WhatsApp: Time to Grow-up and Start Making Money

There is a piece on All Things D about WhatsApp’s CEO calling out other messaging apps and their “bullshit metrics”.

“We want to steer the conversation to be about active users, not registered users,” said WhatsApp CEO Jan Koum. “We’re a bit fed up and frustrated about people talking about registered users. We think it’s important for us as a leader in the space to speak up and be ethical.”

…the CEO, Jan Koum says.

In a competitive space as messaging apps, it’s no longer just about mass adoption. WhatsApp is the most adopted in markets where users do not spend.

These charts basically speak for themselves. Their pay-per-dowload and one dollar annual fee is cute, compared to the business oriented players as Line, KakaoTalk and WeChat.

Messaging apps are not social networks. They are communication tools and now, moving on to becoming businesses, shifting from apps to e-commerce.

I can’t be the only one who thinks it’s peculiar how WeChat has the most MAUs (monthly active users), yet they are profiting the least.

Calling out other players in the messaging space is nice and all but “we have the most users! we are superior!” mind-set is no longer enough.

Time to grow-up and answer the question: Where is the monetization strategy? #1 in MUAs, last in revenues. Hi, Facebook.

*All Things D piece is here
chart sources 1, 2

When Japanese Efficiency Meets Creativity

Lovely example of when Japanese efficiency meets creativity.
From Peatix, the EventBrite from a Japanese startup.

…sadly, I don’t think a lot of venues will adopt, as lines creates the illusion of popularity, which leads to need then ultimately, conversions.

Would love to see US retailers adopt this to prevent Black Friday madness though (for example). And this, is why I still believe in Japan.

Why People Should Care About Viki

My Twitter and Facebook are filled with mostly Americans and Europeans. Americans, only talk about American news (maybe a few China this-and China-that when the FT headlines them). Europeans, are 90% US and a few domestic posts here and there too.

I kind of get the feeling no one really talks about Asia and well, that’s ok. I guess that’s why there is a need on the planet for people like me. I digress, where was I? Oh. Viki. Particularly,Viki and Baidu’s partnership.

This is a BIG DEAL and All Things D nails why:

“Viki, which has already done several partnership deals in China, will be Baidu’s first streaming partner from outside the country, which is important given that big players like Netflix and Google’s YouTube are not represented there.”

Just a reminder, Asia has the largest distribution of world wide Internet audience:

global market

So for Viki, to secure a partnership where YouTube, Netflix, et al., aren’t is certainly a big, big, BIG deal.

I’m just sorry more people, well, don’t really give a two shits.
*FT’s coverage is pretty legit too

Messaging Apps: What’s Next

Several have asked “what’s next?” after this post on messaging apps was published. By what’s next, I’m assuming people are wondering what I see as the ‘next big thing’. There are several ‘what’s next’ questions that need answering. Here is one. Who will win the messaging space?

I went into details about Line in particular because they are taking the right steps in differentiating themselves from the other messaging apps.

  1. product evolution — Line, continues building new features and functions that fit user needs. Most recently they released an event app Band, that is like Facebook events but a million times better.
  2. business models — like I said, stickers are not after-thoughts or novelty items. Stickers, are part of their monetization strategy. Line also does merchandising. They license their characters and collaborate with brand partners to bring things like thisbnr_crocs
    Aside from Crocs they partner with toy makers, accessories makers — basically about any company — to bring stuffed animals, plushies, cell phone accessories, and of course, stickers. [1, 2, 3] They recently collaborated with Maybelline to even bring Thailand users flash sales. Their next step, is eCommerce. Obviously.

Because of the above, I believe LINE will be the ultimate of messaging apps. And I still stand by my statement they will not successfully localize in the US. Messaging apps don’t have a place there.

As for the the Snapchat counter-argument, I am pasting a response to a comment.

I commend Snapchat and indeed their rise proves there is a need but if you look at the feature differences, you, too, will agree Snapchat is not on the same playing field as Line, KakaoTalk and WeChat. WhatsApp, Kik and Viber aren’t even on their levels.

Snapchat serves as a fun tool. WhatsApp, Kik and Viber are communication utilities like Line, KakaoTalk and WeChat. The differences are, the latter three have business models and strategies. Where the former are just…building to build.

In the American market, Instagram (if they lay out their product pipeline correctly and ultimately include text communication sans comment thread) will ultimately win the space (in the US).

As for ‘what’s next’, as in what is the next big thing?  Easy: wearables.

I think it’s absolutely fascinating though, how the US is moving back into hardware, while the software shift is happening around Asia. God, I love technology.

Added. Wired agrees wearables are what’s going to be hot, too.

Japanese Mobile Market — a Brief History

Japan is an odd land where things are so advanced yet it can be backwards. Several times, I’ve been asked to fax my e-mail address, which sums up how ass backwards this country can be.

