An Inconceivable Truth: MMS is a Global Success at 30B dollars

This is a blog about the facts of MMS. I was surprised how strongly many pushed back at my blog last week (Everything you ever wanted to know about mobile, but were afraid to ask). The biggest reactions were about MMS, where many readers here on the blog and on Twitter felt strong disagreement about MMS. So lets do the full story about MMS. For some media execs tasked with mobile strategies, the MMS story may even be an inconvenient truth; for most even inside the mobile industry, its an inconceivable truth. MMS a huge success?

MMS IS FAILURE BECAUSE

There is a whole slew of arguments of whats wrong with MMS. Most cameraphone pictures are not shared, they are shown by sharing the cameraphone itself. Many users feel that since they personally don't use MMS (and confidently claim that none of their friends use MMS), there is no chance. Many experts think that there are far better solutions, like sending a picture as an email attachment. There are those who feel that the right way to do picture sharing is on a picture sharing social website like Flickr or Facebook.

There are those who say that cameraphones are bad cameras. There are those who say MMS settings are wrong. Or that the network cannot support it, or that the handset cannot support MMS (even strangely the early iPhones did not support MMS; they do now).

There are those who say MMS is expensive to send - and yes, in America, there is still that punitive practise where carriers/mobile operators still charge for incoming messages (ouch, that hurts haha, luckily almost all of the rest of the world have already moved beynd this archaic practise). And there are those who actually know some of the numbers who say the usage of MMS is trivially small, at the magnitude of one or two percent of the level of traffic on SMS text messaging.

I hear you. These are all valid points of view. There is plenty of evidence to support most of those opinions. Yet inspite of all of those 'faults' - MMS is a success. Not that MMS is starting to generate interest (like say smartphone apps or location-based services). Not that MMS is getting accepted as a major growth area (like say mobile phone internet browsing). No, MMS is established as a success. A huge, global success. All the facts support this. But before we can move further, lets make one thing clear.

IS NOT PICTURE SHARING SERVICE

MMS is not the 'Picture Messaging System' else it might have been called PMS.
The industry took the established format of SMS text messaging, and added four critical elements to it - allowed longer text than the SMS limit of 160 characters - so media brands can do longer news or entertainment articles. Allowed sounds, so MMS can be used to deliver radio and music recordings related audio content. Allowed pictures, that media brands like newspapers and magazines could add images to their news stories. And similarly allowed picture stories, ie cartoons for example to be delivered. And MMS added video clips. So television and cinema content could use MMS to deliver clips from their video programming, from soap opera previews to hollywood movie clips. And all of these allow advertisers to deliver compelling mobile phone ads, far more engaging than anything that could be done on an SMS text message or a WAP banner ad or a search word.

MMS IS NOT SMS

We as an industry (and that includes me personally, and my Global Consulting Department at Nokia specicially around years 2000-2001) misunderstood early MMS. We believed that shortly all SMS users would migrate their person-to-person traffic from basic text based SMS to the more advanced MMS. We imagined the analogy to be what happened to email from the early 1990s to the turn of the millenium - email had 'grown' to include picture attachments, pdf files, powerpoint slides, sound clips, even video clips. We thought we would see that same pattern, text based person-to-person emails migrated to emails with attachments, so too would SMS person-to-person mobile messaging migrate to MMS allowing the 'attachment' of pictures, videos and sounds.

Based on those very widely reported forecasts by Nokia 3G Consulting Department, we suggested that by 2006 of the total messaging traffic, half would be MMS, and by end of 2009, the world active messaging user base would average 4 mobile phone messages sent per day, of which 3.5 per day would be MMS, and 0.5 messages only would continue to be SMS text messaging (Source Nokia 3G Business Consulting presentation to 3G Germany Conference in Bonn Germany Sept 2001)

First on that forecast - remember, we had made our forecast before any MMS services were launched commercially anywhere. It was a 'shot in the dark' forecast, made with the best of logic and analysis, but obviously we made it with no data points. This type of forecasting is inherently the least accurate of any forecasting scenario (when no actual usage data is available from any market or customer segment). Secondly, look at how uncannily accurate we were on total person-to-person messaging - exactly spot-on, 4 messages sent per messaging user, per day, globally. That is exactly the level of 2009. Wow. That is rare, to forecast 8 years into the future and hit a number so accurately. That was the 'easy' part - and shows the professional competence of my Consulting Department at Nokia, they really knew their numbers and had powerful forecasting models. For mobile messaging (ie SMS) we did have data points, and their forecast was spot on. Wow.

