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SOURCE Frost & Sullivan
By Marc Einstein, Industry Principal for Digital Media and Telecoms, Frost and Sullivan
BANGKOK, Thailand, Dec. 6, 2013 /PRNewswire/ -- 2014 is shaping up to be another exciting year for the Thai ICT market, as mobile broadband is finally gaining momentum in the kingdom. Operators will benefit from increased smart device usage, but at the same time will struggle with competition from OTT services. Fixed broadband growth will remain low, while regulatory challenges over mobile spectrum will continue to impede growth while the mobile gaming market is set to flourish.
1.Smartphone customer migration will be the key challenge for mobile operators this year
The Thai mobile market currently has 15.3 million smartphone users which represents roughly 25% of the domestic mobile user base. In 2014 we believe that encouraging mobile users to adopt smartphones will be the key challenge for local operators, as revenue from data services, especially using 3G services will be the best way for operators to stabilize their ARPUs in the face of cannibalization of voice and texting services from OTT platforms. The smartphone market will expand steadily in 2014 to reach over 20 million users and roughly 38% of the total mobile user base.
2.Tablets will also continue to grow quickly, but will remain a niche market for the time being
Tablets ownership in Thailand will grow strongly in 2014 but will remain a niche product in the kingdom for the time being. We believe that tablet ownership is currently about 6% of the market with 4 million tablet users, but we expect this number to increase to 7 million users in 2014 or about 11% of the population. Tablets will grow strongly as users continue to buy tablets instead of PCs, and Thai game developers should put more emphasis on tablet based gaming as tablet users spend considerably more on tablet games compared to smartphone games.
3.Android will remain the dominant mobile operating system in 2014 in the Thai market.
Android is the dominant operating system in the Thai market currently holding 70% market share of smart device owners in the country. We expect Android to increase its market share to 78% in 2014, largely due to a migration of users away from Blackberry but also due the increasing inflow of low-end Android devices mainly coming from China. We do not expect any significant traction for Windows smart devices in Thailand in 2014.
4.LINE will continue to be a major disruptive force in the Thai market in 2014
Since its launch in the Thai market in Q1 2012 LINE has become a dominant force in the market, and with over 18 million users it is even catching up with Facebook which now has over 25 million users. Naver has successfully partnered with a variety of local content providers, and has been the top grossing app in the country largely due to the popularity of its stickers. We expect that LINE will continue to increase its service offerings in the market and continue its success in the coming year.
5.Mobile revenues will continue to increase, although margins will be lower
We believe that the mobile market will still grow in 2014, although at a lower rate that what the market saw in 2013. Mobile operator revenue is expected to grow at 8% in 2014 due to increasing handset sales by operators and increasing 3G usage, although this will be hampered by lower mobile voice revenue and especially SMS revenue which will be hurt by customers using OTT services such as LINE, WeChat, Skype and Facebook which in turn will hurt margins.
6. Fixed broadband growth will stagnate
The fixed broadband market will not grow rapidly in the market as operators will mostly focus on upgrading existing infrastructure to faster speeds as opposed to extending coverage. Household broadband penetration is currently 24% and we expect this will increase to 28% by the end of 2014. Thailand should consider adopting a national broadband plan similar to that of Malaysia which has been very successful in increasing coverage.
7. Spectrum allocation will still be a regulatory headache
Mobile spectrum allocation will continue to be a huge issue in the country as operators prepares to deploy 4G LTE services. Thailand urgently needs a transparent spectrum allocation system which conforms to global trends, as the previous system has resulted in Thailand having some of the lowest 3G usage in the world. Current regulation has not allocated enough spectrum for a full mobile broadband deployment and we expect that full LTE coverage will not happen until 2016 at the earliest.
8. Mobile gaming will grow significantly and surpass US$100m in revenues
The local mobile gaming sector is still very small compared to most APAC markets, but is growing strongly due to smart device uptake and more localized content. PC Online MMO games will still dominate the market with over a 50% market share, but mobile games will be the fastest growing while console sales will be stagnant. The Thai mobile gaming market is dominated by LINE games such as Pokopang and LINE POP, and casino games also remain popular. Most foreign companies to not localize their content into Thai script, creating an opportunity for those that do. Thailand also has the potential to become a major hub for game production, and the government should do more to encourage foreign investment in the sector.
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