Operators to lose $2.5 bn of business messaging revenue to OTT apps

Mobile operators will lose $2.5 billion in 2023 to OTT business messaging providers such as Messenger, WeChat and WhatsApp, according to a new Juniper Research study.
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The report found that promotional messages will account for 30 percent of this revenue loss in 2023, with enterprises embracing up-selling and cross-selling capabilities through rich media marketing campaigns.

OTT business messaging involves enterprises using messaging applications to interact with consumers.

The A2P Messaging market report found that the total number of SMS business messages sent will reach 1.7 trillion in 2023; growing from 1.6 trillion in 2022, as enterprises capitalise on the channel’s impressive open rates and unrivalled subscriber reach.

The use of SMS will remain particularly strong in the retail sector, with operator-led messaging channels in multi-factor authentication increasing in tandem with the growth of eCommerce.

Despite the popularity of OTT applications, the number of operator‑led RCS (Rich Communication Services) business messages sent will also increase, from 161 billion in 2022 to 219 billion in 2023. It urges network operators to move away from the turbulent monetisation models used for SMS, as fluctuations in RCS pricing will limit enterprise adoption of operator-led rich media messaging.

Volatile RCS pricing will encourage the establishment of grey routes, with lucrative business messages concealed and transmitted within cheaper interpersonal channels.

“In order to support the growth of RCS business messaging, operators must ensure that pricing remains profitable without dramatic increases. Operators must absorb the initial cost of rich media messaging, using digital advertising and sponsorships to secure a return on investment,” Research author Scarlett Woodford said.