OTT messaging will be 10x larger than SMS by 2020

Pamela Clark-Dickson/Ovum

OvumOvum’s OTT Messaging Forecast: 2016–20 predicts that the strong growth in OTT messaging app (i.e. chat app) users and traffic will continue over the next five years, as the network effect of apps such as WhatsApp, Facebook Messenger, and WeChat takes hold across the globe.

Total mobile OTT messaging traffic (i.e. text, photo, and video) will grow from 22.8 trillion messages in 2015 to 52.5 trillion messages in 2020. By this time mobile OTT text traffic alone will reach 47.7 trillion messages – almost 10 times that of SMS, which is forecast to reach 4.9 trillion messages by the same date. The instantaneous nature and perceived low cost of messaging on chat apps will create a higher volume of text messaging via chat apps than SMS.

China and India drive chat app growth in Asia

Chat apps are part of daily life for an increasing number of mobile and fixed-line subscribers. Ovum predicts that by 2020, unique global mobile monthly active users (MMAUs) of chat apps will number 2.6 billion and unique fixed monthly active users (FMAUs) will number 305.8 million. (For the purposes of the OTT Messaging Forecast, each mobile user and each fixed user is counted only once, because most users will use more than one chat app.)

It’s clear that the use of chat apps will remain a predominantly mobile activity over the forecast period, mainly because most of these apps initially became available on mobile devices and are popular in mobile-first emerging markets. This is despite the fact that most chat apps can now work across devices.

Oceania, Eastern and South-Eastern Asia will outstrip all other regions in terms of number of mobile and fixed chat app users during the forecast period. By 2020, mobile MAUs in this region will total almost 895 million, and the region will account for 34.4% of global MMAUs. Users in Oceania, Eastern and South-Eastern Asia will send 17.3 trillion messages – and 36.3% of global chat app text messages – in 2020. China and India will contribute the lion’s share of users and traffic. Tencent’s WeChat had amassed 762 million users by 1Q16, most of whom are in China.

The impact of the network effect on the growth of chat apps has become evident. In 2020 both WhatsApp and Facebook Messenger will have more than 1 billion MAUs, and Instagram and WeChat will be approaching that threshold. As these apps continue to grow in size, they will continue to add features and capabilities designed to increase user engagement with their messaging platforms. These features and capabilities include stickers and games, payments and financial instruments, and the ability for enterprises to use chat apps to communicate with their customers.

Against this backdrop, smaller chat apps will struggle to gain and retain users. Although it is becoming increasingly difficult for a new app to gain a foothold in the chat app market, it is not impossible. Telegram and Zalo have demonstrated this by building on their respective strengths. Telegram offers a chat app that is focused on security, while Zalo benefits from being a localized chat app in its native Vietnam.

Pamela Clark-Dickson is principal analyst for consumer services at Ovum. For more information, visit www.ovum.com/

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