Yahoo Blueprint

Mobile games and applications development has come a real long way since the early days.

At some point in time, developers realized that in making mobile applications, they were repeating mundane 'base codes' for every project. After a few projects, each developer had his own set of 'engines' and a library of code snippets which could be assembled and themed ('re-skinned' as the industry jargon goes) to get a range of applications out in shorter time frames.

Another important factor which influenced the growth of development tools was the fact that despite its premise of 'write once run anywhere' that Java (the most popular development flavor) proposed, the sheer variety and subtle differences in the JVM implementations and feature-set of handsets made it nearly impossible to have one set of code that could work on all handsets. Netbeans was one of the first IDEs to introduce the concept of 'profiles' that tried to standardize the process of creating multiple builds with pre-compile like instructions. Another significant development was toolkits such as J2ME Polish

All these led to the process of mobile applications development slowly becoming 'design' processes rather than 'development' processes. Put in a different way, it became possible to 'script' a complete application and use a standard script interpreter/ compiler to translate this into a working application on the phone. The net result - one could now develop pretty professional looking applications in a matter of hours rather than weeks! We too, like most development companies had one such framework. These frameworks took a cue from the desktop phenomenon of widgets. Widsets (now acquired by Nokia) was one such initiative. Widsets allowed one to script applications that could be downloaded into the Widsets main application that resided on the phone in a simple point and click operation.

The latest entrant in this category is Yahoo Blueprint. I like what I see here!
From its website:

Blueprint is Yahoo!’s platform for building mobile sites, widgets and applications. Using a simple yet powerful language based on W3C XForms developers can design and host their Blueprint markup which Yahoo! will deliver to 1000s of different mobile devices.

The process is analogous to building a mobile website - you can use any server technology you like such as Apache, IIS, Java or PHP. Just return Blueprint XML and we do the rest. Remember: your Blueprint services run on the same platform that powers our own mobile services, including oneSearch, oneConnect and even our mobile homepage. Not only is it responsive and powerful, but we supply you with analytics to help you find out what makes your customers tick.

I must admit that Yahoo! did a pretty good job with the Y!Go application for the mobile and I think that they have put in a good tool in the hands of the developers with Blueprint. You can now make real slick mobile apps pretty easy. And guess what, this could be your short-cut development tool for the iPhone too! The only negative I could find from a quick read on the docs was the lack of secure communications for a lil more serious apps - I could have missed it, and in any case this could be added easily. So if you're into mobile apps development, go ahead, download the SDK and if possible, do return here to post your feedback.

ARPUs don't lie

This post is a part of my research into the Indian mobile content market - a general 'state of affairs' estimation relying on ARPU figures.

Disclaimer: All calculations here represent my personal estimation based on plain high school maths, figures available on the net (as in Q1 2007) and certain assumptions, which may NOT be accurate :)

VAS: Value Added Services
ARPU: Average Revenue Per User (per month)
COAI: Cellular Operators Association of India
IAMAI: Internet and Mobile Association of India

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Starting Assumptions

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Indian GSM subscriber base
= 135 million (COAI)

ARPU, Avg. Rev. Per User
= Rs. 300 (rounded)

%, VAS Revenues
= 10 (IAMAI)

%, SMS contributing VAS Revenues
= 55 (so remaining 45% has ringtones, CRBT, wallpapers, games, apps, mms...)

%, Games and data contribution to VAS Revenues
= 7

%, VAS operator rev. share
= 60 (remaining split between developer and aggregator)

%, Revenue share, developer (from what an aggregator gets)
= 40

%, Postpaid of subscriber base
= 20 (IAMAI)

%, Postpaid customers revenue contribution
= 80

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Calculations, Non SMS VAS ARPU

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Therefore,

VAS ARPU
= (10% x Rs.300)
= Rs. 30

Non-SMS ARPU
= (45% x Rs.30)
= Rs. 13.5

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Calculations Non SMS VAS Revenues

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Therefore,

VAS 'Market' including telcos share
= (Subscribers x VAS ARPU)
= Rs. 4.95 billion

VAS Aggregator Revenues,
= (Subscribers x Non-SMS ARPU x Aggregators Rev Share)
= Rs. 891 million a month
= Rs. 89 crore (1068 crore annual)

VAS Developers' Revenues,
= 40% x Aggregator revenues
= Rs. 356 million
= Rs. 35.6 crore (427 crore annual)

Game developers' Revenues,
= (15.5 % x VAS Developers' Revenues)
= Rs. 55.8 million
= Rs. 5.58 crore (67 crore annual)

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Twisted Analysis

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1. How much does an Indian mobile consumer actually spend?

