Social messaging will continue its rise in 2013

OVUM VIEW

Summary

The year has started on an exciting note for mobile messaging: Facebook Chat’s recent announcement that it will partner with 18 operators globally is a clear statement of the social network’s intention to ramp up its offering in the social messaging space. Social messaging is proving to be an anchor for mobile content services; it creates stickiness and delivers a high level of engagement, which enables services such as Facebook to grow their mobile footprints. On the operator side, Singapore’s Singtel and Indonesia’s Telkomsel have launched own-branded social messaging apps to compete in the increasingly overcrowded social messaging market. The competition will intensify in 2013, and we will see a large number of partnerships between operators and OTT players. Traditional mobile messaging in the form of SMS will continue its steady decline, leaving social messaging as the future of mobile messaging.

Operators will partner more with OTT players

The period 2013–15 will be crucial in terms of the relationship between telcos and OTT players in the communication space. Ovum expects to see partnerships in this area intensify during the course of 2013. WhatsApp already has a number of operator partnerships, including a roaming pass with 3 in Hong Kong and the GSM-based service offered by Reliance Communications in India. Facebook has a long history of working with operators, and its new partnership with 18 global operators will allow free or discounted data access to the social network’s messaging platform. Social messaging player Viber’s CEO has stated that the company will be happy to share revenues from paid services once it begins to charge consumers. Such operator partnerships help OTT players to broaden their reach, while the operators benefit from the sale of subscription plans.

Social messaging will move toward content platforms

Most social messaging services are currently either free or based on discounted plans. In 2013 we will see a large number of social messaging companies begin to grow into content platforms. KakaoTalk and Line already have growing revenue streams from games, emoticons, and marketing channels, while social gaming service DeNA has introduced a messaging service, Comm, to anchor its existing gaming platform. Social messaging’s viral growth, high level of engagement, and sticky nature make it a strong foundation on which to build a content platform.

Mobile broadband revenues will outpace SMS revenues after 2013

SMS growth rates fell from 14% in 2011 to 8% in 2013, and SMS revenues have fallen since the emergence of social messaging. After 2013 mobile broadband revenues will form the bulk of operators’ non-voice revenues (contributing 43% of revenues in 2014). They will outpace revenues from SMS, with messaging forming a smaller proportion of data revenues (40% in 2014); 2013 will be the last year that SMS brings in the largest proportion of non-voice revenues, and by 2015 SMS revenues will begin to plateau. There are several reasons for the erosion of messaging revenues, and the rise of social messaging players is a key factor. The bundling of SMS with calling minutes and mobile broadband plans has also contributed to the decline of messaging revenues. Ovum forecasts that social messaging cannibalization of SMS revenues will grow from $32.6bn in 2013 to over $86.0bn in 2020.

APPENDIX

Author

Neha Dharia, Analyst, Consumer

neha.dharia@ovum.com

Further reading

Consumer Insights Snapshot: Social Messaging (January 2013)

Countering the Social Messaging Threat (July 2012)

Casualties of Social Messaging (February 2012)

Disclaimer

All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the publisher, Ovum (an Informa business).

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions, and recommendations that Ovum delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Ovum can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.