Interview with Naveen Bhandari, MD and CEO, Techzone

Face to Face , February 20, 2013

The launch of 3G and 4G services and the increasing adoption of smartphones is contributing to the growth of the value added services (VAS) market in India. This growth presents lucrative business opportunities for content aggregator companies like Techzone, which develops content for VAS services.

In an interview with, Naveen Bhandari, managing director and the chief executive officer, Techzone discusses the opportunities, challenges and the key growth drivers of the Indian VAS market.


How has the VAS market in India evolved?

The Indian VAS market has seen a transformational phase since the last decade. For example, caller alert tones, a small VAS product has witnessed multi-staged growth from a monotone available on the phone by default to polytones to today’s highly customised ringtones and finally the full song download facility from  reliable platforms.

The service has evolved to meet the changing needs of the consumer. Similarly, the caller ringback tone (CRBT) which was available in the generic category for masses later got customised as per the package chosen by the user. All these evolutions showcase the user’s need for better and customised quality content.

The VAS market in India has huge potential. With varied demography, lifestyle and user preferences amongst consumers, the choice and quality of content preferred across the country is varied. Hence, the VAS industry is destined to generate high returns in India. Also, the increasing disposable income has revolutionised the consumer’s buying and spending pattern and has made it more smartphone savvy. This has further enhanced the scope for VAS players providing innovative mobile applications and rich mobile content. The overall ecosystem has been very supportive for the growth of the VAS industry.

What are the key drivers for the growth of the Indian VAS market?

The Indian VAS industry has always been dynamic and has witnessed constant evolution in the creation, distribution, monetisation and consumption of VAS content. The key growth drivers for the VAS market in India include:

Creating rich content

In order to improve customer reach, it is very important to generate information-rich and good quality content which is customised as per user requirements. Keeping this in mind, Indian VAS players are generating content which is useful, appealing and can be consumed on multiple platforms.

 Scaling-up user-friendly platforms

Scaling-up of the platforms that can deliver rich content created for smartphone users is going to be crucial as a majority of data services are used while travelling. Therefore, it becomes important to reach out to the diversified consumer base through the different platforms they use.

Further, the integration of these online platforms where the user can access multiple content and services and can shift between platforms in a seamless manner is going to be the thumb rule for delivering content in the future.

Leveraging 3G

The launch of 3G services in 2012 raised the bar for speed and effectiveness of mobile internet. Unfortunately, this service was not well received amongst Indian users, probably due to high tariffs and lower speeds and lack of devices supporting 3G.  However, with improved speed and lower tariffs, 3G is picking up in the country leading to high data consumption. In 2013, the 3G and 4G technologies are expected to be key drivers for the consumption of VAS in India.

What are Techzone’s plans for financial year 2013-14?

In 2013, one of our major focus areas will be mobile applications which are emerging as necessary services rather than a luxury. We are going to strengthen our position in the application and advertising space by expanding our product line. This will be in sync with the organisation’s philosophy of claiming leadership by introducing path breaking technology and innovations in VAS.

The company is also foraying into the managed services space.  The business will be based out of Delhi where we are going to build technology platforms for managed services for telecom companies. The services would include the missed call alert service or SMS or interactive voice response-based activities. We are also focusing on expanding our footprint in the international mobile advertising market. To begin with, the company has already made investments overseas and by 2013, Techzone will be present in 50 locations across globe. Further, the company is looking at tie-ups with various digital platforms for integration of services.

What are the challenges before the company?

One of the major challenges before Techzone is the existing revenue sharing model between VAS providers and telecom operators. The distribution of revenue across the globe is in favour of content providers. However, the scenario in India is opposite. The lower share of revenues leaves very little room for innovation for VAS content providers.  One can sustain with lower revenues as a content distributor only. But when one is investing heavily in research and development and independently marketing the content it becomes difficult to sustain in the market.

Another challenge is the slow adoption of VAS amongst Indian consumers and its penetration in the Indian market. I believe that there are still miles to go on this front. Another significant challenge in the VAS market emerges from the current transformation that the Indian market is undergoing. With Indian consumers becoming more discerning and the market becoming more consumer-centric, the content in its current unrefined format will not garner users. The industry needs to adopt inventive packaging and complex niche marketing to encourage consumers to adopt VAS services.

Content piracy is another challenge. However, this issue can be plugged, unlike the open internet model wherein it becomes difficult to stop piracy.

What are the trends that the company expects in the Indian telecom market?

The Indian VAS industry is undergoing a transitional phase wherein the monetisation of VAS content has gone beyond the conventional VAS operator-distributor model. Going forward, the following trends are expected to shape the industry in 2013-14:

Localisation of content

An average Indian consumer is bilingual and might prefer content is one language over the other. Hence, the trend of providing content in English is an obvious choice. However, to reach the masses, players need to offer content in regional languages as well. This trend has already been adopted by the entertainment industry, wherein regional music downloads and the CRBT service for regional songs is available across the country. Techzone itself provides extensive content in regional language such as Tamil through its portal, Dethadi.

Integration of platforms

2013 will also witness the scaling up of technology and consolidation of content, so it is delivered to users through a single platform. The integration of platforms will enhance user experience.

Segmentation of the content

VAS content is expected to be divided into the regional music, lifestyle/health, governance, education, commerce, agriculture, etc, categories. The focus on news and sports will be further narrowed down to niche categories like hockey, golf, tennis etc in sports. News will be segregated as business, politics, financial etc. in news updates.

Direct customer interaction

The industry is moving towards a model where VAS providers will communicate directly with users. While most VAS services will continue being available through the operators., the creation of independent platforms for providing digital content for mobile along with innovative promotional mediums like social media will allow the VAS providers to communicate directly with the users and showcase their content.








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