sms and ott future trends 2012 2016
DESCRIPTION
2012 analysis of the on-going competition between traditional SMS and the new breed of OTT messaging appsTRANSCRIPT
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Portio Research Limited.
Published 2012 by Portio Research Limited © Copyright 2012.
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Presentation Plan
Overview of OTT Messaging Services 1
SMS and OTT Messaging: Current and Future Trends 2
Conclusion 3
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
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
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.
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
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
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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
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
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
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
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
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
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
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
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