Ovum analysts predict that operators will lose $54 billion in SMS revenues by 2016 due to social messaging services on smartphones.
These losses are more than double the amount operators are expected to lose by the end of this year, according to the analysts. To continue competing in the messaging industry, these operators must collaborate with handset manufacturers, Ovum said.
A dramatic increase in the number of OTT players indicates that social messaging is a shift in communication patterns, not just a temporary trend.
“Social messaging is becoming more pervasive, and operators are coming under increased pressure to drive revenues from the messaging component of their communications businesses," said Neha Dharia, consumer telecoms analyst at Ovum. “Operators need to understand the impact of social messaging apps on consumer behavior, both in terms of changing communication patterns and the impact on SMS revenues, and offer services to suit."
Ovum said that social-messaging growth will continue as smartphone and mobile broadband penetration increases. Prominent brands like WhatsApp, as well as smaller players like Pinterest, will continue to cause further disruption in the messaging space.
Dharia added that these OTT players are changing consumer preferences.
" ... The pressure they are exerting on operators’ messaging services is forcing them to offer increased SMS bundles and to experiment with messaging pricing models, further dampening revenue growth," she said.
Ovum also stressed the importance of industry-wide collaboration as operators look to a Rich Communication Suite platform to provide consumers with features such as file sharing, video calls and IP-based messaging.
However, RCS is not expected to reach the mass market before 2014, so operators will have to rely on innovative pricing strategies, partnerships, and launching operator-branded IP messaging services to keep up with the changing demand.
“In order to take advantage of RCS when the time comes, operators will have to have a strong market presence," Dharia said. "This means that they need to move to social messaging now in order to make sure OTT players are not in a better position to take advantage of future opportunities."