ott vs messaging

8/13/2019 ott vs messaging

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OTT Messaging: Impact and Reactions

February 2014 Aditi Olemann


2/15


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0

5

10

15

20

25

30

35

40

45

2011 2012 20

Average number of messa

day (billion)

1994

1999

2000

2007

2009

2013

The birth of SMS

Tipping

Source: Informa Telecoms & Media, EY re

Messaging- SMS and the rise of OTT

SMS hits first 100

billion target

MMS Service

launched

Smartphone

market explodes

with the advent ofiPhone

Whatsapp

launched in 2009,

Viber and

KakaoTalk in 2010

WhatsApp: 300m users

Viber: 200m users

Kakao Talk: 90m users

Line:150m users

WeChat: 300m users


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1994

1999

2000

2007

2009

2013

The birth of SMS

Messaging- SMS and the rise of OTT

SMS hits first 100

billion target

MMS Service

launched

Smartphone

market explodes

with the advent ofiPhone

Whatsapp

launched in 2009,

Viber and

KakaoTalk in 2010

WhatsApp: 300m users

Viber: 200m users

Kakao Talk: 90m users

Line:150m users

WeChat: 300m users

0

10

20

30

40

50

60

70

80

90

2012 2016

Predicted Loss of Operat

Source: Ovum.


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Drive

TechnoReadin

StrengtOTT

alterna

Socialpropensity

to adoptOTT

Region-wise Predictions


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Netherlands, South Korea,Spain

Canada, United States, Italy

Brazil, India, China

Drive

TechnoReadin

StrengtOTT

alterna

Socialpropensityto adopt

OTT

Source: McKinsey & Company Telecom.

Region-wise Predictions


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StrategyBlock OTT messaging services to

revenues

ChallengesDependent on net neutrality pol

and competitiveness of the mark

Prone to criticism for curbing cus

Example

Regulators in Vietnam and Egypttowards banning OTT services.2

In 2012, Korean regulators allow

Telcos (KT, SK Telecom) to contro

messaging services including Kak

Sources: Gatner1, Reuters2

Offensive

Throttling

OTT services

OTT app

development New

business

unit creation

Joint product

development

and promotion

Charge

premium from

customers

Defensive

Tactical Strategic

Operator Strategies to counter the OTT th


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StrategyOpportunistic approach: Objectiv

Charge customers a premium fo

on the OTT wave.

ChallengesCustomer dissatisfaction

churning over to other service p

Example

China Mobile and China Unicomthat they would provide a standa

for app users and developers, w

allow them to take a greater sha

made for mobile apps in the wor

market.

Operator Strategies to counter the OTT thOffensive

Throttling

OTT services

OTT app

development New

business

unit creation

Joint services

and promotion

Charge

premium from

customers

Defensive

Tactical Strategic


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StrategyDevelop own OTT services: in-ho

outsourcing

Re-establish consumer relationsEstablish itself as an innovator

Leverage core assets (eg. custom

distribution channel) to differen

ChallengesLack of software and IT expertise

High upfront investmentUnpredictable ROI

Stiff competition from OTT comp

Potential cannibalization of SMS

ExampleTelefonica TU Me

T Mobile Bobsled

Orange Libon


Throttling

OTT services

OTT app

development New

business

unit creation

Joint services

and promotion

Charge

premium from

customers

Defensive

Tactical Strategic


10/15

StrategyCollaborative approach: Partner

players and leverage core compe

OTT servicesShare revenue or charge fees for

(eg. guaranteed QOS, customer c

Acquire new customers who are

OTT brands

Challenges

OTT remains the consumer facincollaboration.

Lack of exclusivity in the deals

ExampleReliance and Whatsapp

Airtel and Facebook


Throttling

OTT services

OTT app

development New

business

unit creation

Joint services

and promotion

Charge

premium from

customers

Defensive

Tactical Strategic


11/15

StrategyEnable Rich Communication Serv

operator standardized communi

Long term and highly strategic so

ChallengesOffering competitive solutions to

alternative applications

Example

Consumers can identify the presservices through the joyn bran

Telenor, Orange, Telefonica, T-M

are attempting to create this new

initiative led by GSMA.


Throttling

OTT services

OTT app

development New

business

unit creation

Joint services

and promotion

Providing

services to

OTTs

Defensive

Tactical Strategic


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RCS Deployment

Source: GSMA, Rich Communications


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An alternate view: OTT not cannibalizingSMS

South KoreaAlthough overall use

OTT has become ve

popular, but average

SMS usage per pers

has decreased only

about 2%.

The NetherlandsThe Netherlands is the second

most expensive mobile market in

Europe. Over the last 3 years, the

whole market has contracted

subscriber numbers have declined,

voice revenues are declining, non-

voice revenues are under pressure,

SMS revenue has declined.

Source: Portio Research


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An alternate view: OTT not cannibalizingSMS

SpainMarket has witnessed declining subscribers, declinin

revenues and declining SMSs for several years. Cann

determine if OTT is the reason or declining economi

conditions.

North AmericaBetween 2009 and 2011,

the market became

unsustainably inflated,

and subsequent drop-off

was inevitable.

Source: Portio Research


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The Way Ahead

1. A number of initiatives are underway. Innovation is2. Pricing will be critical.

3. Exposure varies significantly between

operators/countries.

ott vs messaging

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