The rise of the messaging app has been something of a phenomenon. Faced with a simple choice of ‘pay’ or ‘don’t pay’, teens have turned in their droves to the free messaging apps which, in turn, have benefitted from a snowballing in user base which continues to gather momentum.
If we were in any doubt as to the significance of the shift, WhatsApp, one of the larger players, now claims to have a bigger userbase than Twitter, and by processing a staggering 18bn messages a day, dwarfs its rival Facebook (10bn).
These ‘over the top’ messages, so called because of their avoiding of sms charges, are expected to double to 41bn this year. Figures like that are not without impact. For example, in Spain, sms revenues have fallen from €1.1bn in 2007 to €758.5m in 2011. While sms isn’t dead (according to some it’s still a $120bn industry) telcos have certainly been hit hard.
And in place of the sms market, a new war is being fought for dominance in this ‘over the top’ market. It’s a highly fragmented scene, with everyone from hardware companies to software startups jostling for audiences. WhatsApp, Kik, iMessage, SnapChat, Waneloo, LINE, BBM, Tellit, Viber, Voxer, Skype, Facebook Chat, WeChat – are just a few, and different apps have different dominance in difference geographies.
WhatsApp believes it leads the pack, and it could be about to get much bigger: Nokia are launching something already dubbed the ‘WhatsApp Phone’. The Nokia Asha has a physical button which shortcuts to the app and, being one of Nokia’s cheaper handsets, is aimed at emerging markets. It’s likely to lead to more explosive growth. Blackberry have finally woken up and smelt the coffee, making their popular BBM service more widely available on iOS and Android devices.
Meanwhile, Facebook’s Home mobile project, which tried to deeply integrate messenger services, has been sent back to the drawing board by consumers and manufacturers alike.
A fascinating battle lies ahead for growth and survival. One way or another, messenger apps will need to make money at some point too. Ultimately, the tried & tested convention of monetisation through the latent potential of large userbases does have a bottom line.
WhatsApp have insisted they will not pursue an advertising model, which leaves two other obvious routes. The first is a subscription model, which they have promised will arrive across all new downloads of their app this year – it’ll cost $0.99. The second route to cash could be data. Effectively, these companies know with whom we communicate most, i.e., our closest friend networks. It’s something Facebook place high value on – and others will be wise to it.
For the telcos, nothing is off the table. Over in Japan, NTT Domoco, the largest telco, has just announced a partnership with the largest messenger service there, LINE. Back in March we covered a glimpse of telcos’ futures through O2’s device agnostic Tu Go app, which facilitates quality comms through any iOS or Android device, at a small charge. With the likes of 4G on the horizon, such services have every chance of offering highly desirable premium services.
At the moment, consumers seem content with an array of messenger apps on their phones. But it’s a status quo that we don’t think will last too long…
