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The OTT communication services worldwide: forecasts 2013–2018

  • December 2013
  • -
  • Analysys Mason
  • -
  • 68 pages

Apps from over-the-top (OTT) communications service providers are disrupting mobile markets by offering voice and messaging services with (often) superior user experience at minimal cost. This report quantifies their impact and provides detailed forecasts for operator-provided and OTT communication services in 47 countries and 8 regions worldwide.

Executive summary

- Technological enablers and widespread adoption of mobile Internet access have lowered the barriers to entry in communication services markets. Major Internet players have identified opportunities for market disruption and have entered these markets. These services are not necessarily expected to be major drivers of revenue growth but are usually expected to complement the core business, typically device sales or advertising. The largest Internet players such as Apple and Google are increasingly able to leverage their strengths in the value chain to present their communication services as the defaults in devices.

- Specialist start-ups have also driven innovation in feature sets and supporting business models. The ongoing viability of many of these business models have been a source of speculation, but a number of players have emerged with sizeable user bases and/or profitable businesses. A notable area of innovation has been in ‘social messaging’ where apps combine social networking features such as home pages and timelines with messaging and group chat as well as more advanced picture- and location-sharing features. Apps such as KakaoTalk, Line and WeChat have also demonstrated the possibility of monetising these services with revenue from gaming, advertising and stickers.

Table Of Contents

The OTT communication services worldwide: forecasts 2013-2018
Executive summary
Executive summary [1]
Executive summary [2]
Key recommendations
Key recommendations [1]
Key recommendations [2]
Quantifying the impact of OTT communication services
Smartphones are driving adoption of IP communication services, with messaging apps leading the way
SMS services are showing clear signs of substitution but mobile voice usage continues to grow in most regions
A detailed look at Western European usage data reveals the heterogeneity of messaging markets
Voice and messaging revenue is in decline in the more advanced regions but results do not accurately capture the change in perceived value
Increased penetration of smartphones is driving adoption of OTT services but a significant installed base of non-smartphones will remain
Market outlook
Outline of forecast methodology
Our worldwide forecasts include regional breakdowns and detailed forecasts for 47 countries
Our forecasts build upon a strong set of primary and secondary data resources
Mobile voice services
LTE makes OTT VoIP more viable in the cellular environment and potentially opens the door to innovation
OTT VoIP services will continue their growth on smartphones but will only achieve mass-market status in a few countries
OTT VoIP services will take advantage of the increasing trend towards owning multiple connected devices
Some operators are tweaking the voice feature set but most view any major transformations with VoLTE as a long-term plan
Operators will remain the dominant force in mobile voice but will be significantly weakened as OTT VoIP services continue to grow
Mobile voice revenue worldwide reached a turning point in 2012
Mobile messaging services
More and more countries will embrace OTT messaging services - most smartphone users worldwide already use them
Growth of OTT messaging services will quickly outstrip those provided by operators
Messaging revenue will decline at a CAGR of -6% between 2013 and 2018 as it is increasingly subsumed into data plans - Europe has farthest to fall
Regional trends
North America
Despite high smartphone penetration, penetration rates of OTT communications services are relatively low in North America
North American operators are relatively well positioned in the increasingly data-centric marketplace
Developed Asia-Pacific
Developed Asia-Pacific is home to many of the world's most popular social messaging apps
Operators in developed Asia-Pacific lead the way in rich communication initiatives but are likely to establish partnerships
Western Europe
The outlook for Western European countries varies considerably
Operator responses to changing market dynamics also vary dramatically - it will be too little, too late in many Western European countries
Central and Eastern Europe
Most countries in Central and Eastern Europe have yet to be significantly affected by OTT communication services
Most operators in Central and Eastern Europe are unlikely to make significant efforts to compete with OTT communication services
Latin America
Relatively low smartphone penetration limits the opportunity for OTT services in the short term in Latin America
Several Latin American operators have demonstrated ambition in the contest with OTT players
Emerging Asia-Pacific
Social messaging is very popular in the emerging Asia-Pacific region - WeChat dominates the messaging market in China
Chinese operators are launching their own services but the partnership model will prevail in the rest of the region
Middle East and North Africa
Smartphone penetration of VoIP applications in Saudi Arabia and UAE is probably the highest in the world
Operators are unlikely to seriously compete in the messaging market in MENA and will focus instead on growth from data services
Sub-Saharan Africa
OTT providers in Sub-Saharan Africa are focusing on extending access via feature phones
Operators in Sub-Saharan Africa have little incentive to launch their own next-generation services
Market definition
Definition of geographical regions [1]
Definition of geographical regions [2]
About the author and Analysys Mason
About the author
About Analysys Mason
Research from Analysys Mason
Consulting from Analysys Mason

