Global annual SMS revenue will dip to US$96.7 billion by 2018, with the Asia-Pacific region experiencing the highest drop, but is expected to see increased adoption among enterprises.
According to stats released by Informa Telecoms & Media, annual SMS revenue would drop by US$23 billion from US$120 billion in 2013 to hit US$96.7 billion in 2018, due primarily to growing adoption of over-the-top (OTT) messaging apps in both developed and emerging markets.
The Asia-Pacific region would see the sharpest dip in annual revenues over the forecast period, dropping from US$45.8 billion in 2013, to US$38 billion in 2018. Several developers of OTT messaging apps hail from the region, including China's Tencent which developed WeChat and South Korea's Kakao and its Kakao Talk.
China would see most of the revenue loss in the region, clocking US$19.6 billion in 2018 compared to US$25.4 billion this year.
In Western Europe, Italy was expected to see the sharpest decline, registering US$2.2 billion SMS revenue in 2018, down 7.54 percent in compound annual growth rate (CAGR) from US$3.3 billion this year.
Informa, however, noted that mobile operators in markets with high postpaid subscriber base would be able to mitigate the impact of OTT messaging apps, by offering unlimited or large bundles of SMS in their contract plans. In South Korea, for instance, where 99 percent of mobile subscribers were postpaid, SMS revenues would fall comparatively slowly at a 3.5 percent CAGR over the forecast period, from US$2.51 billion in 2013 to US$2.1 billion by 2018. This gradual decline was in spite of the popularity of Kakao Talk in the Asian market.
While most of the 59 economies and seven regions Informa covers in its study would see their SMS revenue fall over the forecast period, markets such as Argentina, Japan, and United Arab Emirates would continue to enjoy some growth over the next two to three years.
The research firm also noted that enterprise use of SMS also would see growth as businesses and government agencies recognize the benefits of tapping the platform as an inexpensive, highly accessible, and reliable communications channel to engage customers, employees, partners, and the general public.
"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 naïve to think that SMS has no future role to play," Gareth Sims, Informa's head of forecasting, said in the report.