All Downhill Now? Messaging Revenues Expected to Decline by $600 Million

All Downhill Now Messaging Revenues Expected to Decline by 600 MillionJuniper Research is out with new research that suggests the messaging market will decline from $113.5 billion in 2014 to $112.9 billion in 2019. That would represent a reduction of about $600 million.

It’s not that messaging traffic is dying, however.

Actually, messaging traffic is forecast to double by 2019. But it will be driven by OTT (over-the-top) messaging applications like WhatsApp and LINE, which could enjoy a significant increase in message traffic (from 31 trillion in 2014 to 100 trillion by 2019 globally).

Here’s the kicker: revenue generated from each OTT message is forecast be less than 1 percent of that from SMS and MMS in 2019.

Juniper’s new research, contained in “Mobile & Online Messaging: SMS, RCS & IM Markets 2015-2019,” found that “OTT messaging services are facing a struggle to monetize services. Combined with users switching from SMS and MMS services, this will contribute to a contraction in the overall revenue pot.”

The problem?

“OTTs have not yet succeeded in using advertising at scale to monetize their services, due to a limited acceptance by consumers, particularly in Asian markets,” explains the research firm. “In these markets, messaging services have relied upon in-app purchases such as sticker sets to generate income.”

Traffic is one thing. But it’s revenues at issue.

“Traditional messaging services from MNOs (mobile network operators) have long since been viewed as under threat from OTT offerings,” notes the research summary. “However, in terms of revenues, SMS still continues to dominate the market, with MNOs benefiting from growth in the A2P (application to person) sector.”

Juniper Research provides research and analytical services to the global hi-tech communications sector, including consultancy, analyst reports, and industry commentary.