Published on November 16, 2023, 9:05 pm

Mobile operators are expected to face a significant revenue loss of US$2.5 billion next year due to the growing popularity of OTT (over-the-top) business messaging providers like Messenger, WeChat, and WhatsApp. This finding comes from a recent study conducted by Juniper Research.

OTT business messaging refers to the use of messaging applications by enterprises to interact with their customers. According to the study, mobile operators are projected to experience an even higher revenue loss in the next 12 months, with an estimated increase of 20% compared to 2022. The report also highlights that promotional messages will account for 30% of this revenue loss in 2023. Enterprises are increasingly utilizing rich-media marketing campaigns for up-selling and cross-selling purposes.

Interestingly, despite the dominance of third-party OTT applications, there is still expected growth in operator-led RCS (Rich Communication Services) business messages. The report predicts that the total number of these messages will rise from 161 billion in 2022 to 219 billion in 2023.

In light of these findings, the A2P Messaging market report emphasizes the importance of stable pricing for RCS services. Fluctuations in RCS pricing can hinder enterprise adoption of operator-led rich media messaging. To remain competitive against OTT apps and drive growth in RCS business messaging, network operators are advised to move away from turbulent monetization models used for SMS.

The study also suggests that volatile RCS pricing could lead to the emergence of “grey routes,” where lucrative business messages are concealed and transmitted within cheaper interpersonal channels.

Scarlett Woodford, Principal Analyst for Service Providers and Telecommunications at Juniper Research, stated that operators must ensure pricing remains profitable without significant increases if they want to support the growth of RCS business messaging. Operators should be willing to absorb initial costs associated with rich media messaging and explore avenues such as digital advertising and sponsorships to secure a return on investment.

While OTT apps continue to gain popularity, SMS (Short Message Service) still maintains its dominance in the messaging landscape. The report predicts that the total number of SMS business messages sent will reach 1.7 trillion in 2023, surpassing the previous year’s figure of 1.6 trillion. This growth can be attributed to the impressive open rates and unrivaled subscriber reach offered by SMS.

In particular, the retail sector is expected to continue relying on SMS, with operator-led messaging channels being increasingly utilized for multi-factor authentication as eCommerce continues to expand.

To read more about this topic, you can find additional information in the article “Mobile operators to lose US$2.5B to OTT apps in 2023” published on FutureCIO’s website.


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