Messaging still reigns in mobile VAS market

Messaging, including P2P SMS, continues to account for almost half of Asia Pacific's mobile VAS market, which last year was valued at $82.9 billion last year. Over the next five years Informa Telecoms & Media estimates the market will grow 11% annually and generate revenues of $137.3 billion by 2014.

Messaging accounted for 46.7% of total VAS revenue in 2009 while mobile entertainment VAS, including mobile music, games, images, TV and video, contributed 13.2%. Mobile internet revenues accounted for 32.9% and other VAS, including social networking and mobile banking and payments, contributed the remaining 7.2% share.

IVR (interactive voice response) is playing an important role in driving the growth of the mobile VAS market in Asia Pacific. IVR portals are already well established in most countries, including India, China, Pakistan and Bangladesh, and are being used by mobile operators to offer, market and promote their mobile VAS. Indian companies, such as Comviva and IMImobile, are also finding success in exporting their IVR and other mobile VAS solutions and business models to other emerging markets in Africa, the Middle East and Latin America.

The low fixed-internet penetration but strong growth in mobile internet adoption in emerging markets means "mobile search" has the potential to generate significant revenues, especially in countries such as China and India. For example, there were already some 106 million active mobile internet users in China by the end of 2009, a significant addressable market to target for mobile search and huge opportunities for web search companies, including the likes of Baidu and Google.

Mobile social networking is beginning to see strong growth in the region's emerging markets but most of the services are instant messaging chat applications. One of the most successful service examples is China Mobile's IM service called Fetion, which has over 100 million registered users. The addressable market for the Fetion service is large as it can work using IVR, GPRS and SMS access modes.

In growth markets like India, where the majority of the population is based in rural areas, it is important for the mobile industry to develop VAS relevant to the needs of the people in those areas and address issues that include illiteracy and the demand for content in the local language format.

In addition, generating awareness by effective marketing of these services to the rural population is equally important. At present, most operators use SMS and IVR to communicate new services, offers and promotions to subscribers. IVR is particularly useful in regions of low literacy and where there is need to communicate with people in their local/regional languages.

Shailendra Pandey is a senior analyst for Informa Telecoms & Media