sms and ott future trends 2012 2016

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2012 analysis of the on-going competition between traditional SMS and the new breed of OTT messaging apps

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Page 1: SMS and OTT Future Trends 2012 2016
Page 2: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

Portio Research Limited.

Published 2012 by Portio Research Limited © Copyright 2012.

www.portioresearch.com

[email protected]

Disclaimer and Legal Notices

Disclaimer

Every care has been taken in the preparation of this study to ensure that the information contained herein is accurate, factual and correct to the

best of our knowledge, at time of publishing. All opinions, suppositions, estimates and recommendations included in this document are solely

the opinions of the authors unless otherwise stated. Portio Research Limited accepts no liability for any loss or damage or unforeseen

consequential loss or damage arising from the use of the information contained within this document. The opinions, suppositions, estimates and

recommendations within this document cannot be guaranteed, and readers use this information at their own risk. The information published in

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Page 3: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

Presentation Plan

Overview of OTT Messaging Services 1

SMS and OTT Messaging: Current and Future Trends 2

Conclusion 3

Page 4: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

Over-the-Top (OTT) Messaging Services

OTT messaging services deliver the message to recipients using

Internet connections, which in the case of mobile is via the MNOs’

data networks

Most OTT messaging services are packed with multiple features

and capabilities, such as availability status message, message

history and picture/video/file sharing

OTT services are becoming increasingly popular, especially

among those who do not have access to cheap text messaging

bundles but have subscribed to mobile Internet offerings

OTT Messaging Services – An Overview

Source: Portio Research Ltd.

OTT Messaging Services – Key Drivers

Increasing Smartphone Penetration

Popularity of Mobile Applications

Lower pricing – mostly available free of cost

Mobile handset vendors’ attempts to strengthen brand loyalty

Increase in data network coverage

Availability of MNO’s co-branded OTT messengers

Internet Messengers: This group constitutes OTT messaging

services that require the same application/mobile operating

system (OS) on both participating handsets to enable

communication between them. For example: WhatsApp,

BlackBerry Messenger (BBM), Apple iMessage and ChatOn.

SMS Messengers: This group constitutes OTT messaging

services that can deliver messages even on feature phones as

texts and do not require both parties to have the same

application/mobile OS to communicate. For example: JaxtrSMS,

SMSGupShup and Way2SMS.

OTT Messaging Services – Broad Categories

Page 5: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

Presentation Plan

SMS and OTT Messaging: Current and Future Trends 2

Overview of OTT Messaging Services 1

Conclusion 3

Page 6: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

SMS Market – Current and Future Trends

5,225.6 6,834.5 7,843.7 8,599.7 9,162.9 9,443.5 9,639.3 9,554.2

100.1 113.9 115.5 115.0 113.8 109.3 105.1 102.0

0

20

40

60

80

100

120

140

0

3,000

6,000

9,000

12,000

2009 2010 2011 2012F 2013F 2014F 2015F 2016F SM

S U

se p

er

Subscri

ber

per

Month

SM

S T

raff

ic (In

Billion)

Year

SMS Traffic and Use — Worldwide

SMS Traffic SMS Use per Subscriber per Month

12.1%

49.4%

31.1%

5.0%2.4%

Europe Asia Pacif ic North America Latin America Africa and Middle East

SMS Traffic Break-out – Regional (2011)

Over 7.8 trillion SMS were exchanged worldwide in 2011, and total

SMS traffic is expected to near 9.6 trillion by end-2016 –

representing a CAGR of over 4 percent

In 2011, an average subscriber sent approximately 116 text

messages per month. This number is forecast to drop to 102 text

messages by end-2016.

With a CAGR of almost 14.1 percent, Africa and Middle East will

lead in terms of regional SMS traffic growth during 2011–2016

Worldwide A2P SMS traffic is expected to grow at a CAGR of 13.1

percent during 2011-2016, while the corresponding growth rate for

P2P SMS is 1.9 percent

SMS Traffic: Highlights

Source: Portio Research Ltd.

