Since its inception over two decades ago, SMS has changed the way people interact, which has made it an incredibly valuable profit source for mobile operators worldwide.
A recent report from PortioResearch[i]revealed that SMS currently generates US$254,663 every minute, or US$336,716,160each week, in operator revenues.
Despite the amount of revenue it generates, the majority of media coverage regarding SMS in recent years has been about its imminent demise. This primarily cites the advent of OTT services as the cause, which some industry commentators suggest will push SMS into oblivion. While it is true that in some markets the use of text messaging is declining, the reality is that OTT services and SMS are actually ideally suited to co-exist.
This is no more relevant than in Latin American, arguably the world’s most lucrative mobile market. According to the third edition of Acision’s MAVAM (Monitor of Mobile Value Added Service) report, Latin America registered 687.354 million mobile subscribers in the second quarter of 2013 alone –more than ten times the population of the UK. The same quarter also registered a 116% penetration rate, which is one of the highest in the world.
Operator revenue in the region continues to surge. This is thanks mainly to Value Added Services (VAS) which, according to the MAVAM report, increased by 34% in the second quarter of 2013. VAS generated US$ 7.67 billion across Latin America in Q2 2013 -roughly35% of the region’s total operator revenue. The research found that SMS is the second highest VAS contributor in the region, accounting for 41%of all revenues and second only to mobile internet, which contributed 50%.
To further understand the strength of SMS in Latin America we can look at some country-specific statistics that were revealed through this year’s MAVAM report.
In Brazil, SMS revenues reached $R1.18 billion (US$ 0.57 billion) in the second quarter of 2013, an 11% increase from the same period last year. Interestingly, Brazilian’s have a strong affinity for MMS – with over 50% of smartphone users confirming they had increased their MMS use over the last 12 months.
SMS’s popularity is also evident in Argentina where it contributed 56.8% of all VAS sales or $ARG 2.9 billion (US$570million) in Q2 2013. To put this further in perspective, VAS accounted for a combined total of 49.4% of total operator revenues. In Mexico, meanwhile, SMS services actually outshine mobile internet as the main VAS contributor – adding a total of $MEX 7.77 billion (US$ 601.4 million)in Q2 2013, compared to the $MEX 4.80 billion(US$ 371.1 million) from mobile internet.
While these statistics show that SMS is still competing strongly against the ‘OTT invasion’, it is equally important to emphasise that rather than been a battleground between the two technologies, Latin America is instead a land of messaging harmony. Customers are increasingly using messaging services on several platforms and devices. The MAVAM report shows that 98% of Mexican smartphone owners currently use multiple platforms and 89% of these use SMS as a daily communications tool. This figure in Argentina is 86%, of which 93% send text messages daily.
While the figures cited are undoubtedly interesting, it is important that operators are aware of the popularity and growth of messaging in the region in order for them to best capitalise on the opportunity that clearly exists. This is particularly relevant in regards to the willingness of Latin Americans to use multiple platforms to send messages.
As it stands today there is no single application that meets all consumers messaging requirements and works across any platform, device and at any time. There is, however, a willingness from Latin American consumers to use one. According to the MAVAM report,60% of Argentinean and 27% of Brazilian smartphone users confirmed they would use a multi-platform messaging tool should it be available. There was a similar trend in Mexico, where only 12% of smartphone users said they would not use such a tool.
It is important that operators take advantage of the consumer appetite for all types of messaging, whether SMS, OTT or Instant Messaging (IM). This could be achieved through strategic partnerships with existing OTT providers or by launching their own Rich Messaging and Rich Communication Services (RCS) tools or applications. The adoption of such strategies will ultimately only increase the region’s hunger for messaging and further increase the contribution messaging, regardless of platform, makes to operator’s VAS revenue pots.
Portio: OTT messaging apps are not cannibalizing SMS in most markets: http://www.fiercewireless.com/story/portio-ott-messaging-apps-are-not-cannibalizing-sms-most-markets/2013-10-22#ixzz2iY09FkzC
Koby Amedume is the Global Director of Communications at Acision.