Entertainment firms see profit, bigger role in mobile content services

Predict boom in mobile content consumption revenue with 3G.

With telecom operators across the country gearing up to introduce 3G services in the next few months, industry players have projected revenues from content consumption in the sector to exceed that of the television industry over the next four years.

Ronnie Screwvala, founder and chief executive officer, UTV Software Communications said, “Mobile services on Thursday have eight times the connected base as compared to television. The payment gateway in the segment is well-established. There is no threat of erosion of revenues from piracy. Even if 10 per cent of the connected subscriber base converts to 3G, the mobile content market would exceed the size of the television broadcasting industry over the next three to four years.”

The subscriber base in the mobile telephony market, at present, stands at a whopping 650 million as compared to the 85 million cable and satellite households in the country. Telecom operators expect 100-120 million subscribers to convert to 3G over the next two years.

Concurred Raghav Anand, who heads the mobile entertainment segment at Ernst &Young. “Even on Thursday, mobile has the ability to grab more eyeballs. Chat services with celebrities have over a million followers as compared to roughly a few hundred thousand viewers who log on to some of the smaller channels on air. Subscribers are willing to pay Rs 5-30 for a single product on the mobile platform. The segment would compete strongly with television in four to five years and broadcasters would definitely see a significant share of their revenues coming in from content consumption on mobile and internet in the next three years.”

Globally, the mobile application market stands at $ 5 billion and is slated to grow to $25 billion by 2015. According to a FICCI-KPMG report on the media and entertainment industry (2010), the television industry in India was valued at Rs 25,700 crore in 2009. This is projected to grow to Rs 28,900 crore in 2010 with 65 per cent of the revenues coming in from subscription charges and the remaining 35 per cent from ad spends made by companies.

“In the television industry, cable business never got structured, as a result of which operators and subscribers never paid the requisite amount for the content on offer. There has been negligible growth in subscription revenues over time. For mobile content the payment pattern is well established, subscribers shell out more money to download content on mobile phones than to watch pay channels on television, the growth potential is huge,” added Screwvala.

What is essential to bring in the momentum is to put on offer content which is “compelling” and tailored to suit the preferences of consumers on the move. “The content would primarily cater to consumers aged between 16 and 34 years, and will have to be interactive, edgy and ‘snacky’,” Screwvala reckoned. UTV Group, on its part, has already commenced work on producing original as well as repurposed content across the board and “will be ready with products when telcos are ready to roll out services on new media platforms.”

On the cards, are plans to develop a theme-based collage of movies among others.

Regarding revenue sharing arrangement with telecom services providers, which had been a bone of contention in the industry for years, Screwvala held even if 40 per cent of revenues garnered are shared with content producers, it would be good to start with. The UTV Group expects over a third of its revenues to come from the mobile content development business by 2014.