The Ringtones Industry | Group 1 | Section A

Among all the MVAS (Mobile Value added Services), ringtones still have the majority share in India. A study conducted by IAMAI (Internet and Mobile Association of India) estimated the ringtones to constitute about INR 1,140 crores within the expenditure on MVAS, and is estimated to touch a billion dollars.

The ringtones industry due to its inherent structure was heavily dependent on telecom operators for generation of revenues. But due to the advent of smart phones and digital technology, consumer no longer is dependent on the select choice of ringtones offered by the telecom operator. They can easily go online purchase a track which they like and then transfer it on their mobiles and set them as ringtones.

When considering the drivers and barriers of mobile-ringtone value added service adoption in India, a stellar study by Wipro and IAMAI revealed deep insights on consumer adoption trends, captured below:

Figure 1: Consumption pattern of Mobile Value Added Service amongst mobile consumers

Source: "Beyond the Tip of The Iceberg" The Multibillion dollar Indian MVAS market opportunity, Jacobson M., Trigunait A., Nambiar R.

 

As is apparent from the research, there is an immense scope for customization in the entertainment zone of the mobile value added services. The ringtone industry, in particular, is open to massive changes. The replacement of polyphonic ringtones with real music ringtones amounts to far more than a format replacement cycle: because record labels have now arrived in the market, the very structure and operation of the ringtone industry is seeing dramatic change.

There is, however, little idea whether rolling out a ringtone company is as viable a threat to the ringtone economy as peer-to-peer file swapping and CD ripping has been to the CD industry. Nevertheless, Xingtone Ringtone Maker (www.xingtone.com), Ring Factory (www.ringfactory.net) and Ringtone Music Studio (www.bvrp.com) are only three of many ringtone-making programs that fully bypass the ringtone industrial complex.

Furthermore, another survey from Alatto Technologies found that 37% of 15- 49-year-olds said they would subscribe to a ringtone service. The first and biggest provider of ringtones, Korean company Widerthan, reported that they're now a 120m business for Korean operator SK Telecom. It is also interesting to note that Korean operators are fast moving into MP3 delivery, wishing to become MP3 providers both in mobile and online. The key to driving take-up of ringtones is integrating advanced feature sets such as gifting and copying.

In order to start a mobile ringtone business, the first task to be tackled is the type of ringtones that should be offered. When composing the ringtone a great deal of research has to be done on the taste and preferences of consumer in the music today. The format of the ringtone is equally, if not more important. The appropriate format like midi would mean the ringtones can be downloaded on a larger variety of mobile phones and hence has a larger market at its disposal.

Figure 2: The Value Chain

 

Value Proposition: The firm should look at reducing time for consumers searching for their favourite music by providing them a one-stop shop for all kind of music genres.

Revenue Model:  There can be two main options for revenue streams;

1. Advertising revenue: By having featured artists and charging a nominal fee from the artists.
   
2. Subscription: Freemium model could be applied in which first download is offered for free and subsequent downloads have a nominal charge attached.
   

Market opportunity: The realistic marketplace for this population service would be the whole population which owns or are likely to own a mobile device.

 

 

References:

1. Identify the key forces that will shape the new ringtone industry. (2006, Aug 25). Business Wire.
   
2. Beyond the Tip of The Iceberg: The Multibillion dollar Indian MVAS market opportunity, (2012, Mar 1). Jacobson M., Trigunait A., Nambiar R.
   
3. What next for the not so humble mobile ringtone? (2004). New Media Age.
   

12DM-020 Akshay Kumar

12DM-034 Aprajita Aparna Sahay

12DM-056 Gaurav Kumar Singh

12DM-069 Gandhi Karan Suresh

12DM-071 Karthik Govindarajan

12DM-078 Lohit Gupta

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