M A R K E T I N S I G H T

The Future of Mobile Messaging:

Content is King

By Lawrence Lundy – ICT Consultant

Frost & Sullivan | Market Insight

2

Frost.com

MOBILE MESSAGING APPS SHOW HOW MOBILE USERS CAN BE MONETIZED

With the recent $3 billion cash acquisition offer for SnapChat by Facebook, the $11 billion market capitalisation of Twitter, and the $1 billion acquisition of Instagram by Facebook, it is clear that companies successful on mobile are valued extremely highly. Despite their high valuations, none of these companies are profitable; their value is based on number of users and user growth. There is a market for mobile that has even larger user bases, with even faster user growth, and has managed to generate significant revenues: mobile messaging applications.

The numbers can be staggering; WeChat, the Chinese messaging app, has 272 million monthly average users, and WhatsApp, a California-based app, has 350 million. This can be compared to Twitter with 215 million users or SnapChat with 5 million users. Even smaller mobile messaging apps have huge installed bases, such as LINE with 280 million and KakaoTalk with more than 100 million. Unlike micro-blogging apps or photo-sharing apps, mobile messaging has seen success in generating considerable revenues in a variety of ways.

This paper will explore a few of the most important mobile messaging applications and the business models they are employing. It will argue that these applications can no longer be seen as mobile messaging applications, as they offer a far richer experience with far deeper user engagement than the SMS experience that they are replacing. These applications should be seen more as content distribution networks, and their ability to create relationships between users and content on mobile puts these applications in direct competition with Twitter and Facebook.

Part 1: The market is regionally fragmented, with WeChat dominating in China, WhatsApp in Europe and Latin America, and Facebook Messenger in the United States

Part 2: Mobile messaging is a uniquely volatile market, with growth driven in the early stages by teenagers and apps that do not lock in users

Part 3: Premium content, brand development, gaming, and in-app payments offer revenue generation possibilities

Conclusion: The companies that expand beyond messaging and develop a content distribution platform will win in this market

T: @lawrencelundy L: http://uk.linkedin.com/in/lawrencelundy E: lawrence.lundy@frost.com

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