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Cell content firms headed for shakeout

A study predicts that there can be a major shakeout among VAS players and only a handful will survive, reports Venkatesh Ganesh.

india Updated: Nov 18, 2007 20:23 IST
Venkatesh Ganesh

There could be a major shakeout among value-added services (VAS) players soon and only a handful will survive, according to a study conducted by Thomas Weisel International, an investment bank that specialises in the technology, healthcare and retail sectors.

The study points out that VAS players are still not making enough money and telecom operators keep the majority of the revenues earned from services like ring tones, wallpapers, mobile games and music. Also, lack of co-ordination between mobile handset makers and content developers on standards is hampering growth.

Currently, VAS players have to depend on telecom operators to reach a subscriber and hence have to give in to their demands. “We get to keep about 25 per cent of the revenues earned from a subscriber and the mobile operator keeps the rest,” says Nitish Mittersain, CEO, Nazara Technologies, a VAS player. Companies say due to this they are unable to plough money back into marketing and other initiatives. The study says that VAS still does not feature among the top issues for regulators. Regulators should step in to frame a set of broad guidelines regarding pricing, measurement of services provisioned and revenue share to encourage content and application development, they add.