Feature Article

September 18, 2012

Mobile Messaging Drives New Mobile Internet Revenue Opportunities in Asia

A recent article we’ve published suggests that APAC retail telecommunications revenue growth will increase by $94 billion over the next five years or so. A key component for that growth will be the emergence of simple 3G networks that open up both the mobile Internet and mobile Web to hundreds of millions of users who did not previously have access.

These new mobile users will also gain access to mobile messaging capabilities that include instant messaging (IM).

Instant messaging in general has taken off in a big way in Asia, although it is the more sophisticated and advanced regions such as South Korea and Japan where the dominant market penetration has occurred. A few areas in China have also emerged, though by and large China still remains a mobile market on the cusp of taking off.

It isn’t anywhere near where Japan and South Korea are in terms of overall large scale mobile sophistication, but China makes up for it in sheer size and volume of clientele.

The IM story is a very interesting one. What began life as a set of simple IM messaging services mobile apps has evolved into a mobile phenomenon, with the mobile apps taking on almost Facebook-like growth. The key messaging apps have managed, over several years, to pull in at least several hundred million active Asian users. That level of subscriber growth creates non-trivial mobile/online environments that take on lives of their own.

Once this sort of growth takes control, the next step in growing services beyond mobile messaging (while still relying on the core mobile messaging framework to work) means expanding capabilities to include mobile commerce and mobile games. And the key mobile app developers behind the largest mobile apps are doing exactly this.

Line, for example, allows users to purchase elaborate emoticons, called stickers, which can be sent to friends while chatting. Younger people love them and spend real money on them.

Line has grown to 60 million mostly Asian users, at least 29 million of which are based in Japan. Line’s developer estimates the number of users will reach 100 million by the end of 2012. Kakao Talk is another service with a current user base of 60 million users. In the case of Kakao, more than half reside in South Korea, where the service originates.


Image via Shutterstock

Other successful mobile messaging services include India-based Nimbuzz, which has already reached 100 million users, 31 million of them in Asia, and WeChat, which was created by China-based Tencent, and which is nearing 200 million users.

All of these apps have evolved into full-fledged mobile destination sites. The success of these mobile applications means that people are becoming increasingly mobile, and that they are accessing online services through their mobile phones and other wireless devices. The massive numbers involved – and the conversion rate to mobile Internet and Web access creates new opportunities.

What began life as simple mobile messaging-centric apps has created opportunities to create new service areas such as gaming. Following the original Facebook model, the mobile messaging services are free – the challenge for the players here is to figure out how to deliver the new services while also developing effective plans for monetizing the services. Monetizing services – or at least trying to do so is like walking a fine line – just as the opportunity is there, there is also a very real possibility of alienating what has to date been a large and loyal user base.

Not an Advertising Platform

Part of the appeal of the applications is the ability to create an unlimited number of group chats and the ease with which connections can be made — the apps automatically create a contacts list by harvesting the contacts list saved in the phone. At the same time, managing privacy is simpler than on a social networking site. This simplicity of use, in a very strong sense, makes the apps themselves unobtrusive. The apps do their jobs at no cost to the user, and they do their jobs by essentially staying out of the way.

The developers of the major IM programs have realized the value of staying out of the way, and they have also understood that ad-based revenue generation – which of course is the current monkey on Facebook’s back – is not unobtrusive. Developers therefore seek ways to add value to services they can charge for but remain out of the way of users doing what they want to do. The previously noted stickers/emoticons that Line sells is an example. Users must go out of their own way to make a purchase and put them to use – if they don’t want to use them, they stay hidden from the user experience.

Line messenger is now expanding to photo editing and sharing, social games and Twitter-like features that allow users to follow corporate brands or celebrities, its windfall came from sales of virtual goods. Sales of the stickers — which are sold as a $1.99 bundle of cute pictures of cartoon characters or animals — have been its biggest revenue generator. In August 2012, users spent about $3 million to send the elaborate emoticons when they chat with friends.

Kakao Talk has added a free voice calling service, a gift shop to send Starbucks drink coupons to friends, and options for receiving weather and news, discount vouchers and music videos. As we noted earlier, the app has been wildly popular in South Korea, so much so that even a small disruption in service makes news. Of particular interest has been the fact that it has actually caused the phrase “let's do ka talk" to become part of the local collection of idioms.

South Koreans are typically connected to multiple group chats on Kakao Talk, holding conversations in separate chat rooms with family, a group of close friends, coworkers and other circles. In fact, South Koreans used Kakao Talk for 62 minutes a day on average in August 2012, compared with 17 minutes on Facebook's Android application, according to Appsooni.com, a company that compiles data on Android application usage.

Want to learn more about today’s powerful mobile ecosystem? Don't miss the Mobility Tech Conference & Expo, collocated with ITEXPO West 2012 taking place Oct. 2-5 2012, in Austin, TX. Stay in touch with everything happening at Mobility Tech Conference & Expo. Follow us on Twitter.




Edited by Braden Becker


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