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Summary

In Ovum's OTT Communications Tracker: 4Q16, it is clear that "Team Facebook" – comprising WhatsApp, Instagram, and Facebook Messenger – leads in the chat app and social networking space. Facebook Messenger and WhatsApp crossed 1 billion monthly active users (MAUs) in July and February 2016, respectively, and Instagram had reached 600 million MAUs by the year's end. In 2017, Ovum expects the strong growth in the chat app market to continue, allowing WhatsApp and Facebook to close in on the 2 billion MAU milestone. However, competition is not far behind: Tencent's WeChat is nearing the 1 billion MAU mark. And it's not just a numbers game. For example, Snapchat has a smaller user base, but it is driving fundamental changes in consumer messaging and communications behavior and leading the way on innovation through products such as Spectacles.

Smaller players must not be overlooked

Facebook has done well not only in garnering a large user base, but also in acquiring WhatsApp and Instagram while building its own communications service, Facebook Messenger (hedging its risk in the chat app market). WhatsApp focuses purely on messaging, voice, and video calling, while Facebook Messenger follows a platform-based model which allows it to do a lot more such as handle payments, make bookings, and even offer media services. Facebook is therefore well positioned as a provider of a pure-play communications-based chat app and a platform-based chat app. Meanwhile, Instagram is more of a Snapchat competitor, quick to launch new services in response to communications trends (see its video stories). With its chat app properties, Facebook is a formidable force in communications.

According to Ovum's OTT Communications Tracker: 4Q16, Facebook Messenger and WhatsApp are expected to pass 2 billion MAUs by the end of 2017. WeChat is expected to cross 1 billion MAUs in mid-2017. Instagram is not far behind. It has been growing steadily and is expected to finish close to 1 billion MAUs by end-2017. OTT giant Google is not doing so well: Ovum does not expect it to reach 1 billion MAUs by 2019.

The "billion MAU club" (i.e. the top three players in the world: WhatsApp, Facebook Messenger, and WeChat) are looking at ways to continue their growth trajectory. However, the smaller players must not be discounted because of the size of their user base. Players such as Snapchat and Line are doing interesting things that impact the wider industry. For example, the popularity of Snapchat's media-focused service has compelled Instagram to incorporate features almost identical to Snapchat's on its platform, and Line is paving the way for communications players to move into other service areas by launching as an MVNO and offering a range of handsets. Snapchat is also going the device route through the sale of Spectacles. All in all, 2017 is set to be another landmark year in the history of OTT services, as WhatsApp propels itself past 2 billion MAUs and chat apps continue to innovate strongly on service features and business models.

Appendix

Further reading

OTT Communications Tracker: 4Q16, TE0003-000986 (January 2017)

OTT Messaging Forecast: 201620, TE0003-000952 (September 2016)

A Day in the Life of Mobile Communications, TE0003-000939 (September 2016)

Remaining Relevant in Communications: Partnering with WhatsApp, TE0003-000935 (August 2016)

Digital Economy 2025: The Future of Communications, TE0009-001524 (May 2016)

Deutsche Telekom's managed OTT service is a step into the future for voice, TE0014-000398 (March 2016)

Mobile Messaging Traffic and Revenues Forecast: 2015–20, TE0003-000874 (October 2015)

"Messaging players evolve with AI-enabled bots," TE0003-000931 (June 2016)

"Video, music, and social media dominate telco–OTT partnership deals," TE0003-000829 (February 2015)

Author

Neha Dharia, Senior Analyst, Consumer Services

neha.dharia@ovum.com

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