Instant messaging (IM) apps will generate more than $3 billion revenue by 2018, said Juniper Research. This will not be good news for OTT players including WhatsApp, WeChat, LINE, etc.
This revenue indicates that apps will only generate 2 percent of the mobile messaging market’s revenue by 2018. This is despite Instant Messaging accounting for around 75 percent of the traffic – or 63 trillion messages, said Juniper Research.
Juniper Research report says there is a growing disparity between traffic volumes and revenues in the mobile messaging market.
The increasingly high IM traffic volumes are the result of a number of factors, but chief among them is the fact that usage of IMapps is inherently different to usage of SMS; users typically send up to 10 chats to convey a message which could be contained in 1 SMS.
In addition to this, stickers, emoticons, images and group conversations all add significantly to IM traffic, as well as the fact that handset users – the younger demographic in particular – typically install multiple IM apps.
Report author Sian Rowlands said that the adoption of IM apps has rapidly accelerated over the past 18 months, something which has led Juniper to revise upwards our forecast for the volume of IM traffic.
Messaging to grow
But a recent report by Analysys Mason shows a different picture about the overall messaging market.
Recently, Analysys Mason said major Internet players including Apple, Facebook and Google have identified the messaging market as a target for market disruption and one that can complement their core businesses.
In addition, specialist start-ups such as Kakao, Line and WhatsApp have driven innovation in feature sets and supporting business models. 55 percent of smartphone owners worldwide were active users of IP messaging services at the end of 2013.
Analysys Mason said the services are driving much higher levels of user engagement compared with SMS.
Also read: Facebook snatches WhatsApp in $16 billion deal
WhatsApp recorded 10 billion outgoing messages in a single day in June 2013, which equated to an average of more than 30 messages per user per day.
Analysys Mason estimates that the total volume of messages sent from mobile devices via IP services exceeded the volume of SMS messages for the first time in 2013, at more than 10.3 trillion compared with 6.5 trillion worldwide.
The main growth driver for messaging is the increased adoption of smartphones. The number of users on smartphones will increase from about 1 billion in 2013 to 3 billion in 2018. Messaging volumes associated with OTT services are expected to almost double in 2014 and will reach 37.8 trillion messages sent in 2018.
WeChat thrives
There are several success stories in the IM market.
Recently, WeChat crossed 100 million installs on Google Play. WeChat was the second most downloaded app on the iOS AppStore in 2013 in India.
Nilay Arora, vice president – Marketing and Business Development, 10c India said: “With a plethora of social communication applications at a user’s disposal, WeChat has always been in the lead through its focus on innovation and localization.”
Difficult times for IM
Juniper Research says IM apps are continuing to encounter difficulties in generating revenues, given the infancy of the market. The hundreds of IM apps available are taking different approaches, some utilizing in-app purchases and games, others with advertising or subscriptions. Facebook Messenger is a loss leader, only serve to increase engagement with a companies’ separate revenue generating app.
Juniper Research says mobile operators are continuing to work on the RCS (Rich Communications Suite) initiative, which has potential to see traction after 2018, although progressing at a slow pace. The Far East & China will generate the most traffic across all mobile messaging formats, throughout the forecast period.
“Operators are increasingly faced with newer threats from OTT players that are nimbler and more agile, enabling them to identify a niche market and move to address it before carriers can even begin to reconfigure their networks to deliver the service in the traditional modus operandi,” said Ronald Gruia, Director for Emerging Telecoms at Frost & Sullivan.
Innovation at LINE
LINE has recently hit the 16 million mark.
LINE Corporation has partnered with Groupon to offer LINE users to bag exclusive deals from Groupon. The users get amazing deals from Groupon for spontaneous, valuable and varied buys on the go.
“With strategic partnerships such as this one with Groupon we are aiming to create an exciting market place for young consumers on the application. As we advance to our aim of becoming the No. 1 communication app in India, our users would continue to enjoy their time on LINE,” said Damandeep Singh Soni, head of India Business Development, LINE.
Telecoms continue investments
Last week, Jinny Software announced a multi-year managed services contract for messaging and cloud based services to CWI Caribbean (LIME), a provider of landline, internet, mobile and entertainment services, serving the communities of the Caribbean Islands.
Deploying and launching the latest messaging services on the Jinny platforms where Jinny provide operational management for all of the platforms will allow LIME to provide better experience and high quality service to its subscriber base.
Baburajan K
editor@telecomlead.com
