Facebook acquisition of WhatsApp
- Messaging apps are currently used by more than half of smartphone users worldwide and WhatsApp dominates this market with a 45% user market share. They have user engagement levels that are the envy of the industry. When WhatsApp recorded an all-time high of 10 billion outgoing messages in a single day in June 2013, this equated to more than 30 messages sent per person per day.
- We estimate that IP messaging volumes were over 10 trillion in 2013 and expect them to almost double in 2014 and will reach 37.8 trillion in 2018 (a graph is available of this upon request). We forecast the number of users on smartphones to increase from about 1 billion in 2013 to almost 3 billion in 2018. These kinds of figures capture the attention of the major Internet players.
- Facebook needed to make a bold move to retain relevance among younger users, the core constituency of messaging apps. Facebook failed to anticipate the way that messaging apps have transformed social networking on mobile devices. Facebook's own Messenger app has slipped in the rankings and WhatsApp Messenger has emerged as the global leader. WhatsApp has a user base of 450 million (with smartphone penetration rates as high as 80% in some countries) with a stronger bias towards the young than Facebook (a graph is available of this upon request).
- How will Facebook monetise the WhatsApp acquisition? Facebook has stated that it will not introduce intrusive ads but there are alternative routes to advertising revenue. It can use WhatsApp data to enrich its social graph and identify influencers in communication networks. The data can be used to enhance its service to advertisers via established channels. It will also seek to emulate the likes of WeChat, Line and KakaoTalk by monetising gaming, stickers and in-app purchases.
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