Assuming that post and pre-paid spending ratio applies to VAS as well,
(Since 20% post-paid subscribers make 80% of revenues)
33 million subscribers contribute Rs. 3.96 billion VAS revenues per month

Excluding SMS share,
33 million subscribers spend Rs. 1.78 billion a month
Therefore, on an average, a post-paid user spends Rs. 54 a month on VAS excluding SMS.

There is one catch though! all these services require GPRS and it would not be fair to assume that all the post-paid subscribers would also be GPRS subscribers.

Assuming that only 20% of the post-paid subscribers are active GPRS users,
6.6 million post-paid GPRS subscribers spend Rs. 1.78 billion on VAS per month.
Therefore, an active GPRS user spends Rs. 270 per month on VAS.

Now, there is another caveat, GPRS by itself attracts a 'fee' for most subscribers, a few operators do provide pay-per-KB data transfer plan. (Airtel, for instance has a Rs.250 per month plan and a Rs.1500 per year plan) Still, I think it would be safe to assume that 40% of this customer spend goes towards paying for 'data' and that leaves an actual spend of close to Rs. 165 on actual 'buying' digital content per month?

2. Where is the moolah flowing?

Riding on the sheer volume of users, the telecos are building up their kitty by the virtue of owning the pipe and controlling the gates.
The next in line are the aggregators. India has the following major aggregators, there might be a few more:

IMI Mobile - Good operator tie-ups
OnMobile - IVRS leaders
Mauj - Good portfolio
Indiagames - Relatively recent shift of focus on aggregation
Indiatimes - Portal.

They'd make 60% of VAS Aggregator Revenues (after paying out developers/ rights owners). Put together, their revenues would be close to Rs. 50 crore a month.

Now come the developers, ringtone, wallpaper, game, app providers put together. Logically they'd get as their share whatever is left after the operator and aggregator takes, which would be 40% of VAS Aggregator Revenues close to Rs. 35 crore a month.

The only problem is, there are hundreds of fingers in this pie. A cursory glance at the portals will give a good picture at the enormous selection of content available. While a good percentage of such content comprises of scaled down bollywood/hollywood posters, trailers, screenshots and ringtones, the next major set of content providers are global studios. Then come relatively obscure studios, including many Indian content developers.

The pan-Indian mobile content shelf:
_______________________________
Item: Tones | Images | Games Apps
_______________________________
Share: 78% | 7% | 15%
Rev: 27.3 cr | 2.45 cr | 5.25 cr

Active: 5000 | 2000 | 500

Avg revenue per item for a developer
Tones
= Rs. 5,460
Image
= Rs 12, 250
Game and app
= Rs. 1,05,000

However, an 'average' can be misleading, since what really happens is that the downloads are heavily skewed in the favor of top 10 to 20 content items, the rest of the items together might constitute just 10% of the total downloads.

3. Is developing content really worth the time and effort?

To get a perspective on these figures, let me take the case of games and apps since these would be the most resource intensive. A good 'visible' game or app could thus make $2,500 or close to $6,000 over its Indian shelf-life. So, for an developer investing at least four months worth of team effort in developing an international class product exclusively for the Indian market, is a high risk. The other alternative is to make a lot of low-quality quick games - one might just about break even with such glut!

The only reason why someone would consider this market is its sheer size and 'potential'. So those with deep pockets spend to build the brand and be ready 'when the time comes'. Also, most content items have a global appeal. India can just be one of the many spokes in the developer's distribution wheel.

Another word of caution: These figures lead me to believe that there is a 'revenue leak' somewhere in the chain. The 'numbers' passed down to the content developers rarely come even close to our estimates. Perhaps some members of the Content Providers community could comment on this?

Also, I might have made mistakes, logical or arithmetic in my calculations - please point them out. Baseline- ARPUs dont lie!