UPDATE 20th Feb 2014: Since this article was written, Rakuten acquired Viber and Facebook acquired Whatsapp
They start off as apps, apps that we use daily. They add service after service as they slowly evolve into an ecosystem of their own and before we know it. It becomes one of the de-facto places we visit on a daily basis to get all the things we need.
You may have heard of KakaoTalk, Line and Wechat. Kakao dominates Korea, Wechat is the de-facto chat app in China and Line is massively popular in Japan, and most of the rest of Asia. You may be mistaken in thinking they are messaging apps, similar to whatsapp and Viber, but you’ll be mistaken. They have evolved past that point and are now platforms in themselves.
I’ll look at each app to see what they are providing and to see where they are potentially heading.
Kakao is dominating the South Korean landscape, 130 Million users, topping the revenues and download charts. Starting off as a messaging service, it is also a game platform and will begin rolling out a content platform. With an expected $200M in revenues for 2013. With its game publishing platform, it is dominating the games section and becoming one of the main places to go to find new games (in Korea) which gives them a huge element of control over their userbase.
Line has around 280 Million users worldwide, with hugely impressive revenue figures, 31.3 Billion Yen 2013 revenue numbers up to Q3. That’s around $300M USD for 3 quarters last year.
Besides all the games they release, Line services include sticker shops, birthday cards, even extending out to create their own episodes of content - Line Town.
Wechat have approx 270M monthly active users, with their main growth in Q3 last year increasing when they started to focus on revenues by adding games and payments services into their messaging app. Raking in $82M USD in revenues on singles day alone, Wechat have been adding multiple services such as a taxi service which reported 100,000 rides in 9 days, investment services accruing $130M in its first day. You can blog on wechat and use it store articles to read.
Becoming a Platform
The evolution of these messaging apps into full fledged discovery, content, games platforms makes these apps into a platform ontop of a platform. Effectively a Trojan Horse Platform. They work because
- Sharing and network effects are built into the app from the start, it’s designed so that recommendation are easy to send, particularly because people generally do not ignore messages as it is to blank out news feeds from social media. It’s a lot more personal.
- Messaging apps is something that people will look at multiple times a day, adding additional services gives immediate access and more reasons to visit the app making it a de-facto location as these services complement your daily usage.
- As an app, you can be cross platform, Line exist on iOS, Android, Blackberry, Mac OS and Windows, it doesn’t tie you down to a specific OS or to a ‘higher tier’ platform.
- Control over the userbase, since many people tie their network (contacts) it becomes a switching cost to move to a competitor messaging app… but not hardware device or OS. This gives the trojan horse platform direct access to the user. Especially given that (wechat for example) own some of the payment and financial aspects of the user.
- Ecosystem development, wechat are working hard to integrate services from many providers such as LinkedIn. Kakao publish games from other developers. They are creating their own ecosystems on top of their platforms and are becoming a gatekeeper to their userbase whilst adding these complementary services.
For now whatsapp and Viber are still messaging apps, but they will have seen the developments in asia and are likely looking at a way to assume this type of control as a Trojan horse platform in the markets where they are dominant,.
What does this mean to everyone else?
For everyone making apps or services, it means there is now another channel to tap into users and means that there is another layer of controllers in the mobile ecosystem as a new set of gatekeepers emerge to plant themselves into the value chain and control access to users.
It’s all about owning the wallet of the end user.