Page 7: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

OTT Messaging – Current and Future Trends

146.6 214.7 306.4 438.2 640.8946.4

1,417.42,001.1

3.1% 4.0% 5.1%6.8%

9.2%

12.9%

18.4%

25.0%

0%

7%

14%

21%

28%

0

500

1,000

1,500

2,000

2,500

2009 2010 2011 2012F 2013F 2014F 2015F 2016F

OTT U

ser

Penetr

atio

n

(In P

erc

ent)

OTT U

sers

(In

Mill

ion)

Year

OTT Users — Worldwide

OTT Users OTT Users Penetration

OTT Users Break-out – Regional (2011)

The worldwide OTT messaging user base stood at 306.4 million at

end-2011

Widespread adoption of smartphones, better network coverage,

compelling and affordable data plans and the launch of numerous

OTT messaging services have bolstered uptake

With the aforementioned favourable factors in mind, OTT users

are expected to total over 2 billion by end-2016, growing at a

CAGR of 45.5 percent

OTT Users: Highlights

Source: Portio Research Ltd.

25.4%

34.9%

30.9%

2.8%6.0%

Europe Asia Pacif ic North America Latin America Africa and Middle East

Page 8: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

SMS Traffic vs. OTT Messaging - Worldwide

Source: Portio Research Ltd.

30.8%

14.8%9.6% 6.5%

3.1% 2.1% -0.9%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

2010 2011 2012 F 2013 F 2014 F 2015 F 2016 FSM

S T

raff

ic G

row

th(In P

erc

ent)

Year

SMS Traf f ic Growth

OTT impacting North America

OTT impacting Europe

214.7 306.4

2,001.1

6,834.5 7,843.7

9,554.2

0

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2016 F

SM

S T

raff

ic a

nd

OT

T U

sers

Region

SMS Traffic and OTT Users

OTT Messaging Users (In Million) SMS Traffic (In Billion)

OTT and SMS traffic will grow side by side, synergistically till

2015, as the overall volume of mobile P2P messaging increases

dramatically

OTT will effectively slow down the growth of SMS over the next

few years, but little ‘cannibalisation’ will occur in the short term

As more new ways of messaging become available, consumers

will adopt the new ways alongside the old ways and communicate

more and more

OTT Users: Highlights

Page 9: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

SMS Traffic vs. OTT Messaging - Europe

Source: Portio Research Ltd.

819.1 948.8 1,006.3

65.1

73.4 72.5

60

65

70

75

0

200

400

600

800

1,000

1,200

2010 2011 2016 F

Messag

es P

er

S

ub

scri

be P

er

Month

SM

S T

raff

ic

(In B

illion)

Year

SMS Traffic & Messages Per Subscriber Per Month

SMS Traffic (In Billion) Text Messages Per Sub Per Month

The number of text messages per subscriber per month is

expected to increase in the near future. It will reach 78 messages

per subscriber per month in 2013. Post 2013, this figure is

expected to decline and subsequently reach 72 SMS per

subscriber per month by 2016.

OTT messaging services penetration will reach 35 percent by

2016 from 7.1 percent as of 2011

OTT messaging services will not cannibalise P2P SMS services in

the next couple of years. However, post 2014, the impact of OTT

messaging services will be felt on overall regional text message

volumes.

OTT Users: Highlights

58.4 77.9 416.0

5.5% 7.1%

35.8%

0%

10%

20%

30%

40%

0

100

200

300

400

500

2010 2011 2016 F

OT

T P

enetr

ation

(In P

erc

ent)

OT

T M

essagin

g

Users

(In

Million)

Year

OTT Users and Penetration

OTT Messaging Users (In Million) OTT Penetration (In Percent)

82.0 237.1 1,884.7

133.9

289.9

448.0

0

100

200

300

400

500

0

500

1,000

1,500

2,000

2010 2011 2016 F

Messag

es P

er

S

ub

scri

be P

er

Month

OT

T T

raff

ic

(In B

illion)

Year

OTT Traffic & Messages Per Subscriber Per Month

OTT Traffic (In Billion) OTT Messages Per Sub Per Month

Page 10: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

SMS Traffic vs. OTT Messaging – Asia Pacific

Source: Portio Research Ltd.

3,291.5 3,874.5 5,484.0

116.1 114.8

106.6

100

105

110

115

120

0

1,000

2,000

3,000

4,000

5,000

6,000

2010 2011 2016 F

Messag

es P

er

S

ub

scri

be P

er

Month

SM

S T

raff

ic

(In B

illion)

Year

SMS Traffic & Messages Per Subscriber Per Month

SMS Traffic (In Billion) Text Messages Per Sub Per Month

OTT services will not impact the uptake of SMS services in the

region. However, growth in the overall volume will reduce year-on-

year. As per our estimates, text message volumes will grow by 13

percent in 2012. It will reduce to 4 percent by 2016.

