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Analysts at Juniper Research have predicted that providers of over-the-top (OTT) mobile messaging apps – such as Snapchat, WhatsApp and Japan-based Line – will struggle to monetise their services and will be forced to diversify rapidly in the next four years if they want to survive.
In a report, titled Mobile and online messaging: SMS, RCS and IM markets 2015-2019, Juniper forecast that overall messaging traffic looks set to double by 2019. OTT offerings will see a threefold increase in traffic, from 31 trillion messages sent in 2014 to 100 trillion by the end of the decade, said analysts.
Meanwhile, the messaging market will decline in value by around $600m, from $113.5bn in 2014 to $112.9bn in 2019.
A key factor in the value decline of the market will be that each OTT message is set to generate less than 1% of the revenue of a regular SMS or MMS.
While SMS and MMS services provided by traditional mobile network operators (MNOs) have long been viewed as under threat from OTT offerings, Juniper said that OTT providers were actually not much better off than the carriers.
Analysts pointed out that SMS continued to dominate the market, with MNOs benefiting from growth in the internet of things and autonomous application-to-person messaging.
“OTTs have not yet succeeded in using advertising at scale to monetise their services due to limited acceptance by consumers,” said the report. This was especially true in Asian markets, where OTT players have relied on in-app purchases – such as the sale of humourous cartoon stickers to use in messages – to scrape together a few pennies.
Grabbing a share of the fast-growing mobile payments market may be one way that OTT players are able to begin to better monetise their services. A number have already embarked down this path.
OTT players are now seeing further diversification with a foray by several big players into the payments market, such as Line Pay, which rolled out in December 2014, and Snapcash, which allows Snapchat users to link debit cards to their accounts to send payments to friends and family. Facebook has also got in on the action early on, adding a payments feature to its Messenger service for Android and iOS devices in March 2015.