Popular Communication & Messaging Apps by Country

I spent the past week reading forecasts and reports from Goldman Sachs, McKinsey, Morgan Stanley, Deutsche, etc., etc.

It sounds a bit boring but really not. It was actually fun to read, consume, compare and contrast the different reports.

Quick takeaways:

Deutsche Engagement

Deutsche’s chart of messaging apps used in Brazil, Russia, China, South Korea, Japan and the US.

culture and distro

 

Cross referenced with AppAnnie’s spend by country chart tells us:

  • S. Korea consumes and spends on content. Kakao Talk’s success is likely due to that ecosystem.
  • Japan leads in gaming, explaining the success of gaming companies as Capcom, DeNA, Gree, et al., and the reason the Japanese spend the most in both Google Play and iOS stores. Also explains success of LINE
  • US has wide range of content spend but the US is a distinct market from the rest of the world with different economical factors.

This chart also from App Annie interests me more, as it shows spend vs device:

Device per spend

I agree with Goldman Sachs, stating BRICs (Brazil, Russia, India and China) are 3-5 years away from global scaling and spending.

South Korea, with the highest spend and technological advancements, is like China where the ecosystems are so tightly intertwined it’s a tough market to penetrate. Fun to watch, but just like China, certain models and strategies cannot be emulated because of the reliance on proprietary strong holds.

For people looking to enter markets, Japan, UK and US are the likely bets. Or at least if I were a VC, that’s where I’d be placing bets.

Still digesting but as my thoughts parse, I will be sharing.

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Scale of Chat Apps in Asia

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I don’t think America still understands how big chat apps are in Asia and that’s ok. Like I keep saying, the US is email, iPhone (iMessage), SMS and Facebook Messenger reliant.

In Asia, it costs money to SMS. It costs money to make phone calls. Not as much as Europe maybe, but it still adds up. The US may be the only country where SMS and voice are flat fee, unlimited.

Because we are charged by telecos, chat apps have become a solution to avoid fees for something basic and ubiquitous as communication.

In Asia we are so chat app reliant, my personal and even work emails have been reduced by at least 85%. The only people who actually email are my American friends and colleagues.

Because I stopped relying on email as my main form of communication, I now see what a massive burden email is and how much of my time email dictated.

Chat apps don’t restrict texts with character counts, but because of the context of the core products (real-time interactions, short mail, instant messaging like features and functions), it cuts out a lot of unnecessary bullshit and people just get straight down to the point.

Granted, this is only from my experience and doing business with the Japanese, but I much prefer interacting with colleagues on LINE or company approved Viber as we communicate more efficiently. (Quick contextual background: the Japanese language has four different ways of speech, two honorifics. The honorifics require buffer language — a lot of set phrases before getting to the point. Chat apps tend to cut all that out.)

Aside from the communication utility, chat apps in Asia are evolving from tools to full fledged platforms. I keep repeating this but it’s almost necessary, as there are people still comparing WhatsApp, Viber, Telegram and Snapchat to LINE, WeChat and KakaoTalk. WhatsApp, Viber, Telegram and Snapchat are used for communication only. With LINE, WeChat and KakaoTalk  usres can text, call, video chat, edit photos, play games, get coupons/discounts… and now WeChat allows their users to shop. In their app. Asian chat apps are more than chat apps, they are turning into ecosystems.

The Asia chat app market is truly something else but I think one has to live in China, Korea or Japan to experience the phenomenon for themselves. At least for me that was the case. In a mere six months chat apps have completely changed the way I communicate and also purchase via mobile.

God, I love technology and I love being in Asia seeing, breathing and living the evolving products and market.

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.