OTT communication services worldwide: stakeholder strategies
Research Report
OTT communication services worldwide: stakeholder
strategies
December 2013
Stephen Sale
© Analysys Mason Limited 2013
OTT communication services worldwide: stakeholder strategies 2
Contents
Slide no. Slide no.
5. Executive summary 21. Apple is integrating its own communication services with the iPhone,
6. Executive summary [1] thereby disintermediating the operator
7. Executive summary [2] 22. WhatsApp is focused on providing a specialist messaging service to a
large installed base
8. Executive summary [3]
23. Skype retains its position as market leader in VoIP and closer
9. Recommendations
integration with Nokia devices is likely
10. Key recommendations [1]
24. WeChat is driving international growth with high-profile advertising
11. Key recommendations [2] campaigns
12. Trends in OTT communication services 25. Line is an example of the new generation of ‘social messengers’ that are
13. Players from across the mobile value chain are displacing operators as transforming messaging and social networking
the sole providers of communication services 26. KakaoTalk successfully monetises its communications with a wide
14. Communication services are increasingly supported by indirect range of complementary premium services
business models 27. BlackBerry continues to be a significant force in some countries and
15. As communication service feature sets broaden, operators’ traditional hopes that opening BBM to other platforms will revive the service
portfolios look increasingly weak 28. Operator responses
16. Messaging services are already used by more than half of smartphone 29. Operators are responding with a variety of approaches
owners worldwide, and adoption is growing rapidly
30. Blocking OTT services is largely counterproductive but many
17. Profiles of major OTT players stakeholders persist with this approach nonetheless
18. A number of fast-growing specialists are joining the Internet giants in 31. Operators can use pricing levers to limit the appeal of alternatives, but
targeting the communication services market the window of opportunity is closing
19. Google has revamped its offering with Hangouts and is integrating 32. Partnership models are increasingly common, but the motivation is
communications capabilities ever deeper with Android stronger among those operators with less to lose in legacy services
20. Facebook is making aggressive moves in mobile – communication
services are a major focus
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OTT communication services worldwide: stakeholder strategies 3
Contents
Slide no. Slide no.
33. The GSMA is promoting RCS as the industry’s collective strategy to 46. About the author and Analysys Mason
countering cannibalisation of messaging revenue … 47. About the author
34. … but serious questions remain about the ability of RCS to perform its 48. About Analysys Mason
designated role, and of operators to capitalise on it
49. Research from Analysys Mason
35. VoLTE is probably RCS’s best chance of making any meaningful impact
50. Consulting from Analysys Mason
36. VoLTE deployments are being driven by cost efficiencies – next-
generation voice strategies are a secondary consideration
37. Many promising initiatives in next-generation communications have
been proprietary ‘telco OTT’ services
38. Telco OTT initiatives are refocusing on adding value to the operator’s
customer base
39. Market outlook
40. OTT messaging services are transforming the user experience and are
expected to cement their dominance of the messaging market
41. OTT voice services are expected to gain more traction, but are unlikely
to pose the same level of threat to operators as messaging apps
42. Operators must not be complacent in the voice market – they need to
address vulnerabilities and improve the user experience
43. The poor outlook for operators’ consumer messaging services suggests
that they should focus on other opportunities
44. When preparing investment cases, operators need to properly assess
the value of ‘retaining relevance’ in communication services
45. The revenue outlook is uncertain, but the platform business model offers
welcome wholesale opportunities for operators
© Analysys Mason Limited 2013
OTT communication services worldwide: stakeholder strategies 4
List of figures
Figure 1: Representation of the mobile value chain Figure 18: Examples of partnerships between operators and OTT service
Figure 2: Examples of different business models in the OTT communication providers
services market Figure 19: RCS deployments at November 2013
Figure 3: Comparison of communication services and supporting business Figure 20: RCS specification roadmap at November 2013
models Figure 21: Selected VoLTE announcements
Figure 4: Smartphone penetration of OTT VoIP and IP messaging services, Figure 22: Major propositions addressed by ‘telco OTT’ initiatives
worldwide, 2010–2013
Figure 23: Screenshots from O2 UK’s TU Go and Orange’s Libon (Sosh
Figure 5: Major non-operator communication services players implementation)
Figure 6: Google Hangouts and Nexus 5 screenshots Figure 24: Active users of OTT messaging services on smartphones, by
Figure 7: Facebook Messenger and Facebook Home screenshots region, 2010–2018
Figure 8: iMessage and FaceTime audio screenshots Figure 25: Messaging traffic originated on mobile handsets, by type,
Figure 9: WhatsApp Messenger screenshots worldwide, 2010–2018
Figure 10: Skype on Windows Phone screenshots Figure 26: Active users of OTT VoIP applications on smartphones, by region,
2010–2018
Figure 11: WeChat screenshots – ‘Shake’ feature and Sticker Shop
Figure 27: Voice traffic originated on mobile handsets, by type, worldwide,
Figure 12: Line screenshots
2010–2018
Figure 13: KakaoTalk screenshots – Plus Friend and Gift Shop
Figure 28: Operators’ position in key areas of the mobile value chain
Figure 14: BBM for BlackBerry and iPhone screenshots
Figure 29: Distribution of apps by number of users and potential
Figure 15: Operator responses to competition from OTT players in the opportunities for API providers
