Over-The-Top (OTT) Communication Market Set for Rapid Growth during 2017 – 2025

Delivery of content, application, or services over internet protocol networks that are not directly provided by internet service providers is referred to as over-the-top communication. Over-the-top communication is sometimes referred to as value added services. Over-the–top communications apps have bypassed the traditional network distribution approach. OTT apps and services are those provided by Skype, FaceTime, and WhatsApp for voice/video call and messages on a mobile device.

Decline in SMS service was largely after the introduction of over-the-top communication services. In the year 2011, OTT messaging service traffic was less than 5% of the overall messaging, globally. However, by 2013, OTT messaging outshined SMS as the primary source of messaging, and currently SMS represents less than 10% of the traffic globally.(source: Synchronoss Technologies Inc.). The statistics clearly displays the exponential adoption of over-the-top communication services and its growth trend.

OTT communication providers largely rely on global internet and network speed (ranging from 256 kilobits for messaging to speed in the range of megabits for video) to reach the user base. Services offered by OTT players are either free of cost or are provided at much lower cost to users. The business model of OTT communication providers are largely advertisement, in-app purchase/ content, unit pricing, subscription, and software licensing. Advertisement includes all those services funded by viewing advertisements. In-house purchase/content includes revenue generated when the user purchases extra features such as stickers or some premium service. Unit pricing includes revenue derived from off-net calls or terminating incoming calls. Players such as Skype and Microsoft base their business model on unit pricing. The subscription model includes the revenue generated from recurring charges for additional services offered by the company. The software licensing model is largely the revenue generated by purchase of software services by users.

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Three vital factors driving the growth of the over-the-top communication market are continuous improvement in devices whether television, smartphones, or laptops among others; consumer communication demand; and availability and easy accessibility of network technology. Device intelligence particularly in smartphones has grown exponentially in the last 5-10 years. The most prominent revolution in the smartphone market was the introduction of iPhones in the year 2007 that completely changed the end-user outlook toward the use of mobile technology. Since then, improvement in data speed, chip performance, camera technology, integrated sensors, and enhanced battery power has changed the mobile phone industry. Huge transition in IP network that has enabled an enriched communication experience has given a tremendous boost to all OTT apps and services. Additionally, growth in network investment by operators has improved the quality of services. The investment has led to faster broadband speed which has improved the OTT services experience among the consumers.

Key players in the over-the-top communication market are Akamai Technologies, Facebook Inc., Google Inc., Tencent Holdings, Microsoft Corporation, Mara Group (Nimbuzz), Dropbox, Inc., Limelight Networks, Inc., Rakuten, Inc., and  Yahoo Inc. among others

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