Messaging Services like BBM are cutting heavily into Carriers SMS Revenue
Messaging has been a popular if not addictive activity that has been around in one form or another for some time.
Initially made popular by AOL’s instant messaging capabilities, the messaging market exploded when it went mobile and global with short message service, more commonly known as SMS.
According to CTIA, monthly text messages sent in the U.S. grew to 184.3 billion in June 2012 compared to 28.9 billion in June 2007 and 930.7 million in June 2002. Annualising the data, that equates to 2.27 trillion text messages in 2012, up significantly from 240.8 billion in 2007. That helped drive annualised wireless data revenues to $68.3 billion in June 2012, up from $727 million in June 2002 per CTIA data. Putting that in context, wireless data grew to 38% of total wireless revenue compared to just 1% in 2002. In terms of wireless revenue growth over the last decade, growth in wireless data was responsible for roughly 68% of that growth.
Those are big numbers and they get even bigger when we expand our view to a global basis. That has made messaging big business for mobile carriers.
As big as those figures are, however, it could be argued that they could have been even higher if not for the impact of several mobile messaging clients that utilise mobile data networks and Wi-Fi, but do not generate revenue for the mobile carriers.
Examples of those messaging alternatives, which in some cases come pre-loaded on mobile phones, include Research in Motion’s Blackberry Messenger, Yahoo’s Instant Messenger, Google’s GoogleTalk, Apple’s iMessage and Microsoft’s Skype as well as Twitter.
In early 2012, research firm Ovum estimated that wireless carriers lost close to $14 billion in SMS revenues in 2011, up from $8.7 billion in 2010, due to the adoption of alternative messaging apps. In November of this year, Ovum released its view that by 2016 mobile operators will have lost $54 billion in SMS revenues due to the increasing popularity of social messaging services on smartphones. That’s more than double the $23 billion Ovum forecasted mobile carriers to lose by the end of 2012.
And that’s before this morning’s announcement by Facebook that it would make its mobile messenger app free to anyone with a mobile phone – all they need to do is provide a name and phone number. Mobile has been a sore spot for Facebook and while this initiative to grow mobile messenger, currently Facebook doesn’t currently make money off the app. Perhaps Facebook will start showing ads on top of its mobile messenger app or do so on a free version of the app and offer a premium version for a modest price that does not include advertising. That’s not oh-so different than what Amazon did with its Kindle Paperwhite – $119 with Special Offers, $139 without.
Looking at today’s Facebook mobile messenger announcement, Ovum may have to raise its forecast for carrier SMS revenue loss again before too long.