The rise of over-the-top messaging applications is behind the drop in SMS revenues, which will be largest in Asia Pacific and Italy
Global annual SMS revenues will decline by $23 billion (£14.5 billion) by 2018, analysis firm Informa has discovered.
The decline in global SMS revenues will caused by the continuing adoption and use of over-the-top (OTT – services provided over the internet rather than by a network provider) messaging applications in both developed and emerging markets, Informa said.
Asia Pacific is the region forecast to experience the highest drop in annual SMS revenues between now and 2018, falling from $45.8 billion (£28.8 billion) to $38 billion (£24 billion).
The firm says OTT apps – many of which are free – have also “particularly taken hold” in those Western European markets which have been affected by the global financial crisis, such as Spain and Italy.
Informa estimates that, in Western Europe, Italy will see the steepest decline in its SMS revenues, falling from $3.3 billion (£2.1 billion) currently to $2.2 billion (£1.4 billion) in 2018.
Mobile operators in markets with a high proportion of postpaid subscribers can reduce the impact of OTT messaging applications on their SMS revenues by offering unlimited SMS or large bundles of SMS with their contracts.
Informa forecasts that in South Korea, where 99 per cent of mobile subscribers are postpaid, SMS revenues will decline relatively slowly over the forecast period, from $2.51 billion (£1.6 billion) in 2013 to $2.1 billion (£1.3 billion) by 2018.
Almost none of the 59 countries and seven regions covered by Informa’s World Cellular Revenue Forecasts are immune to SMS revenue decline over the forecast period, although some 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.
Informa Head of Forecasting Gareth Sims said: “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 naÃ¯ve to think that SMS has no future role to play.”