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Market prospects of mobile instant messengers in Russia and in the world in the period up to 2020

MAMrch 2017

Analytical Report (full version)

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Analytical Report (full version)

Market prospects of mobile instant messengers in Russia and in the world in the period up to 2020
Market prospects of mobile instant messengers in Russia and in the world in the period up to 2020
MAMrch 2017

Market prospects of mobile instant messengers in Russia and in the world in the period up to 2020

MAMrch 2017

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J'son & Partners Consulting presents brief results of a study on the Russian and world market of mobile messengers. Development prospects in this segment are associated with social commerce and creating self-sufficient multi-purpose platforms that combine a variety of services within the same application.

 

The largest projects in Russia and the world

 

The list of the largest messengers in the world includes WhatsApp (1.2 billion users at the end of 2016), Facebook Messenger (1 billion in mid-2016), QQ (900 million in Q3 2016), WeChat (846 million in Q3 2016), Skype (over 300 million at the end of Q1 2016), Viber (260 million at the end of 2016) and Line (217 million at the end of 2016).

 

Source: TeleGeography

 

In 2016, OTT international voice traffic for the first time exceeded the traditional telephone traffic - 552 billion min. against 546 billion min., respectively.

 

Source: TeleGeography

 

 

In Russia, according to the survey conducted by J'son & Partners Consulting, at the end of 2016, VKontakte, WhatsApp and Viber were the three most popular mobile messengers and social networking sites.

 

Compared to the data from the survey conducted by J'son & Partners Consulting in mid-2015, the project "VKontakte", managed to take off from 5th to 1st place, and Skype (the absolute leader in 2013) moved from 3rd to 4th place after WhatsApp and Viber. The decline in the popularity of Skype in Russia in 2016 is confirmed by other surveys and can be explained by the insufficiently quality of communication, lots of advertising, complicated registration and distribution of contacts compared to other messengers (Viber, WhatsApp and Telegram), as well as the need to maintain an active application for real-time communications.

 

 

From toll calls and monthly fees to "social shopping"

 

After not entirely successful and sometimes unsuccessful attempts of monetization through subscription fees and pay-for calls in mobile and fixed networks, monetization of mobile messengers remains an important issue, and companies are trying to solve it in different ways, for example:

  • selling advertising, stickers and souvenirs;
  • establishing platforms for third-party applications and services;
  • using "social commerce";
  • taking fees from owners of business accounts.

 

Most likely, the messengers will use many different ways for implementing monetization, before they focus on a few key optimal models. One of the most important trends is the transition of major players to the creation of their own platforms for third-party applications.

 

The largest Russian instant messengers mainly go towards the Chinese project WeChat, which is due to the partnership with millions of companies from different segments (from public transport to food delivery sale of digital content) was able to integrate a large number of services in one application. Users of WeChat, without leaving the application, may, for example, choose a café for breakfast, book a table, call a taxi, choose food from the menu, pay the bill etc.

 

Using messengers is a model of communications between consumers and brands – at present, Russia in this direction is still taking the initial steps. For example, some retailers do primarily use this channel of communication with their customers in the simplest embodiments (e.g., as a replacement for normal phone). More active messengers are used for online sales (taking orders, booking tickets, supporting services, consulting, etc.). Some companies already are actively using bots that can significantly reduce the cost of customer service. 

 

Projects of cellular operators

 

So far none of the Russian operators has failed to create a project in the field of mobile messaging which could compete in popularity with existing global brands WhatsApp, Viber etc. However, the operators are not giving up attempting to create similar services. For example, in 2015, the company MTS has launched the MTS Connect messenger, Megaphone in 2016 "reset" "Tifon" (eMotion project), and "VimpelCom" plans to start in 2017 an application called Veon that will combine the functionality of a messenger and aggregator of online services. In the world there are only a few examples of successful launches of mobile messengers. One of them is the project BiP from Turkish mobile operator Turkcell (more than 10 million downloads by the end of Q3 2016). However, the ways to monetize BiP are still unclear.

 

The largest global messengers are significantly more popular than operator OTT applications, which are generally focused primarily on the operator's own subscribers.

  

Regulation

 

Mobile operators complain that while their work is licensed, mobile messengers provide essentially the same services, their activities are not regulated. In November 2016, Media and Communications Union, which includes, among others, the largest mobile operators, published a draft law on regulation of OTT services. The document, in particular, requires developers of messengers to work in Russia only under the contract with the operators to identify users and limit the disclosure of prohibited information. The development of the bill began in 2015, it was criticized by Internet companies that control the messengers and video services, as well as the expert Council under the Government. However, the need to regulate messengers were supported in the state Duma. The draft strategy of information society development in 2017-2030, published on the website of the Russian security Council, is assumed, in particular, to strengthen legal regulation of the social networking sites and messengers.

