Killer Messaging Apps – A Guide To Future Proofing Operator Infrastructure

A succession of Over-the-Top (OTT) messaging apps and services have been launched over the last few years, shaking up the mobile messaging industry.

The majority of operators have done little in response to evolve their messaging offerings beyond core SMS:  the result –  person to person (P2P) messaging continues to move rapidly towards instant messaging via OTT apps, and away from SMS.  According to preliminary research by Nitesh Patel at Strategy Analytics, instant messaging is giving SMS a run for its money globally; it is forecast to drive a 25 percent decline in SMS volumes between 2015 and 2020, which equates to a CAGR decline of 5.8 percent in that period.

The millennials

Two OTT players that have had particular success are WhatsApp and Snapchat. Earlier this year, WhatsApp – a platform from which users can send instant messages across any device – announced rapid growth in monthly active users to 700+ million spanning Europe, U.S and Latin America. Similarly, Snapchat – which sends video and picture chats that disappear after 10 seconds – has become the “go-to” app for millennials all over the world, and more recently, media outlets wishing to reach this demographic.

While some are more dominant than others, together OTT messaging apps represent the “petri dish” of messaging development – creating novel and innovative ways for users to communicate with their individual social groups. These are the “killer features”: those messaging functions that have changed the way in which mobile users interact, lessening subscribers’ traditional reliance on SMS. These features include:

• Content sharing – Multimedia Messaging Service (MMS) has proved clunky, costly and unreliable. Users can now share videos, pictures, locations, emojis and stickers quickly as a chat or as snaps – enabling people to express themselves in a richer way and improving the communication experience.
• Group Chat – SMS only allows a conversation with one person at a time – making group conversations time-consuming and awkward. OTT messaging apps have transformed this experience making group conversations simple, accessible, and interactive.
• Presence – “Last Seen At” and “Online/Offline” status of your contacts is now the expected norm. Knowing whether the person you are interacting with is “listening” is key to timely and interactive communication.
• Voice Chat – Users can quickly and simply record a voice message and instantly send it to an individual or a group via a simple “click to talk” button. This is recorded in the timeline making it both a fun and a valuable feature.

But why should operators care?

Instant messaging has overtaken SMS, and this gap is set to widen further. This is impacting on the core revenue of mobile operators, and also raises the question: how can mobile operators remain relevant as a communication service provider?

Operators are aware that they cannot beat OTTs at their own game. The beauty of OTTs lies in their agility, with low overhead costs that enable them to deliver faster services than operators are capable of. However what operators can do is upgrade the customer experience by incorporating these popular features and including them as part of their standard messaging service. Done properly, users will not need to change their behaviour: they will simply ‘get’ these new features as part of their native messaging experience, using them alongside their instant messaging apps.

It’s not just about regaining relevance – operators should being paying attention to how OTT players are monetising other services. The OTT business model creates large communities with a free platform, and then leverages these members by promoting exclusive, premium-priced content.

For example, Line – an instant messaging app that enables free messages, voice and video calls from a mobile or PC, has monetised its messaging platform, by allowing brands to offer ‘sticker’ packs to its 300m users, leading to revenues of $10m a month from sticker sales alone. In addition to stickers, OTT players are generating significant revenue via gaming, music, fashion, and retail. The most recent trend is the integration of financial services (e.g. Snapcash) and e-commerce (e.g Rakuten’s purchase of Viber).

Mobile operators have spent two decades building large subscriber communities with whom they have trusted billing relationships. These types of services present operators with the opportunity to grow new messaging revenues through brand and enterprise partnerships.

How can operators deliver killer features to subscribers?

Services like Rich Communication Services (RCS) enable operators to offer many of the features that users have come to expect from their favourite OTT players – including presence and location information capabilities. It also provides a standard through which all mobile operators can deliver this much richer user experience: a globally interconnected community of billions of users is achievable. RCS features can be provided as part of the standard handset messaging experience.

However, services like RCS should not be viewed simply as a competitive response to OTT messaging apps. The opportunity here is for operators to take a cue from what consumers really want, and adapt accordingly. In an increasingly connected IP world, operators must provide these features or accept that they are no longer relevant as messaging service providers.

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