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Messaging Market Revenue Challenges in 2025: How to Build Sustained Growth

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Growing revenues in the messaging market has been a persistent challenge for MNOs (Mobile Network Operators), and 2025 is likely to be no different due to evolving technologies and shifting consumer behaviour. MNOs should review and adapt their strategy to ensure continuing revenue growth.


Here, TecFutures analyses three challenges of the messaging market that are changing the competitive landscape and revenue outlook, coupled with strategic options that can underpin future growth.


Evolving Messaging Growth Challenges in 2025

 

1.    Competition from Over-the-Top (OTT) Platforms

OTT messaging apps like WhatsApp, Facebook Messenger, Telegram and WeChat have dominated the messaging space for a number of years, offering free services that bypass traditional SMS and MMS. This is a well recognised problem as these platforms have significantly eroded MNO revenues from person-to-person (P2P) messaging – and, while the issue is not going away in 2025, OTT has its own set of emerging issues.


How is the challenge of OTT evolving?

Despite the dominance of OTT messaging apps, these platforms come with their own set of limitations, which create opportunities for SMS messaging to remain relevant.


  • OTT messaging platforms require users to be on the same platform for communication, leading to a potentially fragmented market. OTT messaging apps also require a stable internet connection (Wi-Fi or mobile data), which can be a problem in areas with poor network coverage or during outages.

  • While many OTT platforms offer encryption, data breaches or unauthorised access to user data have been significant issues and privacy continues to rise as a concern amongst users.

  • OTT apps are not always designed for transactional or business-to-consumer (B2C) messaging, although many businesses see OTT as an attractive and cost-effective hand-off from online chat.

 

2.    Declining Consumer SMS Usage

Consumer usage of SMS for personal communication has declined sharply due to the widespread availability of data-driven communication services. Consumers prefer richer, interactive experiences that SMS cannot deliver and OTT messaging has emphasised that limitation.


How is the decline of SMS evolving?

MNOs initially relied on SMS bundles and pay-per-message models, which thrived during the 2000s. Today, SMS is primarily used for transactional and informational purposes (e.g. OTPs, alerts) rather than personal messaging. However, SMS does have specific features that continue to be relevant and can still be an attractive market for MNOs in key niches and evolving use cases.


  • A2P messaging is growing as a key revenue stream, especially where end user authentication is required.


  • New use cases for SMS are emerging, such as for IoT and M2M especially in applications where low-bandwidth, low-power communication is important.


  • SMS is also the go-to medium for emergency alerts, disaster notifications and other critical communications. Its near-universal reach ensures reliability during crises, making it indispensable for governments and organisations.

 

3.    Technological Transformation and RCS Adoption

RCS, the next evolution of SMS, offers richer features like multimedia sharing, group chats, and branding opportunities, bringing it closer to OTT functionality. While RCS adoption has been slow, partnerships with Google and integration into Android devices have improved its prospects and potential usage and revenue upside.


How are these technological developments evolving?

  • Adoption has been slow, with fragmented rollouts by MNOs and limited consumer awareness.


  • Recently however, partnerships with major players like Google have accelerated RCS deployment, but it still faces challenges in achieving critical mass, particularly in markets dominated by OTT apps.

 

Strategies for MNOs to Address These Challenges

To adapt to these changes and grow revenues, MNOs are increasingly shifting focus:


1.    Drive A2P Messaging Growth

MNOs should look to leverage SMS for transactional messaging (e.g. notifications, OTPs, marketing) and promote RCS for richer B2C engagement. While OTT messaging dominates personal communications, SMS remains attractive for its near-universal reach, reliability, and strong presence in business-critical and A2P use cases.


By actively developing and promoting RCS and targeting enterprise markets, MNOs can continue to derive significant messaging revenues. Actions include:


  • Target Enterprises: Promote SMS as a cost-effective, high-reach solution for business communications.


  • Integrate with Digital Services: Combine SMS with digital platforms and AI-driven tools to enable automated and personalised messaging.


  • Enhance Security: Position SMS as a secure channel for OTPs and 2FA (Two Factor Authentication), complementing digital authentication methods.


  • Promote RCS Upgrades: Work with ecosystem partners to drive adoption of RCS, particularly for interactive business messaging.


2.    Develop Innovative Commercial Models for Data

Monetising data traffic is a critical strategy for MNOs to drive revenue growth. Actions include:


  • Create Tiered and Value-Based Data Plans. Offering differentiated pricing based on usage, speed, or application prioritisation allows MNOs to cater to diverse customer needs while maximising revenue potential. MNOs should be mindful of pricing strategy in what is a highly competitive market and that increasing prices has a negative impact on demand, if there is no perception of increased value to the consumer or enterprise.


  • Capitalise on IoT Data Monetisation. IoT applications are significant drivers of data traffic, and MNOs can monetise these segments by offering tailored solutions and services.


  • Omnichannel Solutions can boost messaging revenues for MNOs by enabling seamless communication across SMS, RCS, OTT apps, and chatbots, thereby meeting diverse customer preferences. They can attract enterprise clients with rich, personalized, and interactive messaging capabilities, driving higher engagement. This diversification maximizes monetization opportunities and reduces churn by offering comprehensive messaging solutions.


3.    Support RCS Ecosystem Development

MNOs can monetize RCS by offering businesses rich messaging services like chatbots, interactive ads, and personalized communications, creating new revenue streams. Overcoming challenges requires robust partnerships, consumer adoption through compelling use cases, and ensuring data privacy and security compliance.

Actions that can help drive RCS include:


  • Collaborate with technology partners (e.g., Google, Mobile OS Providers) to promote RCS adoption and integrate it into business messaging.

 

  • Foster ecosystem collaboration. RCS success depends on widespread interoperability and adoption by MNOs, device manufacturers and technology partners like Google. Without collaboration, RCS risks being fragmented, as seen in its earlier rollouts.


  • Drive enterprise adoption of RCS for business messaging. Enterprises are key drivers of A2P messaging revenue. By positioning RCS as a superior channel for customer engagement, MNOs can generate significant business interest.


  • Educate consumers and enterprises to build increased awareness. Many are unaware of RCS and its benefits. Building awareness is essential to drive adoption and loyalty and to grow revenues.

 

About TecFutures

TecFutures is a different type of 'boutique' market analysis / market strategy business. With a unique combination of tailored flexibility and research-driven insights, we are geared to support our clients' growth with speed and agility.


Unlike many consultancies that offer generic solutions, TecFutures provides client-specific, actionable analysis focused on the telecoms, messaging and IoT sectors.


Additionally, our flexible engagement model—with options for high-impact projects and ongoing monthly retainers—means our clients receive exactly the level of support they need, without long-term commitments, enabling rapid response to evolving business demands.


Why engage with TecFutures?

  1. Transform your Challenges into Growth with Expert Insights and Agile, Tailored Engagements

    TecFutures can be your partner dedicated to actionable, sector-specific guidance, designed to help you adapt swiftly and strategically in the ever-changing telecoms market.


  2. Flexible Support to Accelerate Growth: Strategic Projects or Monthly Retainer—You Choose

    TecFutures’ unique flexibility allows clients to select high-impact, research-based support on their own terms, whether for one-off projects or ongoing advisory services.


Visit www.TecFutures.com to find out more.

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