How Messaging Apps are Navigating Revenue Streams

By Jennifer Shambroom, March 12, 2014

instant messagingWhen Facebook spends $19 billion to acquire a company , everyone takes notice. Almost in unison we queried, “Could Whatsapp really be worth THAT much?” Macquarie bank predicts that the messaging app industry will generate $25 billion in annual revenue by 2017, which includes a predicted user base expansion from the current 1 billion to almost 3 billion. This means that a huge number of the global population – nearly 40% – will be participating on messaging apps.

We are becoming all too familiar with the meteoric rise of internet collaboration and communication platforms. Just as we saw with Facebook, these chat apps are evolving into advertising streams and gaming platforms. Line, created in Tokyo, is one such example. The success of its in-app games led to a five fold revenue increase from 2012 to 2013, to roughly $120 million. Despite such examples, Whatsapp has vowed to not integrate advertising or games as additional revenue streams.

With Whatsapp’s promise it might prove more difficult for Facebook to tap into the app’s revenue potential. Though with more than 450 million active monthly users, Whatsapp isn’t going anywhere in the near future. Additionally, Facebook has hinted at integration of video and voice capabilities into Whatsapp, possibly creating a new stream of revenue.

An important aspect to note about chat apps is that they often seem homogeneous, even interchangeable. Within the 24 hours that Whatsapp went offline on February 22, Line reported a gain of over 2 million registered users. While that can be taken with a grain of salt, it is clear that these apps have not differentiated themselves sufficiently enough to keep a firm hold on users or create loyalty.

With a fairly fragmented market and uncertain revenue streams, where do you stand on messaging apps?

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