The popularity of over-the-top (OTT) messaging applications will continue to harm operators’ revenue from SMS as growing smartphone penetration and access to mobile data enable mobile users to switch from ‘metered and basic’ operator messaging to ‘free and feature rich’ OTT IM (instant messaging) services like WhatsApp and Line to meet their mobile communications needs.
According to a report from Strategy Analytics’ Wireless Media Strategies service, Mobile Messaging Forecast Update: 2001-2021, operator revenue from SMS and MMS will decline 42% to below US$53 billion by 2021 as a consequence of the demand for OTT messaging services.
The global base of active OTT messaging users increased by over 40% during 2014 with the average user sending over 900 messages per user per month, over eight times more than the average user of SMS services, the research firm said.
Nitesh Patel, Director of Strategy Analytics’ Wireless Media Strategies said, “While operator messaging will not become extinct given the scale of SMS to reach any device on any network, it is clear mobile users are becoming less dependent on SMS and more reliant on OTT IM as they upgrade to smartphones and have access to data over mobile or over Wi-Fi networks, or both. Even the broader availability and adoption of rich communication services (RCS)-based operator messaging service towards the end of the decade will not be enough to compensate the decline in operator messaging services.”
David Kerr, Senior Vice President at Strategy Analytics noted, “Having built large bases of users, popular Asian-based OTT messaging apps Line Messenger, Kakao, and WeChat have introduced features such as sticker shops, games and app distribution, virtual currencies, and sponsored channels to drive direct and in-direct revenue growth. Facebook Messenger and Blackberry Messenger (BBM) are also beginning to follow similar monetisation strategies. Consequently, by 2021 we forecast global revenue for OTT messaging services to approach US$13 billion in revenue.”
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