Allegedly 170 million votes and over N5.1 billion in revenue after, what seemed to be 3 months of intrigue, suspense and controversy for most, but a serious money making venture for a few, has come to an end. Unbelievable figures it may seem –over N5.1billion?? How possible? Just from N30 per SMS?
I am here to tell you that these figures are likely to be true, if not almost double. Let’s also remember that these figures may not include online votes which many assume is free, forgetting that data is paid for and still translates into revenue for Telcos.
Earlier in April, the Nigerian Communications Commission (NCC) noted that the Value Added Services (VAS) segment of the telecom market in Nigeria has recorded the sum of $200m revenue as at first quarter of this year only. Compared to an estimated worth of $200m in 2014, VAS in Nigeria now has a value of over $1 billion in subscription numbers, from the less than 500,000 lines in 2001, numbers have grown to more than 147 million recorded as at January 2018. Teledensity, weighted in the ITU formula of one line to 100 of population, stands 105.21 percent, while internet penetration has hit the 100 million mark as at January 2018.
Today, the telecommunications industry in Nigeria is experiencing a relative decline in ARPU (Average Revenue per User), which since 2004 has decreased from just over $15 per month per subscriber, to a new low of $4 a month per subscriber. This situation reveals that income from conventional voice services has plummeted and may be a continuous trend. The operators are therefore channeling more resources and emphasis to VAS and this will increase the revenue stream significantly.
Expectedly, mobile network operators never truly forget that the Big Brother business is based on a mentality that does not accept the limitations of one’s salary. How much they are going to make is ultimately determined by the tenacity of their own creativity. Creativity in this sense may include decisions to bring back evicted housemates or some house mates remaining in the house despite their seemingly ugly behaviour. I mean, how else do they ensure that the buzz is kept at an all-time high which ultimately ensures that the billions are churning in?
Value Added Services (VAS) refers to services (beyond voice services) offered via a mobile platform, e.g. Short Message Service (SMS) and Multimedia Message Services.Major VAS services include : contests and voting (as is the case of Big Brother), missed call alerts and voicemails, mobile advertising, mobile money and m-commerce based services, mobile TV and OTT services, music tracks – play, download and ring tones, Ringback tone (RBT and RRBT), SMS chatting and dating services, sports and infotainment services, etc. Entertainment VAS however, seems to be the leading service that is driving the VAS market in Nigeria, this is because entertainment based VAS drives the market in both value and volume terms.
The Mobile network operators are inevitably, somewhat annoyingly,the winners in the value chain of these services as VAS providers for so long have had to contend with the lopsided revenue sharing formula between them and network operators. Investigations revealed that sharing formula has changed from 60% for the mobile operators and 40% for VAS operators, to the present one of 70% for mobile network operators while VAS providers take 30%. Perhaps a sharing formula was re-negotiated, but the present formula means that for every N30 spent on voting for your favorite Big Brother housemate, the operators have a share of a whooping N21.
Network Operators justify the lion’s share for VAS due to cost associated with network, billing, marketing and subscriber acquisition. Most of the VAS is provided over SMS, Voice and WAP and these services are mostly operator controlled, hence VAS players have no option but to concede the lion’s share to operators.However, if the operators do not radically change the present revenue sharing structures which allows them to retain major chunks of the revenue, development efforts might not be encouraging after all.
3 straight months and millions of N30 SMS messages after, the VAS market in Nigeria still remains the largest in Africa and all things being equal, the potential is far reaching and remains largely profitable as the developing world obtains more cell phones and technology becomes more advanced.
The VAS market players surely cannot wait for the next Big Brother edition! I’m sure you can’t wait to vote too!
Raheem Roqeeb is writing from Lagos