 

The probability of special regulation of messengers in Russia in one form or another, is estimated by J'son & Partners Consulting as high. The main arguments are related to the need of user identification and blocking of undesirable content to prevent illegal actions.

 

The newsletter was prepared by J'son & Partners Consulting. We make every effort to provide factual and forecast data that fully reflect the situation and are available at the time of the release of the material. J'son & Partners Consulting reserves the right to revise the data after the publication of new official information by individual players.

 

 

Detailed research results are presented in the full version of the report: «Market prospects of mobile instant messengers in Russia and in the world in the period up to 2020»

Terms and abbreviations

1. Mobile instant messaging

1.1. Traditional systems SMS/MMS

1.1.1. SMS

1.1.2. MMS

1.2. Mobile instant messengers

1.3. Classification of mobile messengers and major projects (number of users, functionality, business model, strategy, etc.)

1.3.1. Traditional mobile instant messengers

1.3.1.1. WhatsApp

1.3.1.2. Tencent QQ, Weixin/WeChat

1.3.1.3. Skype

1.3.1.4. Viber

1.3.1.5. Kik Messenger

1.3.1.6. Line

1.3.1.7. Blackberry Messenger (BBM)

1.3.1.8. iMessage

1.3.1.9. KakaoTalk

1.3.1.10. QIP

1.3.2. Social networking sites (social messengers)

1.3.2.1. Facebook Messenger

1.3.2.2. Hangouts

1.3.3. Projects of Mail.Ru Group

1.3.3.1. Mail.Ru agent

1.3.3.2. ICQ

1.3.3.3. «Odnoklassniki»

1.3.3.4. VKontakte (VK)

1.3.4. Snapchat

1.3.4.1. Number of users

1.3.4.2. Basic functions

1.3.4.3. Business model

1.3.5. Telegram Messenger

1.3.5.1. Brief description

1.3.5.2. Number of users

1.3.5.3. Basic functions

1.3.5.4. Business model and strategy

1.3.6. Firechat

1.3.6.1. Brief description

1.3.6.2. Number of users  

1.3.6.3. Basic functions

1.3.6.4. Business model and strategy  

1.4. Principal monetization models of mobile instant messengers

1.4.1. Paid app, subscription

1.4.2. Advertising

1.4.3. Calls to mobile or fixed networks and from them

1.4.4. Stickers, sponsor stickers

1.4.5. Selling souvenirs

1.4.6. Paid content (filters, themes and music)

1.4.7. In-app purchases

1.4.8. E-commerce and payment services

1.4.9. Official accounts and public chats 

1.5. Impact of mobile instant messengers on traditional operator services

1.5.1. Dynamics of SMS/MMS consumption and traffic of mobile instant messengers

1.5.2. Transformation of operator business models

1.5.2.1. Blocking of OTT services and installation of a lower priority

1.5.2.2. Correction of the tariff policy to reduce the attractiveness of OTT services and stimulate demand for traditional services

1.5.2.3. Developing own OTT applications

1.5.2.4. Launch of RCS (Rich Communication Service) – operator's alternative to OTT services

1.5.2.5. Cooperation with OTT services

1.5.3. Development prospects

1.6. Business user market

1.6.1. Microsoft/Skype

1.6.2. Google/ Hangouts

1.6.3. BlackBerry

1.7. Drivers and restraining factors

1.8. Trends and forecasts 

2. State regulation

2.1. Emergence of OTT service regulation

2.2. In the world

2.2.1. US

2.2.2. EU

2.2.3. South Korea

2.2.4. Netherlands

2.2.5. Germany

2.2.6. UK

2.2.7. France

2.2.8. Taiwan

2.2.9. China

2.2.10. Singapore

2.2.11. Canada

2.2.12. UAE

2.2.13. Egypt

2.2.14. Saudi Arabia

2.2.15. Bahrain

2.3. In Russia

CONCLUSION

ANNEX 1. LIST OF MENTIONED COMPANIES 

ANNEX 2

- Comparison of functions of popular messengers in Russia and in the world

- Basic business models of popular mobile messengers

- Examples of interaction between operators and OTT services

- Launches of RCS and VoLTE in the world

ANNEX 3. RESULTS OF A SURVEY OF MOBILE MESSENGER USERS IN RUSSIA, 4Q 2016

- What free apps (instant messengers, chats, social networking sites) on your mobile device do you use?