This decline in growth is on account of the induction of rural

subscribers, whose primary mode of communication will be voice

OTT service users will constitute 21 percent of the total regional

subscriber base by 2016, compared to 3.5 percent in 2011

OTT Users: Highlights

71.9 107.0 924.6

2.8% 3.5%

21.0%

-1%

4%

9%

14%

19%

24%

0

200

400

600

800

1,000

2010 2011 2016 F

OT

T P

enetr

ation

(In P

erc

ent)

OT

T M

essagin

g

Users

(In

Million)

Year

OTT Users and Penetration

OTT Messaging Users (In Million) OTT Penetration (In Percent)

114.8 668.0 7,085.2

156.1

622.5

752.4

0

100

200

300

400

500

600

700

800

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2010 2011 2016 F

Messag

es P

er

S

ub

scri

be P

er

Month

OT

T T

raff

ic

(In B

illion)

Year

OTT Traffic & Messages Per Subscriber Per Month

OTT Traffic (In Billion) OTT Messages Per Sub Per Month

Page 11: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

SMS Traffic vs. OTT Messaging – North America

Source: Portio Research Ltd.

2,248.7 2,440.8 2,097.0

577.4 589.7

415.8

0

200

400

600

800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

2010 2011 2016 F

Messag

es P

er

S

ub

scri

be P

er

Month

SM

S T

raff

ic

(In B

illion)

Year

SMS Traffic & Messages Per Subscriber Per Month

SMS Traffic (In Billion) Text Messages Per Sub Per Month

North America is the first region that will be impacted by the

increasing uptake of OTT services

As of 2011, over a quarter of the total regional mobile subscriber

base used OTT messaging services. This figure is expected to

reach 72.6 percent by 2016.

Overall text message volumes will increase to 2013, post which

they will witness a decline; this is in spite of a growing regional

mobile subscriber base

OTT Users: Highlights

67.1 94.6 309.2

20.0% 26.7%

72.6%

0%

20%

40%

60%

80%

0

50

100

150

200

250

300

350

2010 2011 2016 F

OT

T P

enetr

ation

(In P

erc

ent)

OT

T M

essagin

g

Users

(In

Million)

Year

OTT Users and Penetration

OTT Messaging Users (In Million) OTT Penetration (In Percent)

1,095.9 2,538.5 10,496.7

1,704.1

2,616.5

2,968.9

1000

1500

2000

2500

3000

3500

0

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2016 F

Messag

es P

er

S

ub

scri

be P

er

Month

OT

T T

raff

ic

(In B

illion)

Year

OTT Traffic & Messages Per Subscriber Per Month

OTT Traffic (In Billion) OTT Messages Per Sub Per Month

Page 12: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

SMS Traffic vs. OTT Messaging – Latin America

Source: Portio Research Ltd.

318.2 392.3 604.1

50.9 57.0

69.3

0

20

40

60

80

0

100

200

300

400

500

600

700

2010 2011 2016 F

Messag

es P

er

S

ub

scri

be P

er

Month

SM

S T

raff

ic

(In B

illion)

Year

SMS Traffic & Messages Per Subscriber Per Month

SMS Traffic (In Billion) Text Messages Per Sub Per Month

OTT services penetration in the region stood at 1.4 percent as of

2011. This is expected to reach 20.1 percent by 2016.

Uptake of OTT services will not impact text messaging services in

the near future. Furthermore, text messages per subscriber per

month will increase during the period 2011-2016.

Total regional SMS volume will cross 600 billion in 2016,

compared to 392 billion in 2011

OTT Users: Highlights

5.2 8.5 147.6

1.0% 1.4%

20.1%

0%

5%

10%

15%

20%

25%

0

20

40

60

80

100

120

140

160

2010 2011 2016 F

OT

T P

enetr

ation

(In P

erc

ent)

OT

T M

essagin

g

Users

(In

Million)

Year

OTT Users and Penetration

OTT Messaging Users (In Million) OTT Penetration (In Percent)

2.2 25.5 451.2

40.5

310.8 322.2

0

50

100

150

200

250

300

350

0

100

200

300

400

500

2010 2011 2016 F

Messag

es P

er

S

ub

scri

be P

er

Month

OT

T T

raff

ic

(In B

illion)

Year

OTT Traffic & Messages Per Subscriber Per Month

OTT Traffic (In Billion) OTT Messages Per Sub Per Month

Page 13: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

SMS Traffic vs. OTT Messaging – Africa & Middle East

Source: Portio Research Ltd.

