It’s shaping up to be an exciting 2015 for those in the space as these platform players look to differentiate in an increasingly crowded market, while the telecoms operators struggle to recoup the cash they’re losing from decreased SMS and voice call revenue.
Canalys analyst Jessica Kwee was quick to point out the pressure these traditional telecoms players are under.
“SMS/texting in the traditional sense has been impacted greatly, especially as people see more value in messaging apps – as in many cases they are considered ‘free’ as they are part of the data plans,” she told me via email.
“Plus, messaging apps are also more flexible and can handle more than traditional texting – no character limits, and on opposite spectrum, you don’t feel obliged to try to use up the character limit either, so it’s easier to text something very short and quick. Also, there’s the ability to communicate in groups, send pictures, videos, voice notes, emoticons, etc.”
However, there are some opportunities for operators.
“People will increasingly rely on an always-on connection and not be able to just rely on wi-fi at home or at work, as they will want to be connected all the time,” Kwee explained. “So even though it is much more difficult to get people to spend a lot of money on expensive data plans, especially in price-conscious markets, it could be a compelling alternative where telecoms provide cheaper data plans to exclusively use such apps.”
Frost&Sullivan principal analyst, Naveen Mishra, added that adoption of mobile messaging apps has soared over the past 12-18 months thanks to their added functionality and free price tag.
“Increasing smartphone penetration and growing internet adoption is driving this usage. Emerging markets like India, are growing extremely fast, both in terms of adoption and usage,” he told me.
“Between May 2014 and Oct 2014, WhatsApp’s monthly active users grew from 50 million to 70 million, which is 10% of the total user base. The next 3-5 years are also looking very promising, as key emerging markets have large opportunities of growth. In India alone, there are over 930 million mobile subscriptions out of which only 70 million are current WhatsApp users.”
As for the various market players, success will come down largely to innovating with new features.
“All the OTT application companies are constantly trying to innovate, however the success of the application largely depends on the value a new feature brings in,” he said.
“Line has tied up with LG Electronics, where through its chat session, LG appliances can be activated and controlled. On the other hand, WhatsApp is working on a voice calling service, which is expected to be launched in early 2015.”