Its about 10 years since the emergence of players into the mobile VAS market. Feb 2002 is when Indiatimes 8888 set the trend in this market with multiple publications and media houses doing a ditto. The key issues then was the oblique dynamics involving the carrier and what today we would call rest of the contributors in the eco system. In a purely text based activity, the carrier, the gateway provider and either the aggregator or the content owner formed the eco system. In an voice based service the gateway provider was replaced by the platform provider , and in a data service, the players in the eco system remained similar.
It is with the advent of music that the revenues started booming but at the same time the imbalance in the eco system started growing bigger. Despite the attractive top lines , I am suspecting that there was very little attention that was paid to the bottom lines of the players in the ecosystem. If one draws up a very simple profit pool for the participants in the eco system, we may realise that the histograms suggest that the lowest bottom lines are with the aggregators followed by platform providers and the the CPs. However, we see the maximum no of players is in this category only. Huge upfront acquisition costs and wafer thin margins have ensured profitability does not grow in these segments. Also, the platform players saw their margins too getting down from close to 25% in 2002 to 8 % and even lesser today. Still the race is here too with many entrants or at least existing ones upgrading into that space.
Even in the gaming space, if anyone can claim the real existence of one in India, the situation has come to be one of aggregation all through with worthy original locally developed titles being a minor amount. There is every possibility that these players too will move to a platform play to survive in future, if they already have not done by now.
Once again if we compare a profit pool of 2002 to 2005/6 to 2011 one can clearly see that it is increasingly becoming a tighter spot to be an aggregator. While we have witnessed the dual roles performed by platform players as aggregators or CPs as direct relationships with carriers, my guess is we will witness more of these in the coming future. The CPs ( and specifically music labels will be either direct in their deployment or will acquire aggregators ( possibly those who have been major partners primarily for their logistics and distribution strengths). While this kind of a consolidation could be welcomed, those who have not figured which way to progress, the tech route or the aggregator route will possibly face a shutdown. 2011/12 will be an interesting year for the mobile VAS segment in India.
Like the assemblers and box pushers in the PC market whose value addition is practically zero today, the role of an aggregator has gotten marginalised as time progressed.
The situation is not very dissimilar if one were to consider profit pools within product categories in the players' portfolio. The ability to constantly evaluate where your bottom line comes from and strategise to create a mix that is advantageous to the player is critical. CPs riding the MG wave and sitting in a safe house will benefit only as long as the aggregator space will exist gainfully.
In a domain which has come to exist and grow for 10 years there is bound to be disintegration and consolidation. Thats only natural. How to remain stable after the shake out is critical. There is no dearth of resources in creating newer products and services. There are plenty of opportunities to be original in your services. Create IP, retain them .
The road may be hard, but companies will still live to see the end of it.
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