SMS and OTT Future Trends 2012 2016
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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

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

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SMS and OTT Future Trends 2012 2016 SMS and OTT Future Trends 2012 2016 Presentation Transcript

  • Portio Research Limited. Published 2012 by Portio Research Limited © Copyright 2012. www.portioresearch.com info@portioresearch.com 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 this document is subject to change without notice at any time, and Portio Research Limited accepts no liability or obligation to inform the reader of such changes. Portio Research Limited do not promote or endorse any specific companies or products, the views and opinions we express in this document are wholly our own assessments, and independent from any external interest or influence. Many terms and phrases and trade names used in this document are proprietary and Portio Research Limited recognises and acknowledges that all trademarks are copyright, belonging to their respective owners. Where possible, this document accords such terms and phrases and trade names to their respective owners. All Rights Reserved. No part of this document can be copied, shared, redistributed, transmitted, displayed in the public domain, stored or displayed on any internal or external company or private network or electronic retrieval system, nor reprinted, republished or reconstituted in any way without the express written permission of the publisher. Forwarding of this electronic document without the correct legal licence is theft. It’s unethical, immoral and against the law. If you have any questions about the legal licence conditions under which this document has been distributed, please contact Portio Research on info@portioresearch.com If you did not buy this document and a colleague or associate has sent it to you, do not assume you are legally entitled to read it, it is your responsibility to ensure you have the correct legal licence to read this document. All Rights Reserved – Privileged and Confidential
  • Presentation Plan 1 Overview of OTT Messaging Services 2 SMS and OTT Messaging: Current and Future Trends 3 Conclusion All Rights Reserved – Privileged and Confidential
  • Over-the-Top (OTT) Messaging Services OTT Messaging Services – An Overview  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 – Broad Categories  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 – 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 Source: Portio Research Ltd. All Rights Reserved – Privileged and Confidential
  • Presentation Plan 1 Overview of OTT Messaging Services 2 SMS and OTT Messaging: Current and Future Trends 3 Conclusion All Rights Reserved – Privileged and Confidential
  • SMS Market – Current and Future Trends 12,000 113.9 115.5 6,834.5 2010 115.0 113.8 109.3 105.1 102.0 7,843.7 8,599.7 9,162.9 9,443.5 9,639.3 9,554.2 2011 2012F 2013F 2014F 2015F 2016F 100.1 9,000 6,000 3,000 5,225.6 0 2009 140 120 100 80 60 40 20 0 SMS Use per Subscriber per Month SMS Traffic (In Billion) SMS Traffic and Use — Worldwide Year SMS Traffic SMS Traffic Break-out – Regional (2011) 5.0% 2.4%  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 49.4% Asia Pacif ic North America SMS Traffic: Highlights  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 12.1% 31.1% Europe SMS Use per Subscriber per Month Latin America Af rica and Middle East  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 Source: Portio Research Ltd. All Rights Reserved – Privileged and Confidential