But obviously, we got the SMS-to-MMS split TOTALLY wrong. Today out of total global mobile messaging traffic mix, over 95% is SMS, and under 5% is MMS. But this is no longer news, I was chairing the world's first MMS conference in Vienna where we saw the early numbers and I was very open that the actual numbers from early markets, proved that MMS would not follow the SMS pattern. I then made a point of emphasizing this change in my forecast in various telecoms forecasting conferences that I chaired around that time. I was quoted on this point, that MMS does not follow the early predicted pattern, in Business Week on October 13, 2003. So it should be no surprise anymore, seven years after that, in 2010, that MMS will not be 'the next SMS'. We have known this, the MMS community and the mobile telecoms forecasting community have both known that the early projections were faulty.

NOT PERSON TO PERSON

The first commercial MMS services were launched in several countries at almost the same time in late Spring 2002, including CSL in Hong Kong, TeliaSonera in Finland, Telenor in Norway and Vodafone in Germany. Bear in mind that email was launched in 1971, so email is 39 years old today, and SMS was launched commercially as person-to-person messaging in 1993, so SMS is 17 years old. MMS was launched in 2002, so it is only 8 years old right now.

The early hope and hype around MMS did prove mistaken. There was a lot of disillusionment in the years around 2003, 2004, 2005. But also, a strange phenomenon was starting to happen, MMS was being adopted by media companies from print to broadcast, to deliver their news, entertainment and advertising. Telecom Italia Mobile (TIM) reported in 2003 that the majority of its MMS traffic was application-to-person (A2P) not person-to-person - the proportion was more than 7 to 1 in favor of A2P messaging. Similar numbers came from China total mobile messaging (SMS and MMS) in 2004. Today, six years later, China reports that 70% of all MMS messaging traffic is A2P traffic (says ZTE in 2010). Note that in China there are already 134 million active users of MMS just on the China Mobile network, we're looking at enormous reach here.

And compare that to Flickr, the world's most used picture sharing social networking site. Flickr globally has about 50 million users. So just in one network in just one country, China, there are almost 3 times as many active paying users of MMS than all registered users to the free picture sharing site of Flickr worldwide.

MMS FASTEST TO 10 BILLION DOLLARS

So fast forward. By 2007 MMS has passes the 10 Billion dollar annual revenue level. Yes, Portio Research was the first major analyst to give a public domain count of MMS revenues worldwide to pass that level, hitting 14.5 Billion dollars for 2006 (Portio 2007). What? From zero to 14 Billion dollars in four years? That is the fastest growth from zero to 10 Billion dollars ever. Ever. Far faster than SMS text messaging even.

So this year 2010, MMS will be worth 31 Billion dollars if you prefer Portio Research's numbers, or 32 Billion dollars if you prefer Research & Markets numbers. Either way, thats bigger than the music recordings industry global revenues - a media industry that is over 120 years old; and bigger than Hollywood movies box office income, an industry that is 100 years of age. And MMS is now 8 years old.

ASIA IS MMS LEADER

The biggest market for MMS is clearly Asia. As far back as 2008, 48% of Asian mobile phone subscribers were using MMS according to a TNS survey across 29 countries in the Asia-Pacific region. The big reasons for MMS rapid adoption and use can trace back to the fact, that there is low PC ownership but very high mobile phone ownership. For the users in Asia MMS is usually their first experience with a multi-media capable service, so receiving news, entertainment, soap opera updates, movie trailers, discount coupons, etc via MMS is a compelling offering.

