Value of messaging market expected to fall by $600m by 2019

The popularity of instant chat apps such as WhatsApp and Line may be good news for consumers, but those hoping to make money from messaging may lose out.

According to new data from Juniper Research, the overall messaging market will fall in value by $600 million, from $113.5 billion last year to $112.9 billion by 2019. That’s against the backdrop of a market set to double in volume over the same period.

The growth in the sector, however, will be driven primarily by over the top (OTT) messaging applications, which will generate less revenue than SMS or MMS for operators – about 1 per cent of the revenue for each message by 2019.

Messaging applications such as WhatsApp will see traffic increase threefold from 31 trillion in 2014 to almost 100 million in 2019.

Juniper has noted a move away from traditional messaging such as SMS, particularly in developed markets. This was driven, the company said, largely by increased availability of wifi and broadband services that allow users to avoid SMS costs and data charges from mobile operators.

However, SMS still dominates the messaging market in terms of revenue, with the OTT firms finding it difficult to monetise their services, Juniper said. Advertising hasn’t proved to be the answer, with limited acceptance by consumers.

As a result, firms in this area are being forced to diversify, with the Asian market in particular turning to in-app purchases such as sticker sets to generate revenue.

Some of the larger players, including Facebook, Snapchat and Line, are turning to the payments market, allowing users to send cash via the services instead.

Enterprise messaging

Mobile network operators may lose out on some revenue from customers as a result of the popularity of OTT services, but the research found that they may benefit from growth in the application-to-person (A2P) sector.

This growth is expected to come from an increase in enterprise messaging, which allows businesses to send messages to current and potential customers, with two-step verification, for example, and notification services leading to “significant” growth over the next five years.

Juniper said the trend would be largely driven by banks, financial institutions and security firms seeking the reliability and security that A2P messaging provided, with user concerns regarding privacy a factor.