  • OTT Messaging – Current and Future Trends 25.0% 2,500 2,000 18.4% 1,500 0 14% 9.2% 6.8% 3.1% 4.0% 5.1% 146.6 214.7 306.4 438.2 640.8 2009 500 21% 12.9% 1,000 2010 2011 2012F 2013F 28% 2,001.1 1,417.4 7% 946.4 0% 2014F 2015F OTT User Penetration (In Percent) OTT Users (In Million) OTT Users — Worldwide 2016F Year OTT Users OTT Users Penetration OTT Users Break-out – Regional (2011) 2.8%  The worldwide OTT messaging user base stood at 306.4 million at end-2011 6.0%  Widespread adoption of smartphones, better network coverage, compelling and affordable data plans and the launch of numerous OTT messaging services have bolstered uptake 25.4% 30.9%  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 34.9% Europe Asia Pacif ic North America OTT Users: Highlights Latin America Af rica and Middle East Source: Portio Research Ltd. All Rights Reserved – Privileged and Confidential
  • SMS Traffic vs. OTT Messaging - Worldwide SMS Traf f ic Growth (In Percent) SMS Traffic Growth 40.0% 30.8% OTT impacting Europe OTT impacting North America 30.0% 20.0% 14.8% 9.6% 10.0% 6.5% 3.1% 2.1% -0.9% 2014 F 2015 F 2016 F 0.0% -10.0% 2010 2011 2012 F 2013 F Year SMS Traffic and OTT Users OTT Users: Highlights SMS Traffic and OTT Users 12,000 9,554.2 10,000 7,843.7 6,834.5 8,000  OTT will effectively slow down the growth of SMS over the next few years, but little ‘cannibalisation’ will occur in the short term 6,000 4,000 2,000  OTT and SMS traffic will grow side by side, synergistically till 2015, as the overall volume of mobile P2P messaging increases dramatically 2,001.1 214.7 306.4 0 2010 OTT Messaging Users (In Million) 2011 Region 2016 F  As more new ways of messaging become available, consumers will adopt the new ways alongside the old ways and communicate more and more SMS Traffic (In Billion) Source: Portio Research Ltd. All Rights Reserved – Privileged and Confidential
  • SMS Traffic vs. OTT Messaging - Europe OTT Users and Penetration SMS Traffic & Messages Per Subscriber Per Month SMS Traffic (In Billion) 1,000 70 800 600 65.1 65 400 200 819.1 948.8 SMS Traffic (In Billion) 2011 Year 2016 F 400 1,500 OTT Traffic (In Billion) 500 289.9 300 1,000 200 133.9 500 100 82.0 237.1 1,884.7 2010 2011 Year 2016 F 0 0 OTT Traffic (In Billion) OTT Messages Per Sub Per Month Messages Per Subscribe Per Month 448.0 20% 200 5.5% 7.1% 58.4 100 77.9 416.0 2011 Year 2016 F 10% 0% OTT Penetration (In Percent) OTT Users: Highlights OTT Traffic & Messages Per Subscriber Per Month 2,000 300 OTT Messaging Users (In Million) Text Messages Per Sub Per Month 40% 30% 0 60 2010 400 2010 1,006.3 0 35.8% 500 OTT Penetration (In Percent) 75 OTT Messaging Users (In Million) 72.5 Messages Per Subscribe Per Month 73.4 1,200  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. Source: Portio Research Ltd. All Rights Reserved – Privileged and Confidential
  • SMS Traffic vs. OTT Messaging – Asia Pacific OTT Users and Penetration SMS Traffic & Messages Per Subscriber Per Month 115 4,000 3,000 106.6 2,000 1,000 3,291.5 3,874.5 5,484.0 2010 2011 Year 2016 F OTT Traffic (In Billion) SMS Traffic (In Billion) 622.5 156.1 114.8 668.0 7,085.2 2010 2011 Year 14% 9% 400 2.8% 71.9 200 3.5% 107.0 924.6 2011 Year 2016 F 4% -1% OTT Penetration (In Percent) OTT Users: Highlights 800 700 600 500 400 300 200 100 0 2016 F OTT Traffic (In Billion) 600 OTT Messaging Users (In Million) Text Messages Per Sub Per Month OTT Traffic & Messages Per Subscriber Per Month 752.4 19% 0 100 24% 800 2010 105 0 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 110 21.0% OTT Penetration (In Percent) 114.8 1,000 OTT Messaging Users (In Million) 120 Messages Per Subscribe Per Month SMS Traffic (In Billion) 5,000 116.1 Messages Per Subscribe Per Month 6,000  OTT services will not impact the uptake of SMS services in the region. However, growth in the overall volume will reduce year-onyear. 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 Messages Per Sub Per Month Source: Portio Research Ltd. All Rights Reserved – Privileged and Confidential
