Texting lives on, despite rise of OTT: experts
August 21, 2014
SMS messaging, a fixture of mobile marketing for years, is expected to remain a viable channel for the foreseeable future, notwithstanding the growing popularity of over-the-top (OTT) messaging applications such as WhatsApp.
Although OTT traffic volume was expected to double SMS, or short messaging service, traffic this year, according to Informa Telecoms and Media, experts predict that SMS will survive the OTT challenge.
“OTT players will not be able to replace text messaging,” said Greg Hoy, vice president of mobile solutions for Hipcricket, in Bellevue, WA.
“SMS remains the only ubiquitous and dominant messaging service available for all mobile phones globally. It has continued to show usage and revenue growth in recent years,” he said.
“OTT apps provide an alternative service, but the lack of an interoperable approach makes it near impossible for any one OTT application to garner a consumer base that would make it a true competitor to SMS.”
In a recent market-trends report, SAP, the German maker of business and customer relations management software, forecast that texting will not be replaced by OTT players who claim to be taking messaging market share.
It did predict that Rich Communication Services (RCS) – a platform that provides consumers with instant messaging or chat, live video and file sharing across devices, on any network – will eventually overtake SMS.
LongHorn Steakhouse texting campaign.
SMS emerged in the mid-1990s as a side product to other mobile communication services. Within several years it had become part of everyday life.
Short messages sent from one mobile phone to another, or from an operator to a mobile phone subscription, were a vehicle for news headlines, TV and movie listings, the weather, sports scores, horoscopes and directory and address inquiries.
By April 2013, OTT messaging traffic had overtaken daily SMS traffic by volume. As 2013 ended, the number of daily OTT messages was up to 41 billion, versus 19.5 billion SMS messages, according to Informa.
The statistic is even more significant given that SMS users far outnumber OTT users. In 2012, there were 3.5 billion SMS users, compared with 586.3 million OTT users. Since each OTT user sends an average of 32.6 OTT messages a day, compared with just five SMS messages per day per SMS user, OTT-messaging users send six times as many messages as SMS users.
SMS messaging revenue at wireless carriers is expected to decline by $23 billion over the next five years as OTT messaging applications gain popularity. But SMS is still seen as capable of playing an important role if wireless carriers proceed appropriately.
"OTT apps have certainly moved some P2P (peer to peer) message threads away from our phone's default text messaging app that came installed on our phones,” said Tim Miller, president of Sumotext Corp., in Little Rock, AR.
“And, native apps have done the same with some A2P (application to peer) message threads. But the carrier's default SMS app still occupies the best docked real estate on your phone – and will always be the first place you look for messaging activity,” he said.
“And, this will only grow as device manufacturers counter with their own strategies and tools that will consolidate all of these disparate channels back into the phone's text messaging app – as we'll see in iMessage with Apple's iOS 8.0.”
Mobile messaging is becoming a far bigger part of how businesses and organizations of all types engage with customers.
“Messaging is going through a major disruption caused by the explosion of multimedia,” said James Citron, CEO and co-founder of Venice, CA-based video marketing platform Mogreet. “In today’s world, the simple 160-character text of the past sent to and from consumers is fast being replaced by Snaps, Vines, Instagram photos and videos – in essence, multimedia messages, which are far more personalized and engaging.
“Businesses have come to this same realization – they need to reach all of their customers with media-rich messaging, which is driving a huge uptick in multimedia (MMS) messaging volume,” he said.
“While OTT applications are significantly eroding peer-to-peer SMS volumes, they are not impacting the hyper-growth curve of businesses using mobile messaging because businesses want the ability to reach all of their customers, which only SMS and MMS can provide,” Mr. Citron said. “Four billion consumers use MMS as a way to communicate, which is four times more people than Facebook can reach.”
Avenue's SMS push.
Some see SMS emulating mobile devices in going down an evolutionary path from simple to smart.
“Smart Messaging is multimedia-rich, contextual, and location-aware,” Mr. Citron said. “A good example of smart messaging is a Passbook pass delivered by MMS. As an example, imagine smart messaging as the future of plane travel.
“When you book your flight, the airline texts you a Passbook pass via MMS with your boarding pass. All of the information you need – your gate, your seat, your loyalty information – is embedded in the MMS message. It’s location-aware and as soon as you arrive at the airport, your boarding card pops up on your mobile phone.
“The airline chooses MMS as the preferred delivery method because its reach will dwarf the reach of any downloaded airline application.”
Smart messaging is starting to happen and is the future of how businesses across all industries, from healthcare to retail to hospitality, will communicate with customers, he said.
RCS, or Rich Communication Services, is seen as the most likely next step in messaging.
“Even though OTT is picking up some market share, there are still hurdles for these players to get past that are required to be a replacement for SMS,” said Hipcricket’s Mr. Hoy. “RCS is an approach to messaging based on a unified standard and is being driven by a governance body made up of global industry representation.
“Its goal is to provide a ubiquitous channel for the advancement of messaging services that remove the adoption roadblocks that proprietary solutions generally run into,” he said.
The OTT market is highly fragmented, with no body of industry professionals who are working together to create interoperability of the various services, Mr. Hoy said. Mass consumer adoption will happen because the next era of messaging services will be right on the phone, work cross-carrier and facilitate aggregated services.
“SMS still has legs and will continue to grow for some time in the future,” Mr. Hoy said. “The potential replacement by RCS is a long road. From an industry perspective the transition will be much more a marathon than a sprint.”
Michael Barris is staff reporter for Mobile Marketer, New York.