A Contrarian View of Over-the-Top Messaging Impact on SMS

Portio Research has what you might say is a contrarian analysis of the impact of over-the-top (OTT) messaging apps on text messaging revenue streams.

“During 2012 and 2013 we have seen many reports that operators are losing $20 billion to $30 billion in SMS revenue to OTT messaging apps,” said Karl Whitfield, a director at Portio Research.

“We see reports that OTT traffic will be double that of SMS by the end of 2013,” he says. “This is wrong on both counts.”


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It may be true that SMS revenues are leveling off and that OTT is on the rise, but SMS is still generating revenues of $15.3 million per hour, 24/7 – that’s a massive $133.8 billion in 2013, Whitfield says.

Over-the-top apps generate about $3 million an hour, by way of comparison.

Worldwide SMS revenue has gone up year after year since the early 1990s and will continue to be above 2010 levels until 2017, Whitfield said.

In fact, in some markets, SMS and OTT apps are coexisting, serving end users in different ways.

There is a huge uptake of OTT messaging in Japan, particularly with local player LINE, yet the SMS market remains healthy and stable, he says.

The same goes for South Korea, where KakaoTalk is enjoying huge success; here again the SMS market remains stable and is not declining as many predicted.

Where SMS has seen a decline, in markets such as Spain and Greece, there has been an overall fall in subscribers and revenues at the same time.

“Our research into mobile messaging completely contradicts what some other industry observers are saying,” said Whitfield.