  • SMS Traffic vs. OTT Messaging – North America OTT Users and Penetration SMS Traffic & Messages Per Subscriber Per Month 589.7 600 2,300 415.8 400 2,200 2,100 2,000 200 2,248.7 2,440.8 SMS Traffic (In Billion) 2011 Year 2016 F OTT Traffic (In Billion) 3000 2,616.5 2500 6,000 4,000 2,000 2000 1,704.1 1500 1,095.9 2,538.5 10,496.7 2010 2011 Year 2016 F 1000 0 OTT Traffic (In Billion) Messages Per Subscribe Per Month 3500 2,968.9 8,000 150 20.0% 100 40% 26.7% 20% 50 67.1 94.6 309.2 2011 Year 2016 F 0% OTT Penetration (In Percent) OTT Users: Highlights OTT Traffic & Messages Per Subscriber Per Month 10,000 200 OTT Messaging Users (In Million) Text Messages Per Sub Per Month 12,000 60% 250 0 0 2010 300 2010 2,097.0 1,900 80% OTT Penetration (In Percent) 577.4 OTT Messaging Users (In Million) SMS Traffic (In Billion) 2,400 72.6% 350 Messages Per Subscribe Per Month 800 2,500  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 Messages Per Sub Per Month Source: Portio Research Ltd. All Rights Reserved – Privileged and Confidential
  • SMS Traffic vs. OTT Messaging – Latin America OTT Users and Penetration 50.9 57.0 80 60 400 300 40 200 20 100 0 318.2 392.3 2011 Year 2016 F 0 SMS Traffic (In Billion) 322.2 400 300 200 40.5 100 2.2 25.5 451.2 2010 2011 Year 15% 10% 1.0% 1.4% 5.2 8.5 147.6 2011 Year 2016 F 5% 0% OTT Penetration (In Percent) OTT Users: Highlights 350 300 250 200 150 100 50 0 Messages Per Subscribe Per Month OTT Traffic (In Billion) 310.8 20% OTT Messaging Users (In Million) Text Messages Per Sub Per Month OTT Traffic & Messages Per Subscriber Per Month 500 25% 20.1% 2010 604.1 2010 160 140 120 100 80 60 40 20 0 OTT Penetration (In Percent) 500 69.3 OTT Messaging Users (In Million) SMS Traffic (In Billion) 700 600 Messages Per Subscribe Per Month SMS Traffic & Messages Per Subscriber 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 2016 F 0 OTT Traffic (In Billion) OTT Messages Per Sub Per Month Source: Portio Research Ltd. All Rights Reserved – Privileged and Confidential
  • SMS Traffic vs. OTT Messaging – Africa & Middle East OTT Users and Penetration 24.0 17.7 157.1 18.3 187.3 20 250 SMS Traffic (In Billion) 2011 Year 2016 F 100 50 2.3 22.5 375.4 2010 2011 Year 2016 F 0 OTT Traffic (In Billion) Messages Per Subscribe Per Month OTT Traffic (In Billion) 200 150 18.3 1.5% 2.0% 12.1 18.4 203.8 2011 Year 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2016 F 50 OTT Penetration (In Percent) OTT Users: Highlights 250 122.8 100 OTT Messaging Users (In Million) Text Messages Per Sub Per Month 192.3 150 0 OTT Traffic & Messages Per Subscriber Per Month 400 350 300 250 200 150 100 50 0 200 2010 362.8 0 2010 15.8% OTT Penetration (In Percent) 40 OTT Messaging Users (In Million) 400 350 300 250 200 150 100 50 0 Messages Per Subscribe Per Month SMS Traffic (In Billion) SMS Traffic & Messages Per Subscriber 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 20112016  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 Messages Per Sub Per Month Source: Portio Research Ltd. All Rights Reserved – Privileged and Confidential
  • Presentation Plan 1 Overview of OTT Messaging Services 2 SMS and OTT Messaging: Current and Future Trends 3 Conclusion All Rights Reserved – Privileged and Confidential
  • Impact of OTT Messaging Services on SMS Volumes Impacted Markets Messages Per Subscriber Per Month 25% Growth Percentage Y-o-Y (In Percent) 20% 22.5% 18.6%  North America will witness a decline in overall SMS volumes from 2014 15.8% 15%  Europe is expected to see a decline in SMS volumes from 2015 8.5% 10% 5.6% 4.2% 5% 4.7% 3.5% 0.2% 0% -5% -3.3% Year -10% Europe 2012 F -15% 2010 2011 2013 F North America 2014 F -1.0% -5.9% 2015 F -3.3% -12.5% 2016 F Messages Per Subscriber Per Month 45% Growth Percentage Y-o-Y (In Percent) 40% 42% 41% Immune Markets 36% 35%  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 30% 23% 18% 19% 25% 20% 15% 18% 15% 13% 10% 16% 12% 8% 14% 8% 6% 12% 6%6% 5% 11% 4%4% 0% 2010 2011 2012 F Asia Pacific 2013 F Year Latin America 2014 F 2015 F 2016 F Africa & Middle East All Rights Reserved – Privileged and Confidential
  • Conclusion Conclusion  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. Source: Portio Research Ltd. All Rights Reserved – Privileged and Confidential
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