OTT messaging is destroying SMS revenues, but innovative carriers can still thrive

Strategy Analytics today said the carriers around the world may lose out on $3 billion in revenues from 2012 to 2017 due to the rise of over-the-top (OTT) messaging apps and services.┬áThe study cites the “runaway success” of apps such as We Chat and LINE in the Asia-Pacific region, where users are increasingly turning to third-party offerings to trim their wireless budgets.
That trend isn’t exactly new, of course: Third-party offerings are eating into SMS revenues across multiple markets in Europe, and independent analyst Chetan Sharma last fall released data indicating text messaging revenues may have peaked for U.S. operators. But the Strategy Analytics report rightly points out that carriers still have a chance to thrive here because free messaging providers have yet to build a viable business model.
Charging a premium for mobile messaging is nearly impossible when so many free alternatives exist, and many of the independent services will collapse unless they can find other ways to monetize. That could open the door for Joyn, the operator-backed OTT offering in Europe, as well as for carriers willing to differentiate their SMS services with enhanced offerings and innovative new pricing models.