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Google and Snapchat use AI and wearables to shake things up

10 Oct 16

Two major announcements happened in the world of OTT communications in September: Google launched the smart communications service Allo (which has integrated AI, reinforcing the role AI will play in communications) and Snapchat rebranded itself as Snap Inc. with the launch of Spectacles (i.e. sunglasses with a circular-view camera to record and share videos on the Snapchat platform). As a messaging player, Snapchat is taking a bold step into the wearables domain, demonstrating that communications players are quickly extending their scope well beyond communications.

OTT communications players need to take a leap of faith to combat 1 billion–strong WhatsApp

The combination of Duo (video calling) and Allo (smart messaging) is a clear move by Google to try and hold on to its position in the OTT communications space. Given that Facebook Messenger has more than 900 million monthly active users (MAUs) and WhatsApp has crossed the 1 billion MAU mark, there is tremendous pressure on players such as Google and Snapchat to find ways to not only grow in the market but also to differentiate themselves in this increasingly crowded space.

OTT players have an uphill battle when trying to compete with Facebook Messenger and WhatsApp and must take a few risks to accelerate growth. Some of these risks may not pay off immediately: For instance, Google’s Allo has received an underwhelming response because the AI agent is not mature enough to seamlessly carry out tasks and doesn’t match consumer expectations.

The introduction of AI in Allo is an acknowledgment of the fact that AI will become an important component of communications services in the near future. However, its less-than-perfect service is the result of a quick response needed against Facebook Messenger’s growing bot army which, as of September 2016, stands at more than 30,000 bots.

Snapchat has done well to differentiate itself with its strong focus on media and ability to share experiences, especially through the curation of live events through the Live Stories feature. Live Stories is in sync with an emerging trend of live video streaming and is doing extremely well with the younger demographic.

Hot on the heels of Snapchat, Facebook introduced Facebook Live to compete in the live streaming space. (In fact, Facebook has paid more than 140 media companies and celebrities to create content to accelerate the adoption of the service.) During the 2016 Olympics, more than 50 million Snapchat users watched videos of the event on the app.

Snapchat’s Live Stories feature is not always truly live because the feature allows users to access video well after an event is over. But it does offer the unique ability to share an event through the eyes of the user. Snapchat excels at making users part of the content rather just passive viewers, which has contributed to its popularity.

Snapchat has now taken this a step further by introducing Spectacles – sunglasses priced at $130 that can record and share 115-degree videos seamlessly on the platform. This allows users to share content quite literally from their perspective – which will lead to a growth in content shared on the service.

It could also create yet another revenue stream for the business. Snapchat’s move into wearables is a first for any OTT communications player and Ovum expects more players to branch out in this manner. Unlike Snapchat, Google has struggled to keep up with the trend of real-time experiences and therefore must rely on features such as AI that leverage its strengths in search to try and stand apart from the rest.

The OTT communications market is increasingly witnessing major announcements from the key players, such as the recent overhaul of the iMessage service and even Line stepping into the MVNO space. OTT players are realising that messaging is an important platform for the growth of digital services and is slowly becoming a hub for consumers’ digital life. But given that WhatsApp has more than 1 billion MAUs, the rest of the players need to take bold steps to differentiate themselves in the market and remain competitive.

Article by Neha Dharia, Ovum analyst

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