Analysis: SMS Revenues Decline by 2018

Forecasts for global annual SMS revenues will plummet to $23 billion by 2018 to $96.7 billion, down from $120 billion in 2013, according to Informa Telecoms & Media. The organization predicts that the market’s decline is due to over-the-top (OTT) messaging applications, which deliver video and audio over the Internet without a multiple system operator being involved.

 "Although we are forecasting a decline in SMS revenues, due largely to the well-documented competition from OTT players, the diverse messaging market provides so many complementary use cases that it would be naive to think that SMS has no future role to play," said Gareth Sims, Head of Forecasting, Informa Telecoms & Media in a statement.

 Markets such as Argentina, Colombia, Egypt, Japan, Kenya, Nigeria Turkey, Uganda and the United Arab Emirates will continue to experience growth for the next two to three years, according to Informa.

 Government will likely play a part in the increase of some of these markets, as SMS is an inexpensive, reliable and widely-available communications channel that helps them to engage with their customers, employees, business partners and the general public.

 Highlights from the forecast include:

 In South Korea, SMS revenues will decline relatively slowly over the forecast period, from $2.51 billion in 2013 to $2.1 billion by 2018. In France, SMS revenues will decline at a CAGR of minus 4.1 percent from $4.1 billion in 2013 to $3.3 billion in 2018.

 SMS text messaging uses standard communication protocol that allows the exchange of short messages from phone to phone.

 OTT devices allow media to be sent “over the top” of a broadband connection from paid services like Netflix and free content providers like Hulu, separating the content provider from the data provider. OTT devices include Blu-ray players and recorders, game consoles, set-top boxes, connected TVs and tablets like the Apple iPad, many of which have messaging capabilities.

 Given that, is the OTT too large to ignore? The opportunities associated with the connected consumer seem far too lucrative for anyone in the chain to disregard.