SMS losing out to social messaging

Social-messaging services are set to flourish this year, both globally and in Thailand. Such services are expected to surpass the contribution of SMS (short message service, or texting) revenue to mobile-phone operators by next year. 

Revenue from social-messaging service worldwide is expected to grow from US$32.6 billion (Bt968 billion) this year to more than $86 billion in 2020, according to Ovum, a UK-based research firm specialising in telecommunications.

Neha Dharia, a consumer analyst at Ovum, said social messaging would continue its rise this year. Most of these services are currently either free or based on discounted plans. This year, a large number of social-messaging companies will begin to move more strongly into content platforms. 

LINE and South Korea-based KakaoTalk already have growing revenue streams from games, emoticons and marketing channels, while Japanese social gaming service DeNA has introduced a messaging service, Comm, to anchor its existing gaming platform. 

 

VIRAL GROWTH

Globally, social messaging’s viral growth, high level of engagement and sticky nature make it a strong foundation on which to build a content platform.

Moreover, mobile broadband revenues are expected to be outpace SMS after this year. SMS growth rates have fallen from 14 per cent in 2011 to 8 per cent currently, and SMS revenues have fallen since the emergence of social messaging, Dharia said.

By next year, mobile broadband revenues will form the bulk of operators’ non-voice revenues, contributing 43 per cent of income. They will outpace revenues from SMS, with messaging forming a smaller proportion of data revenues, with 40 per cent in 2014. 

The current year will be the last time SMS brings in the largest proportion of non-voice revenues, and by 2015 SMS revenues will begin to plateau. There are several reasons for the erosion of messaging revenues, and the rise of social-messaging players is a key factor. The bundling of SMS with calling minutes and mobile broadband plans has also contributed to the decline of messaging revenues.

Dharia said operators would partner more with over-the-top service (OTT) broadband audio-video players. The period between this year and 2015 will be crucial in terms of the relationship between telecom firms and OTT players in the communication space. Ovum expects to see partnerships in this area intensify this year. 

US-based WhatsApp already has a number of operator partnerships, including a roaming pass with three in Hong Kong and the GSM-based service offered by Reliance Communications in India.

Facebook has a long history of working with telecom operators, and its new partnership with 18 global operators will allow free or discounted data access to the social network’s messaging platform. 

Social-messaging player Viber’s chief executive officer has stated that the company will be happy to share revenues from paid services once it begins to charge consumers. Such operator partnerships help OTT players broaden their reach, while the operators benefit from the sale of subscription plans.

In Thailand, Advanced Info Service’s SMS revenue year on year fell by 10 per cent, while data-service revenue increased by 100 per cent. 

 

LINE STEADY

For LINE, Thailand is set to maintain steady growth after passing the 10-million-user milestone. Lee Jin-woo, general manager of LINE and LINE Plus, said that as of April, LINE had more than 60 official accounts in Thailand ranging from a variety of businesses to celebrities. 

Although many would consider the mobile messenger market to be very competitive, the company believes that LINE is going in a new direction that started with its famous line of stickers enriched with vivid human emotions. 

As LINE proceeds deeper into the digital age, its goal is to be a “smart-phone life platform” that provides much more than just instant messaging. It has started down that path by launching other LINE Family applications such as LINE Camera, LINE Card, LINE PLAY, and LINE Games. 

“Although our core will remain mobile messaging, our end goal is that we want our users connecting with friends and family and reconnecting people through LINE by providing new and convenient ways to express human emotions and have fun at the same time. We believe we are enhancing human emotion and experience into a more digitalised world,” Lee said.

This year, LINE is focusing more on expanding in Southeast Asia and new markets such as Spain, where it has seen enormous growth this year. Japan, Taiwan and Thailand have also maintained steady growth.

“We have also identified such fast growth in new emerging countries in Asia, Europe and South America. Thus we would like to emphasise that instead of focusing on a particular area, we are expecting global expansion, which has already been started in full scale,” Lee said.

 

FACEBOOK UPDATE 

Facebook recently launched its latest update to its application for iPhone and iPad with new features in private messages including chat heads and stickers. Stickers appear to be a key factor in achieving success in mobile social networking, and LINE was the first to jump on the bandwagon a year ago. However, now it has a new competitor in the “sticker battle” – Facebook Messenger. It comes complete with a new set of stickers and an adjusted user interface and design. 

Facebook, which already has more than 18 million users in Thailand, appears to have achieved some success with its new feature, though it is not available to everybody yet. Apart from offering “stickers”, Facebook Messenger also allows users to make calls for free, and this along with video calls, games and other fun features appears to be pulling people away from LINE.

Facebook just announced that as of end of March, it had about 1.11 billion monthly active users, an increase of 23 per cent year on year, while it had about 751 million monthly active users mobile, up 54 per cent.