Operators to Lose $3 bn in SMS Business Messaging Revenue to OTT Channels

Over-The-Top (OTT) business messaging traffic is expected to reach a staggering 375 billion messages by 2028, marking a significant increase from the current 100 billion messages recorded in 2023.
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A decline in the quality of Short Message Service (SMS) networks will be a driving force behind the surge in OTT messaging adoption, a recent study by Juniper Research indicates.

As enterprises relying on mobile business messaging seek alternatives amidst diminishing SMS network quality, OTT messaging apps are emerging as a preferred choice. Consequently, global operators stand to lose over $3 billion in SMS business messaging revenue to OTT channels over the next five years.

The deteriorating quality of SMS networks is attributed to the growing prevalence of fraud, coupled with operators raising SMS prices to maintain revenue in the face of slowing demand for business messaging traffic.

To capitalize on this shift in the market, OTT app vendors need to implement pricing strategies that attract high-spending enterprises away from traditional SMS channels. The approach involves separating traffic by use and charging premiums for mission-critical activities, such as Multi-factor Authentication (MFA).

One notable sector expected to experience substantial growth in OTT business messaging spend is retail. The forecast indicates a surge from $790 million globally in 2023 to over $2.6 billion by 2028. The report advises OTT messaging vendors to integrate data from various retail channels into their business messaging activities.

By doing so, these vendors can position their apps as integral channels for retailers’ eCommerce strategies. The report further emphasizes the importance of integrating payment capabilities directly into OTT messaging apps to maximize their value proposition within the retail space.

As the communication landscape undergoes a paradigm shift, with enterprises increasingly embracing OTT business messaging, the report highlights the pivotal role pricing strategies and sector-specific integrations will play in shaping the future of this evolving market.

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