Messaging apps are dominating the download and revenue charts at the moment with huge user numbers and traffic figures being bandied around.
But these apps are going to need more than huge user numbers if they’re to make money in the long term. As a utility they’re great, but something else is needed to ensure they remain viable business propositions.
WhatsApp, currently the biggest messaging app of them all, recently said it had 300 million active users, while South Korea’s LINE is aiming for the same number by the end of the year.
Tencent now has more than 100 million users outside its home market of China with WeChat, the international version of its Weixin app. And that’s not to mention the likes of Viber, KakaoTalk and Skype who all have millions of users.
Such has been the impact of these messaging services that they are increasingly eroding SMS revenue: research published in April said that by the end of 2012, more instant messages were sent via chat apps per day than SMS text messages.
But there are signs that messaging apps are evolving. Telefonica, for example, recently closed its TU Me messaging app to focus on its more integrated comms app, TU Go, which was launched in March.
TU Go allows users to make and receive calls and text messages and provides voicemail functionality on any supported device. And it does this from their existing O2 number, providing a single point of contact. Positive user feedback apparently prompted Telefonica to focus on TU Go as “a greater commercial opportunity”.
The closure of TU Me could be seen as a continuation of the lack of success afflicting previous operator-led messaging apps, but the focus on TU Go could provide a clue about the future direction that messaging apps could take.
With some apps now claiming to have hundreds of millions of users, there is only so far they can continue to grow. With 3.2 billion mobile subscribers, many of whom currently don’t have phones capable of supporting messaging apps, the addressable market isn’t unlimited.
Clearly many people will have more than one of these apps on their phone, for different contact groups and geographies, but the growth in user numbers can’t be maintained in the long term.
Messaging apps are likely to become one of the main ways people communicate alongside more traditional voice and SMS services. But in order to continue to grow and expand usage, they will need to evolve, becoming either an element in a broader set of services or a platform on which other functionality can exist.
Many messaging apps already have their own unique selling point. LINE, for example, derives much of its revenue from Japanese users buying stickers to send to friends. The LINE platform also includes LINE Camera, which hit 30 million downloads in April, and LINE Game, which reached 100 million downloads in March.
Tencent recently added a sticker store to its Weixin/WeChat apps, but also introduced a game centre and mobile payment functionality.
By further broadening the services offered in this way, the companies behind the messaging apps could tap into new revenue channels directly or through other developers that are able to ride on their coattails.
Third party developers could create new services that broaden the use of messaging apps — and monetisation opportunities — creating a new app ecosystem in addition to those provided by mobile operating systems. Messaging app players could then take a cut of the revenue that these services produce.
There is likely to be a time, not too far in the future, where these apps reach saturation point —everyone will have at least one messaging app on their smartphone, like they currently have email, a camera or a news app.
This will be when messaging apps stop dominating the download charts and new categories of apps will begin to replace them. But if messaging apps become platforms for other services, their monetisation potential could be much more long-lived.
Messaging apps will undoubtedly become less newsworthy than they are now, but they have the potential to become part of the very fabric of mobile communications.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members