157.1 187.3 362.8

17.7 18.3

24.0

0

20

40

0

50

100

150

200

250

300

350

400

2010 2011 2016 F

Messag

es P

er

S

ub

scri

be P

er

Month

SM

S T

raff

ic

(In B

illion)

Year

SMS Traffic & Messages Per Subscriber Per Month

SMS Traffic (In Billion) Text Messages Per Sub Per Month

The Africa and Middle East (AME) region will witness significant

growth in SMS volumes during the period 2011-2016

It is anticipated that the region will witness double digit growth

year-on-year in text message volumes during the period 2011-

2016

As of 2011, OTT users constituted 2 percent of total mobile

subscribers in the AME region. This figure is expected to reach

15.8 percent by 2016.

OTT Users: Highlights

12.1 18.4 203.8

1.5% 2.0%

15.8%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

0

50

100

150

200

250

2010 2011 2016 F

OT

T P

enetr

ation

(In P

erc

ent)

OT

T M

essagin

g

Users

(In

Million)

Year

OTT Users and Penetration

OTT Messaging Users (In Million) OTT Penetration (In Percent)

2.3 22.5 375.4

18.3

122.8

192.3

0

50

100

150

200

250

0

50

100

150

200

250

300

350

400

2010 2011 2016 F

Messag

es P

er

S

ub

scri

be P

er

Month

OT

T T

raff

ic

(In B

illion)

Year

OTT Traffic & Messages Per Subscriber Per Month

OTT Traffic (In Billion) OTT Messages Per Sub Per Month

Page 14: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

Presentation Plan

Conclusion 3

Overview of OTT Messaging Services 1

SMS and OTT Messaging: Current and Future Trends 2

Page 15: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

Impact of OTT Messaging Services on SMS Volumes

22.5%

15.8%

5.6% 4.7%

0.2%

-1.0% -3.3%

18.6%

8.5%

4.2% 3.5%

-3.3% -5.9%

-12.5% -15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2010 2011 2012 F 2013 F 2014 F 2015 F 2016 F

Gro

wth

Perc

enta

ge

Y-o

-Y (

In P

erc

ent)

Year

Messages Per Subscriber Per Month

Europe North America

42%

18%

13%

8% 6% 6%

4%

41%

23%

15% 12%

8% 6%

4%

36%

19% 18% 16%

14% 12% 11%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2010 2011 2012 F 2013 F 2014 F 2015 F 2016 F

Gro

wth

Perc

enta

ge

Y-o

-Y (

In P

erc

ent)

Year

Messages Per Subscriber Per Month

Asia Pacific Latin America Africa & Middle East

North America will witness a decline in overall

SMS volumes from 2014

Europe is expected to see a decline in SMS

volumes from 2015

Impacted Markets

Text message volumes for the Asia Pacific,

Latin America and Africa & Middle East

regions will not be impacted (during the forecast

period) by the increase in OTT users

Immune Markets

Page 16: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

Conclusion

Source: Portio Research Ltd.

OTT messaging picked up in 2010 due to the significant uptake of smartphones and mobile applications

As of 2011, North America had the highest contribution (72.7 percent) to worldwide OTT messaging traffic – owing to high regional

smartphone penetration and high mobile data usage among its mobile subscribers. It was followed by Asia Pacific and Europe, with

respective contributions of 19.1 and 6.8 percent.

OTT messaging is not expected to cannibalise text messages. OTT and SMS traffic will grow side by side, synergistically, as the overall

volume of mobile P2P messaging increases dramatically. Although, OTT may effectively slow down the growth of SMS over the next few

years, little ‘cannibalisation’ will occur in the short term at worldwide level.

The Way Forward: MNOs will launch their own OTT messaging services (e.g. T-Mobile US’s VoIP offering Bobsled) or enter into a

partnership with OTT messaging service providers (e.g. 3 Mobile with Skype in the UK). This will help MNOs to reduce their churn and

improve brand loyalty. In addition, this will also help MNOs to strengthen their ARPU in the long run.

Conclusion

Page 17: SMS and OTT Future Trends 2012 2016

All Rights Reserved – Privileged and Confidential

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