List of figures

Figure 1: Summary of report coverage
Figure 2: Active users of OTT messaging services on smartphones, by region, 2010-2018
Figure 3: Messaging traffic originated on mobile handsets, by type, worldwide, 2010-2018
Figure 4: Active users of OTT VoIP applications on smartphones, by region, 2010-2018
Figure 5: Voice traffic originated on mobile handsets, by type, worldwide, 2010-2018
Figure 6: Smartphone penetration of OTT VoIP services, by region, 2010-2013
Figure 7: Smartphone penetration of IP messaging services, by region, 2010-2013
Figure 8: Year-on-year growth in average mobile voice usage per active handset SIM, by region, 2011-2013
Figure 9: Year-on-year growth in average SMS usage per active handset SIM, by region, 2011-2013
Figure 10: Average SMS usage per active SIM, Western European countries,1Q 2008-2Q 2013
Figure 11: Mobile voice retail revenue, by region, 2010-2013
Figure 12: SMS retail revenue, by region, 2010-2013
Figure 13: Active mobile SIMs by handset type, worldwide, 2009-2018
Figure 14: Major forecast categories
Figure 15: Flow chart representation of next-generation communication services forecast model
Figure 16: LTE's share of mobile handset and broadband connections, by region and worldwide, 2012, 2015 and 2018
Figure 17: Active users of OTT VoIP applications on smartphones, by region, 2010-2018
Figure 18: Smartphone penetration of OTT VoIP applications, by region, 2010-2018
Figure 19: OTT VoIP application users by device, 2010-2018
Figure 20: Smartphone users with VoLTE as their default voice service, by region, 2010-2018
Figure 21: Smartphone penetration of VoLTE services, by region, 2010-2018
Figure 22: Voice traffic originated on smartphones, worldwide, 2010-2018
Figure 23: Mobile retail voice revenue, by region, 2010-2018
Figure 24: Active users of OTT messaging services on smartphones, by region, 2010-2018
Figure 25: Smartphone penetration of OTT messaging services, by region, 2010-2018
Figure 26: Messaging traffic originated on smartphones, worldwide, 2010-2018
Figure 27: Messaging traffic originated on mobile handsets, worldwide, 2010-2018
Figure 28: SMS retail revenue, by region, 2010-2018
Figure 29: Smartphone penetration of mobile handsets, major markets, NA, 2010-2018
Figure 30: Average operator-provided voice and SMS usage per subscriber, NA, 2010-2018
Figure 31: Smartphone penetration of OTT voice and messaging services, NA, 2010-2018
Figure 32: Messaging traffic originated on smartphones, by type, NA, 2010-2018
Figure 33:VoLTE services, subscribers and smartphone penetration, NA, 2010-2018
Figure 34: Voice traffic originated on smartphones, by type, NA, 2010-2018
Figure 35: Smartphone penetration of mobile handsets, major markets, DVAP, 2010-2018
Figure 36: Average operator-provided voice and SMS usage per subscriber, DVAP, 2010-2018
Figure 37: Smartphone penetration of OTT voice and messaging services, DVAP, 2010-2018
Figure 38: Messaging traffic originated on smartphones, by type, DVAP, 2010-2018
Figure 39: VoLTE services, subscribers and smartphone penetration, DVAP, 2010-2018
Figure 40: Voice traffic originated on smartphones, DVAP, 2010-2018
Figure 41: Smartphone penetration of mobile handsets, major markets, WE, 2010-2018
Figure 42: Average operator-provided voice and SMS usage per subscriber, WE, 2010-2018
Figure 43: Smartphone penetration of OTT voice and messaging services, WE, 2010-2018
Figure 44: Messaging traffic originated on smartphones, by type, WE, 2010-2018
Figure 45: VoLTE services, subscribers and smartphone penetration, WE, 2010-2018
Figure 46: Voice traffic originated on smartphones, by type, WE, 2010-2018
Figure 47:Smartphone penetration of mobile handsets, major markets, CEE, 2010-2018
Figure 48:Average operator-provided voice and SMS usage per subscriber, CEE, 2010-2018
Figure 49:Smartphone penetration of OTT voice and messaging services, CEE, 2010-2018
Figure 50:Messaging traffic originated on smartphones, by type, CEE, 2010-2018
Figure 51:VoLTE services, subscribers and smartphone penetration, CEE, 2010-2018
Figure 52: Voice traffic originated on smartphones, by type, CEE, 2010-2018
Figure 53: Smartphone penetration of mobile handsets, major markets, LATAM, 2010-2018
Figure 54:Average operator-provided voice and SMS usage per subscriber, LATAM, 2010-2018
Figure 55:Smartphone penetration of OTT voice and messaging services, LATAM, 2010-2018
Figure 56:Messaging traffic originated on smartphones, by type, LATAM, 2010-2018
Figure 57: VoLTE services, subscribers and smartphone penetration, LATAM, 2010-2018
Figure 58: Voice traffic originated on smartphones, by type, LATAM, 2010-2018
Figure 59: Smartphone penetration of mobile handsets, major markets, EMAP, 2010-2018
Figure 60: Average operator-provided voice and SMS usage per subscriber, EMAP, 2010-2018
Figure 61:Smartphone penetration of OTT voice and messaging services, EMAP, 2010-2018
Figure 62: Messaging traffic originated on smartphones, by type, EMAP, 2010-2018
Figure 63: VoLTE services, subscribers and smartphone penetration, EMAP, 2010-2018
Figure 64: Voice traffic originated on smartphones, by type, EMAP, 2010-2018
Figure 65: Smartphone penetration of mobile handsets, major markets, MENA, 2010-2018
Figure 66: Average operator-provided voice and SMS usage per subscriber, MENA, 2010-2018
Figure 67: Smartphone penetration of OTT voice and messaging services, MENA, 2010-2018
Figure 68: Messaging traffic originated on smartphones, by type, MENA, 2010-2018
Figure 69: VoLTE services, subscribers and smartphone penetration, MENA, 2010-2018
Figure 70: Voice traffic originated on smartphones, by type, MENA, 2010-2018
Figure 71: Smartphone penetration of mobile handsets, major markets, SSA, 2010-2018
Figure 72: Average operator-provided voice and SMS usage per subscriber, SSA, 2010-2018
Figure 73:Smartphone penetration of OTT voice and messaging services, SSA, 2010-2018
Figure 74: Messaging traffic originated on smartphones, by type, SSA, 2010-2018
Figure 75: VoLTE services, subscribers and smartphone penetration, SSA, 2010-2018
Figure 76: Voice traffic originated on smartphones, by type, SSA, 2010-2018
Figure 77: Regional breakdown used in this report
Figure 78: Regional breakdown used in this report

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