- How often do you use messengers or social networking apps on your mobile devices for chatting and phone calls?

- What the functions of these applications, in addition to the chat, do you use the most?

- Do you use paid services in instant messengers and social networking services? If yes, what kind of them?

- How much do you spend on paid features of instant messengers or social networking applications?

- How does the use of instant messengers and social networking applications affect the consumption of your usual mobile services - calls and SMS?

- Why are you using instant messengers and social media apps?

List of figures

Fig. 1. Operator revenues from SMS in the world, $bln, 2004-2018.

Fig. 2. Monthly active users (MAU) of global mobile messengers in the world in August of 2015, mln

Fig. 3. Popularity of mobile instant messengers in Russia 2013 and 1st half 2015

Fig. 4. Monthly active users (MAU) of WhatsApp, 2013-2015

Fig. 5. Monthly active users (MAU) of QQ IM, million, 2014-2015

Fig. 6. Monthly active users (MAU) of Weixin/WeChat, million 2012-2015

Fig. 7. Dynamics and revenue structure of Tencent, 1Q 2012 – 1Q 2015

Fig. 8. Distribution of Viber's subscriber base by region, 2014

Fig. 9. The number of registered users, Kik Mesenger, 2012-2015

Fig. 10. Monthly active users (MAUS) Line, million, 2014-2015

Fig. 11. Dynamics and structure of Line's revenue, billion yen, 2014-2015

Fig. 12. Monthly active users (MAU) of KakaoTalk, million, 2013-2015

Fig. 13. Structure of revenues of Daum Kakao, 2013-2014

Fig. 14. Monthly active users (MAU) of Facebook Messenger, 2013-2015

Fig. 15. Age of Snapchat's audience in the United States

Fig. 16. Monthly active users (MAU) of Telegram, 2013*2015

Fig. 17. Promotional content of Snapchat

Fig. 18. Line commercial stickers

Fig. 19. Examples of sponsor stickers in the Facebook Messenger app

Fig. 20. Selling souvenirs in the apps KakaoTalk and Line

Fig. 21. The official account (public chat) in Viber

Fig. 22. The number of messages sent in the world per day (SMS and OTT), billion units.

Fig. 23. Dynamics of SMS traffic and traffic of WhatsApp messages in the world, 2011-2015

Fig. 24. SMS traffic in the world, regional breakdown, billion messages per year, 2004-2014

Fig. 25. SMS life cycle, 1995-2018.

Fig. 26. Dynamics of changes of the Russian "Big Three" revenues from SMS in annual terms, 2013-2015.*

Fig. 27. The number of active projects in the field of communication services of the next generation as of June 2014, broken down by regions of the world

Fig. 28. Operator strategy in respect of RCS

Fig. 29. Benefits of the affiliate scheme for operators and OTT services

Fig. 30. Traffic of instant messaging in the corporate and public IM, billion messages, 2013-2017

Fig. 31. Available park of mobile devices in Russia, million units, 2009-2014

Fig. 32. Penetration of smartphones in the world, fact for 2014, forecast for 2015

Fig. 33. Do you visit the social networking websites on the Internet? If so, which of them do you use? (closed question, any number of answers, % of Internet users)

Fig. 34. Forecast of the number of users of social networking services in the world, mln, 2015-2019

List of tables

Table. 1. The main model of monetization of Tencent projects and the number of users Q1 2015

Table. 2. Basic functionality of Skype

Table. 3. Skype tariffs with no monthly fees (Pay as you Go) in Russia

Table. 4. Basic Skype tariffs in Russia with a monthly fee

Table. 5. The main sources of income of Daum Kakao

Table. 6. Functions of the mobile version of "Mail.Ru agent" depending on the operating system type

Table. 7. Basic business models and functionality of key communications OTT services compared to mobile operators

Table. 8. SMS traffic in the world, regional breakdown, billion messages per year, 2004-2014

Table. 9. Income and traffic from SMS and OTT services in the world and in Europe, 2013 and 2017

Table. 10. Mobile operators’ strategy for neutralization of the OTT "threat"

Table. 11. Skype tariffs for business

Table. 12. Prices for using Microsoft Office 365 for business in Skype

Table. 17. Differences between traditional operator services and OTT services 2015

Table. 18. Conditions for state regulation of services from mobile operators and OTT service providers, 2015