Global annual SMS revenues will drop from €89.3 billion this year to €72 billion by 2018 due to the continuing use of over-the-top (OTT) messaging services, new research has found.
In Europe, Italy will witness the sharpest decline in SMS revenues, falling from €2.4 billion this year to €1.6 billion in 2018, according to research house Informa.
However, Asia-Pacific is forecast to see the steepest dip in annual revenues, dropping from €34 billion this year to €28 billion in 2018, mainly due to China.
Most of the developers of OTT messaging apps come from the Asia-Pacific region, including China's Tencent, which developed WeChat and South Korea's Kakao and its Kakao Talk.
“Although we are forecasting a decline in SMS revenues, due largely to the well-documented competition from OTT players, the diverse messaging market provides so many complementary use cases that it would be naïve to think that SMS has no future role to play,” said Gareth Sims, Head of Forecasting at Informa.
The report suggests that operators in markets with a high proportion of postpaid subscribers can lessen the impact of OTT messaging applications on their SMS revenues by offering unlimited SMS or large bundles of SMS with their contract.
For example, in France, where 74 percent of mobile subscribers are postpaid, SMS revenues will drop comparatively slowly, from €3 billion to €2.4 billion.
Meanwhile, Argentina, Colombia, Egypt, Japan, Kenya, Nigeria Turkey, Uganda and the United Arab Emirates will witness growth for a few more years until the slowdown starts.
Further, Informa believes that revenues from enterprises that use SMS are growing, as the corporate and government sectors realise the benefits of using SMS an inexpensive, reliable and widely-available communications channel that helps them to engage with their customers, employees, business partners and the general public.
The research firm published a similar report in April, which said that 41 billion OTT messages will be sent every day by the end of this year, compared with an average of 19.5 billion SMS messages.
In August, another research firm Global Web Index estimated that WeChat was used by 27 percent of the world’s smartphone users, while WhatsApp, one of OTT messaging’s biggest brands, was used by 17 percent.
While subscribers’ adoption of OTT messaging has had a significant impact on SMS traffic and revenues, operators are trying a number of different ways to fight back.
The GSMA-backed joyn RCS service has now launched in a number of countries including Spain and Germany, while some operators have launched their own OTT apps. In September, for example, Bouygues Telecom selected fring’s over the top (OTT) service.
