
of gaming in India was initially restricted by the
prohibitive cost of handsets. However, today
Java-enabled handsets (a requisite for gaming) are
available for less than $50, and users, especially
young ones, are willing to experiment with new
games centered on local themes such as Bollywood
(India's film industry) and cricket.
Big
bucks are expected on what has been termed as
"adver-gaming", a format where the user is
provided the complete brand experience as well.
Thums Up (an Indian cola brand) has a game
designed with Mobile2Win; Castrol has its own ring
tone (100,000 people actually downloaded it);
while Star launched "mobisodes", one-minute clips
of its popular comedy show The Great Indian
Laughter Challenge.
Mobile-commerce is
another area receiving attention. Recent Internet
and Mobile Association of India figures estimate
that the size of the Indian e-commerce market will
cross $600 million by 2006-07, a nearly 100%
increase over last year and more than 300% over
2004-05.
Indeed, many market analysts
believe that the potential is yet untapped.
India's telecom-industry boom is led largely by
cellular telephony, although growth of land-line
phones and Internet connections are on the
upswing, though not at the same pace.
More
than 90% of the phones added in 2005 were mobile
phones, with the share now more than 50% (60
million) of total connections (more than 110
million), with private players (Tatas, Hutch,
Bharti Airtel, Reliance) having contributed more
than 88% of the total addition during the period.
Monthly additions of cell phones have grown
exponentially, from 50,000 in 1997 to 1.4 million
in 2003 and a record 4.5 million in December 2005
(due to the launch of services that guarantee a
phone number for life for just over $20), which is
the monthly addition level of China.
India
is considered to be a ripe market, as less than
40% of the country's total area is covered by
mobile networks, and fewer than eight in every 100
Indians use mobiles, compared with 30% in China.
The scope for growth and expansion is immense.
Siddharth Srivastava is a New
Delhi-based journalist.
(Copyright
2006 Asia Times Online Ltd. All rights reserved.
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