communication services market
Figure 16: Regulator approaches to OTT services in selected countries
Figure 17: Penetration of unlimited SMS bundles and IP messaging apps on
smartphones, and average SMS usage per active SIM, selected
countries
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OTT communication services worldwide: stakeholder strategies 14
Communication services are increasingly supported by indirect business
models
Technological enablers and widespread adoption of mobile Figure 2: Examples of different business models in the OTT communication
Internet access have lowered the barriers to entry in services market [Source: Analysys Mason, 2013]
communication services markets. Business Description Examples
model
Major Internet players have identified opportunities for
market disruption and have entered adjacent markets, Advertising Services funded by viewing Facebook,
including communication services. These services are advertisements or the collection Google, Kakao,
expected to complement the core business rather than to of data to sell to advertisers Line, Pinger,
be major drivers of revenue growth. Yuilop
Hardware Services add value to the Apple,
Specialist start-ups have driven innovation in feature sets device and promote market BlackBerry,
and supporting business models. The ongoing viability of presence within a segment Nokia, Samsung
many of these business models has been a significant defined by device ownership
source of speculation, but several players have emerged
with sizeable user bases and/or profitable businesses. In-app Users can purchase extra Kakao, Kik, Line,
purchases/ features such as stickers or Tango, Tencent
The effects have been particularly pronounced in the content download content such as (WeChat)
messaging market where the cost base required to provide a games
service has been dramatically lowered. A service such as Software Services can be bundled with Genband Ireland
WhatsApp Messenger can run on operating costs in the tens licensing hardware or offered on a white- (fring), Microsoft/
of cents per subscriber per year. A viable business is label basis Skype, Vopium
therefore possible on annual ARPU of less than a dollar.
Subscription Recurring charge either for Microsoft/Skype,
Many of the services available do charge directly for basic service or additional Viber, WhatsApp
communication features, but the trend has been towards features
indirect business models that monetise the context for Unit pricing Revenue derived from off-net Microsoft/Skype,
communication rather than the discrete communication itself. calls and messages or Viber
terminating incoming calls
© Analysys Mason Limited 2013
OTT communication services worldwide: stakeholder strategies 32
Partnership models are increasingly common, but the motivation is
stronger among those operators with less to lose in legacy services
Many operators have partnered with social networking Figure 18: Examples of partnerships between operators and OTT service
providers such as Facebook to promote the adoption of providers [Source: Analysys Mason, 2013]
mobile Internet services. Facebook has long emphasised the Operator Partner Details
messaging capabilities of its mobile service and, as the
popularity of communications apps has risen, the partnership 3 (Hong Kong) WhatsApp Roaming package
model has been extended to include these services. includes unlimited usage
WhatsApp has proactively established relationships with DiGi Skype plus Unlimited Skype calling
Telecommunications others plus 100 SkypeOut
MNOs such as 3 (various countries), DiGi, Nawras, Mobily (Malaysia) minutes
and SingTel. Other messaging providers have similar deals in
place. The partnerships are normally at marketing level only Etisalat (Egypt) Facebook Free or discounted
access to Facebook
with the MNO trying to appeal to particular market segments, Messenger
typically by zero-rating usage of the app(s).
Globe Telecom Viber plus GoUnli prepaid tariffs
VoIP providers are also working with operators. Skype had (Philippines) others include unlimited usage
what amounted to an on-net calling promotion with Hutchison Mobily (Saudi Arabia) WhatsApp Exclusivity, zero-tariff
3G UK (Three) as early as 2009. It has also had relationships usage in some bundles
with Qtel (now Ooredoo), Telkomsel and Verizon Wireless.
Verizon Wireless (USA) Skype Pre-installed on some
Viber is also very active in partnering with operators. devices, international
calls via Skype
Many of the operators that have embraced the partnership
model are smaller players, aiming to gain market share by
targeting younger data-centric users, and with less of a
legacy position in voice and messaging.
A move towards a partnership model also supports efforts to
move to a heavily bundling-focused strategy (which will
evolve into a data pipe with usage caps).
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OTT communication services worldwide: stakeholder strategies 46
Executive summary
Recommendations
Trends in OTT communication services
Profiles of major OTT players
Operator responses
Market outlook
About the author and Analysys Mason
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OTT communication services worldwide: stakeholder strategies 47
About the author
Stephen Sale (Principal Analyst) is the lead analyst for Analysys Mason’s Voice and Messaging research
programme. His primary areas of specialisation include consumer VoIP, OTT player strategies, fixed–mobile
substitution and pricing strategies. Before joining Analysys Mason in 2004, Stephen worked in a number of research
and marketing roles within the telecoms industry and has several years' experience in VoIP and broadband access.
He has a degree in economics and an interdisciplinary MRes from the University of London.
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About Analysys Mason
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OTT communication services worldwide: stakeholder strategies
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