The revenues of MMS in Asia have already grown past SMS revenues in Asia already, as IDC reported in 2009. A perfect example of how this is used comes from China. Morgan Stanley counted in 2009 that 40 million Chinese consumers were paying for the type of branded twice-daily news headline service either on MMS or SMS, that comes from the main newspapers out of China. As those newspapers have a total circulation of 109 million, MMS/SMS daily paid headline news had already cannibalized 39% of Chinese newspaper audiences.

MMS VS SMS REALITY CHECK

Yet there is that persistent myth that somehow MMS is a 'failure'. Just because you do not send pictures from your cameraphone to your friends? Is that why? The problem for MMS is of course SMS. MMS sits in that unprecedented shadow of that giant we know as SMS. Even in 2008, Abi Research reported that only 2.5% of all mobile messaging traffic globally was MMS. SMS text messaging is almost all of the rest. The CTIA just this May said that in the USA a similar proportion exists, where MMS traffic is about 2% of the level of SMS traffic. The MDA has similar stats from the UK.

If you want to say that in the USA the total amount of MMS traffic is 'only' 2% of SMS traffic, and worldwide at about 2.5% of SMS traffic, that therefore MMS is a failure - I say that is the wrong comparison. SMS text messaging is the world's most widely used data application, its hardly fair to compare MMS of 8 years of age, to SMS which is 17 years of age. What we can do, is look at MMS in absence of SMS versus other industries, or compare MMS to how SMS did in its first 8 years. Thats a fair measure.

Twelve years after SMS had launched, it passed 1B active users worldwide (Informa 2005). It took SMS text messaging eleven years, to 2004, to pass 30 Billion dollars in annual revenues (Portio 2009). MMS took only 6 years to pass 1 Billion users, and in 8 years passed 30 Billion dollars in annual revenues. If you think SMS text messaging is 'big' and a 'global success' and that it drives the revenues and profits of the mobile industry - MMS is ahead of SMS in both total global users, and in total global revenues, in the comparable point in time.

But that is still an unfair comparison. MMS will not replicate SMS. Most of SMS text messaging is person-to-person messaging and has always been. SMS is a sub-optimal media platform. MMS is exactly the opposite. It is not needed many times per day for person-to-person messages, but is magnificent as a media platform. MMS right from the start became a media darling and in all major markets where its a big success, starting with China, MMS delivers more of its revenues as Application-to-Person messaging. That is the exceptional ability of MMS and we should understand that.

Then if we compare MMS to the world of media, we get astonishing numbers. The world has 480 million newspapers including paid and free editions. MMS at 1.7 Billion people using it, is over 3 times bigger. The world has about 850 million paid TV subscriptions (cable TV and satellite) and MMS is twice that size. The world has a total of 1.4 Billion personal computers - not all of those are connected to the internet by the way, as is frequent in Africa, Latin America etc, yet MMS active user base is significantly bigger. There are 1.6 Billion Television sets on the planet - but MMS is used actively by more people than own a TV set. Behind only FM radio and SMS text messaging, MMS is the world's third most widely used mass media platform.

So then consider. In only 4 years MMS rockets from zero past the 10 Billion dollar annual revenues level - a world record in any industry. In only six years, MMS passed the billion person active user level - another world record. The nearest industry to rival that apart from the mobile phone based services is WWW internet browsing, which was launched in 1989. It took the worldwide web, browser-based internet, which hit a billion users in 2005 - yes, it took the Worldwide Web 16 years to reach a billion users (far faster than the internet or email, obviously). That was the 'world record' prior to SMS and now totally smashed by MMS. Six years to a Billion users! MMS is a media giant. It is worth over 30 Billion dollars this year, meaning it is bigger than music recordings (the original second mass media content) and cinema box office (the third mass medium). And consider all paid content on the internet, Morgan Stanley told us lats year all paid web content was worth 27 Billion dollars. MMS alone has passed the total worldwide internet paid content industry in value already.

MESSAGING ON PHONES

Now, understand the scales - email on mobile phones is utterly dwarfed by MMS. The first email solution on a phone was launched in 1997, so mobile email is 13 years old vs MMS at 8 years of age. Portio reported that in 2009 only 330 million people worldwide used mobile email. MMS is more than 5 times bigger by user numbers.