Back when Americans thought the Nokia 8890 was a status symbol, Japanese users were flashing their fancy flip phones (feature phones, as we call them here) with stunning color screens, amazing motion graphics and incredible audio speakers. Aside from basic phone functions, people browsed the Internet. Listened to music. Played games. Even watched TV on flip phones. I remember each Tokyo visit in the late 90’s-early 2000’s, looking down at my pixelated turtle-colored Nokia screen and thinking: wow, Japan is the future.

Fast forward to 2013 and that’s no longer the case. At least with mobile phones.

If you think Google is evil and Apple is too Draconian, they have nothing on Japanese telecoms. Japan is dominated by three major mobile carriers: NTT Docomo the Japanese equivalent of Verizon. au/KDDI which is closest to AT&T and SoftBank that would be T-Mobile, since they are the newest player in Japanese telecom.

Docomo and KDDI dictated the mobile landscape for years. I say that lightly but in a country that is mobile-centric, controlling mobile is controlling most of Japanese tech. Telecoms maintained closed market places, ensured software was proprietary, steered hardware movement, had a grip on the content space eg: ringtones, wallpapers, video, music, and even managed email.

When the iPhone arrived to Japan in 2008, it basically turned the market upside down.

SoftBank — the youngest carrier of the three — took a gamble and was the only telecom in Japan to carry the iPhone. au/KDDI woke up three years later following SoftBank’s lead in 2011. Docomo, the most dominant carrier in Japan, refused to carry the iPhone until the 5s. Yes, the 5s in September of this year. They tried to sustain their old world order. They ignored the iPhone. They pretended a market shift wasn’t happening and refused to accept the change of consumer needs until the last possible minute.

Docomo’s stubbornness didn’t seem too tragic in 2008, yet five years later, their dominance of Japanese marketshare isn’t as prominent as it once was. At a total of 62 million subscribers, they are still the leading carrier but SoftBank’s growth rate is incredible.

In only five years, they doubled their subscribers, a 78.69% subscriber difference. This number is insane.[source]

This is only the beginning for the Japanese mobile industry and boy, am I glad I am here.

Asia Lacks iOS Talent

This morning, LINE had a major update.

unnamed-1

Their new features are only part of the reason LINE differentiates themselves from the other messaging apps. They are truly, the leader in this space when it comes to long-term product and business strategies. Man, they are so smart.

The one thing that really blows my mind is how the iOS app is so much crappier compared to the Android app.

I only user banner notifications for apps because the little red circles drive me batty. Before, the banner notifications used to tell me who sent a message with a preview.

After the update:

unnamed-2

What is ‘MT’? Manual Transmission?? More Text??? Mt. Fuji???? Margaret Thatcher?????
This just makes no sense.

Hoping it was a bug, I switched the notifications to alert style and…

unnamed-3

Ummmm same thing. I really wonder what MT means.

Check out the notification for the Android though:

unnamed

Legit.

I don’t understand the thinking behind the iOS notifications but that’s neither here nor there. This only goes to show the dominance of Android over iOS in Asia, and how more emphasis is placed on developing on the former than latter.

Living in Asia makes me really want to switch to Android.

KakaoTalk’s Challenges

While the US is still trying to figure out how to jump on the messaging app money train, the downfall of messaging apps has begun in Asia.

KakaoTalk is Korea’s most dominant messaging app and an interesting analysis was just released [source].
A few takeaways:

  • KakaoTalk has 130 million subscribers. 35 million of them are from Korea.
  • Korea has approximately 37 million smartphone users
  • Kakao Japan was set up in July 2011. They have a joint venture with Yahoo Japan
  • Kakao is also in Vietnam and Indonesia
  • 9 of their games have at least 100 million cumulative downloads
  • since July of 2013, they have not hit 100 million
  • new subscriber acquisition rate is slowing down
  • they are also losing ground in overseas markets

KakaoTalk’s monetization strategy is lacking and heavy reliance on mobile gaming is a bad idea. Just look at Gree, the Japanese mobile gaming company. Their net profit Q1 fell 74% from the previous year and it keeps declining [source]. Even if KakaoTalk boasts game revenues of $300 million in the first half of the year [source], KakaoTalk’s user acquisition rate is declining. Their games are no longer as popular. They will see a shortage in projected revenue unless they come up with a new plan.

Their localization strategy is a failure. A joint venture with Yahoo! Japan should have catapulted them to mass penetration quickly, for in Japan, Yahoo!  is still the most visited website source. But they are still very much behind LINE, that entered the Japanese market 15 months after KakaoTalk. I also wonder how KakaoTalk is approaching growth in Vietnam and Indonesia.

KakaoTalk will stay dominant in S. Korea, since they have the most users in their home base, but LINE is also owned by Naver. Naver is a S. Korean company and they also have home base advantage. Unless KakaoTalk figures out a way to scale the servers (they are experiencing server errors and outages. Five that I could find, to date. 1,2 ), users can quickly move to another service as fast as they onboarded. Especially, since messaging apps are the way we communicate in Asia. An outage on KakaoTalk or LINE  in the US, is like Gmail or iMessage going down.

The messaging app space is peaking and it’s so competitive right now. It’ll be interesting to keep a close watch on KakaoTalk to see how they will evolve their product and strategies to stay a major player.