The thought has crossed our minds “Will OTT take over SMS eventually?”
James Citron, CEO and co-founder of Venice, CA-based video marketing platform Mogreet talked about this issue, saying that “Messaging is going through a major disruption caused by the explosion of multimedia.
In today’s world, the simple 160-character text of the past sent to and from consumers is fast being replaced by Snaps, Vines, Instagram photos and videos; in essence, multimedia messages, which are far more personalized and engaging.” This is true for the Millennials as they seem to prefer chatting with their friends through today’s OTT entertaining apps.
Greg Hoy, vice president of mobile solutions for Hipcricket, in Bellevue, WA, has said that “OTT players will not be able to replace text messaging. SMS remains the only ubiquitous and dominant messaging service available for all mobile phones globally. It has continued to show usage and revenue growth in recent years,” he said.
“OTT apps provide an alternative service, but the lack of an interoperable approach makes it near impossible for any single OTT application to garner a consumer base that would make it a true competitor to SMS.” And this is true as there is no other way, besides SMS, for a user to connect with anyone that doesn’t use the same OTT applications as them.
Despite the growing popularity of over-the-top (OTT) messaging applications, SMS messaging is expected to remain a practical medium for the foreseeable future.
What we have now
SMS emerged in the mid-1990s as a side product to other mobile communication services. In December 1992, British mobile engineer Neil Papworth sent the first ever text message: a quick “Merry Christmas” to Vodafone’s Richard Jarvis. The technology has been growing in popularity ever since, and it’s now the first choice of millions of people across the world.
According to Portio Research, almost 7.5 trillion texts were sent in 2014 – that’s the equivalent of around 1,000 for every person on the planet. However, the figures recorded a couple of years before are even higher. The number of messages sent globally was actually two per cent greater in 2013.
In its recent Mobile Messenger Trends report, GlobalWebIndex revealed that 600 million adults aged 16-64 were using OTT services in 2014 – up by almost a third on 2012’s figures.
By April 2013, OTT messaging traffic had overtaken daily SMS traffic by volume. As 2013 ended, the number of daily OTT messages was up to 41 billion, versus 19.5 billion SMS messages, according to Informa.
The statistic is even more significant given that SMS users far outnumber OTT users. In 2012, there were 3.5 billion SMS users, compared with 586.3 million OTT users. Since each OTT user sends an average of 32.6 OTT messages a day, compared with just five SMS messages per day per SMS user, OTT-messaging users send six times as many messages as SMS users.
We can conclude from this that OTT-messaging has certainly taken over or is in the process of taking over the communication methods of the world. The rise of OTT has been driven by the evolution of mobile technology and increases in Wi-Fi and mobile data availability. Hotspots can be found pretty easily these days, and most pay-monthly contracts include enough data to last even the most social of smartphone users.
Challenges the arrival of OTTs created for SMS companies
A certain challenge that has been posed upon SMS companies is the no longer desirable standardized model of their product. Given that OTT applications are constantly being updated, the lifespan of their product is likely to overcome that of the SMS.
Driven primarily by cost, smartphone and mobile broadband invasion, availability of advanced features and net neutrality, the consumers’ messaging preferences have rapidly shifted from SMS and MMS services to OTT messaging services.
Most of the OTT services use a ‘freemium’ based business model, where they provide unlimited messaging to consumers for a small fixed subscription fee or charge consumers only for certain premium features. Hence, a consumer needs to pay only for the mobile data usage. It is obvious that consumers will increasingly start choosing this option over the SMS pay-per-message models.
How are SMS carriers innovating in response to OTTs?
One major change that the SMS industry has brought about to stay competitive in the market is the implementation of features that are similar to those in OTT applications. SMS services have particularly benefited from a new feature installed in the IPhone X. Due to the front facing camera’s ability to recognize the 3D features of the user’s face, Apple has been able to implement a certain attribute to their iMessage/SMS application. The users can now send animated emojis that mimic the movement of their face and act as if they control the emoji.
As people continue to choose OTT over SMS, because of its shiny, attractive features, SMS companies have been trying to innovate and advertise their product in a new light. As a result, they are hoping to win back the love of their previous users and preserve the trust towards their current users.
What people/experts predict for the future?
With the growing user numbers in mind, it’s clear that OTT messaging is having a big impact on human communication. As internet and smartphone availability grows, this is only likely to increase.
But for now, most businesses will be staying loyal to the trusty old text message. However, as innovation develops, who knows what could happen in the future.
According to Informa’s World Cellular Revenue Forecasts 2018, global annual SMS revenues will fall down from US$120 billion in 2013 to US$96.7 billion by 2018, due to increasing adoption and use of Over-the-Top (OTT) messaging applications.
Although OTT traffic volume was expected to double SMS traffic this year, according to Informa Telecoms and Media, experts predict that SMS will survive the OTT challenge.
The massive chaos that OTTs have created for SMS companies has caused people to assume that OTTs will take over the human communication market and cast a shadow on SMS. Nobody can predict what exactly will happen to the SMS companies, but there is no real threat of them completely vanishing. Nothing will happen overnight, but rather gradually. So, if SMS were to ever disappear from the face of this earth, it wouldn’t be because of OTTs. It is a problem for future generations rather than us.
Telecom industry leaders will dissect this hot topic at TelcoDays Las Vegas 2018. Come and join the panel "OTTs vs Mobile Messaging: Competition or Coexistence in a Win-Win Situation?"