What of mobile instant messaging? The first mobile instant messaging solution was launched in 1998, so M-IM is 12 years old, four years older than MMS. Portio told us that there were 191 million users of M-IM - MMS has about 8 times more users than mobile instant messaging.

TYPE..................Launched.....Users 2009......Pct of Subs....Revenues 2009

SMS................... 1993........... 3,600 M........... 78%..............$100 B
Mobile eMail...... 1997............... 330 M............. 7%...............$  12 B
Mobile IM........... 1998............... 191 M...............4%..............$    3 B
MMS.................. 2002............ 1,700 M............ 37%..............$  30 B

Compare to Internet users
email 800 M unique users in 2009 said Morgan Stanley
biggest social network Facebook has 540 M users in May 2010

MMS USERS

There has not been a recent global count of MMS users by any research organization willing to release the number into the public domain (as far as I have seen). My consultancy practise, TomiAhonen Consulting, has been reporting the global MMS user number in the annual publication TomiAhonen Almanac, and I have released into the public domain the total count of MMS users in the past two years. But there may be those who feel the number is 'not credible' because we do not have another research organization releasing the number. I hear you. So consider these usage numbers to get some scale.

The highest usage number for MMS I have seen is Norway, where TNS Gallup reported in 2009 that 84% of Norwegians use MMS. Aenas measured in 2009 that 62% of the British send MMS messages but only 36% of Germans according to the same source. Of Americans, Jagtag reported 40% used MMS in 2009. As I said earlier, China Mobile the world's largest mobile operator out of China (alone almost twice the size of the total US mobile phone user base) reports 28% of its user base subscribing to MMS. And the TNS Survey of 29 countries in Asia-Pacific in 2008 found 48% of Asian mobile subscribers using MMS. Is my 37% a reasonable number? If you take just the weighted average of those countries, the number should be 42%. So I am confident my number is reasonably 'conservative' ie at the lower end of the scale but yes, you can be pretty sure the world has roughly speaking 1.7 Billion active paying users of MMS messaging.

1.7 Billion users of MMS means more than total personal computers on the planet, more than total users of the internet and more than total global number of television sets in use. Paid MMS users total almost twice the number of users than pay TV like cable TV and satellite. Versus newspapers, MMS reaches the pockets of three times the total global daily circulation of newspapers today, paid or free. Behind only SMS, MMS is the world's second most widely used data application. Compared to Facebook, MMS reaches a 3 times bigger audience - its lead is radically bigger compared to smaller social networking sites like MySpace, Twitter, Flickr etc. The same is true of the total installed base of all brands of smartphones. If you only think of apps for Apple's iPhone including the total shipments of all iPod Touch and iPad devices, MMS will reach an interactive multimedia mobile phone audience... that is 20 times larger.

FUTURE - NOT FACEBOOK, MORE MMS

So, what of the future? Yes, the youth love their instant messaging, don't they? And many of our fave tech pundits promise a cloud-based future for mobile content and services. Sure, thats a promising view. But lets be real. Lets look at the the youth and their preferences.

First lets consider mobile messaging and how much it is threatened by Facebook, Twitter, and any kinds of instant messenger services from Yahoo to Blackberry. Lets go to the country where the internet is the strongest, and relatively, the mobile is the weakest. Where of all industrialized world countries, the youth have lowest penetration of mobile phones and one of the highest penetration rates of home PC access to the internet. The USA. Here is May 2010 numbers from a youth survey of US teens and young adults.

When ChaCha Research interviewed US youth, they found that when asked to select the favorite way to communicate, 68% picked SMS text messaging. The distant second was voice calls at 10%. Facebook for all its hype and success, only came in third at 9%. Only 3% picked instant messaging. And how did email do? eMail receive 0.3% of the preferences. To understand how dominating SMS is becoming in the USA, SMS text messaging preference among US youth is up from 44% in 2007, and US youth was first reported to prefer SMS over email only as recently as 2006 by Pew. That is USA following a global trend, French and British youth were reported to feel that way five years before, in 2001. South Korean youth for example were saying back then that they never used email unless communicating with some old people.

