Messaging traffic is exploding but it’s making less money than ever

If you want to message someone today, you’re not exactly short on options. Where you would once have been limited to SMS and then MMS, today there are a plethora of apps available to smartphone users. Thing is, while those apps have more people messaging than ever before, the space as a whole is battling to make money.

According to Juniper Research, the global mobile messaging market will decline from US$113.5-billion in 2014 to US$112.9-billion in 2019, a reduction of US$600-million.

In the same period mobile messaging traffic is set to double by 2019. That increase is set to be driven mainly by OTT (over-the-top) players, such as WhatsApp and LINE, seeing a threefold increase in message traffic — from almost 31-trillion in 2014, to 100-trillion by 2019 globally.

On the surface that seems great for those companies individually, but not so great for the mobile operators, as the revenue generated from each OTT message is forecast be less than one percent of that from SMS and MMS in 2019.

But even the OTT players could find themselves suffering as they struggle to monetise services.

According to Juniper, OTTs have not yet succeeded in using advertising at scale to monetise their services, due to a limited acceptance by consumers, particularly in Asian markets. In these markets, messaging services have relied upon in-app purchases such as sticker sets to generate income.

OTT players are now seeing further diversification with a foray by several big players into the payments market for example, LINE Pay, Facebook’s use of Messenger to send payments, and Snapchat’s ‘Snapcash’.

On the international front, Tencent-owned WeChat is ahead of most companies in this regard. While it’s primarily a mobile messaging app, it also plays host to gaming services, and ecommerce startups that use it as a platform.

Despite all that growth however, SMS still continues to dominate the market, with MNOs benefiting from growth in the A2P (application to person) sector. A2P SMS will generate significant growth over the next five years, as enterprise messaging sees considerable uptake in the form of two-step verification, and notification services.

More

News

Sign up to our newsletter to get the latest in digital insights. sign up

Welcome to Memeburn

Sign up to our newsletter to get the latest in digital insights.