Similarly Pew latest youth survey of US youth out in April 2010, reveals very relevant changes - changes - in youth preference. Since 2006, when Pew started to monitor the behavior types, out of different communication methods used by US teens, using the fixed landline is down of course, now at 30% of US youth using it. eMail is down, no surprise there, down to 11%. Instant messaging? Is not up as you might suspect, it is down since 2006, now at 24% of US youth using the communication method. Did that go to social networks, perhaps a bit, Social networks are up, but only slightly to 25%. Phone calls by the youth on mobile phones are up also slightly, to 38%. But the only communication activity that has changed strongly - in fact doubled in use in the past 4 years, and dominates all others - at 54% of youth using it, is SMS text messaging.

The conventional wisdom suggests that in particular in America, where youth cellphone ownership is low, and internet access is high; and a very strong cultural framework exists with strong internet brands offering instant messaging and social networking, the April 2010 Pew national survey of youth reveals that IM and Social Networking is yes of interest, but at a modest level and not showing dramatic growth (IM is down in fact), but SMS text messaging has exploded.

So, the youth the world-over prefers SMS over any other means including Facebook, MySpace, Twitter etc. But then lets see how do American youth think of MMS. The Pew study also looked at the other activies the US youth do on their phones. Yes, as we can imagine, the youth purchase products, surf the web, send emails, visit social networking sites, but all of these are used by a small minority of US youth phone owners, under one in three teens. Videogaming, recording videos and playing music are roughly speaking used by half. But the most popular activity on the phone after telecommunications, is the camera feature - and guess what - 64% of US youth send pictures with their phones. Similarly a 2009 survey of US youth use by US High School Student Lifestyle, found that 72% of US youth send pictures from their phones to the phones of their friends. Thats using MMS. Of US high school students, only 10% used the internet on their phones, so the majority of picture sharing could not be through picture-sharing services like Flickr or Facebook.

A good reason why is of course that secretive part to mobile phone messaging that is so addictive with SMS. The Pew Study reported that 15% of US youth admit to receiving sexually explicit or nude pictures from friends (meaning in all likelihood the number is far bigger). You can more 'safely' send a picture that the parents might not like, if you use the MMS feature on your phone, than posting it on a social networking site, where your parents may see it too.. So don't think MMS will end anytime soon. The US FCC has just released its latest cellular industry market study for the USA last week. They found MMS messaging in the USA grew 152% in the latest 12 month period, yes MMS traffic more than doubled in the USA in just one year.

ULTIMATE ENGAGEMENT MARKETING PLATFORM

So what do we do with MMS? Yes, we can use it to send pictures, that is not what I argue is the main utility from MMS. The main utility is media content. Lets have morning TV shows send MMS cooking recipes like they do in the UK and the soap operas send a teaser 5 minutes from tomorrow's episode to fans at the end of today's soap opera episode as they do in South Korea, and have the TV's top chefs give cooking advice like Poland's top TV chef does with Knorr. Lets have brands engage with customers like BMW did with its winter tyres MMS campaign in Germany. MMS is perfectly suited for advertisers, because of its enormous reach - bigger than the internet, print or TV - and because MMS is inherently interactive, and is as easy to use by consumers as SMS. Blyk out of the UK showed tons of clever engagement marketing campaigns starting with the iconic L'Oreal MMS campaigns. We can deliver coupons, basic advergames, music, video clips, pictures and longer form news stories via MMS. It is the ultimate media channel and the ultimate engagement marketing platform. But lets not condemn it just because we don't like to send pictures using it haha..

MORE INFO

So, if you would like to have more info about messaging on mobile, I have a free 2 page pdf document  for you, called a "Thought Piece on Mobile Messaging" (note that is not specific to MMS, it covers all major mobile messaging types including SMS, premium SMS and MMS). If you send me an email to tomi (at) tomiahonen (dot) com asking for it, I will send you the Thought Piece by return email. All data in this article tha tis not otherwise referenced, is source TomiAhonen Almanac 2010 (free sample pages at this site).

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