WhatsApp co-founder Jan Koum just dropped several pieces of big news about his messaging giant today during a rare appearance at the DLD conference in Munich, Germany.
Here’s the roundup of news, and you can skip to No. 3 for the meaty stuff:
1) WhatsApp is just days away from reaching 1 billion active users: it’s currently got 990 million, Koum said today. He was hoping for 10 million more before his appearance but you can’t have everything. The company has previously said it was growing by about 1 million users a day.
2) WhatsApp is going totally free, dropping the 99 cent subscription that it applied to certain users after a year of free use. Note that WhatsApp never made much money from this; only around $20 million in 2013 revenue to help cover costs. Up until 2014, when Facebook FB -3.56% bought WhatsApp in a landmark $19 billion deal (950 times its 2013 revenue), WhatsApp was only charging the fee in a handful of countries like the United States and United Kingdom, where most people had credit cards and were more likely to pay for things on their mobile phones. Elsewhere like the Netherlands, WhatsApp dropped the fee because while half the country used the app, mobile payments were still uncommon. Now that WhatsApp has all costs covered and then some thanks to Facebook’s tutelage, it can afford to drop the subscription.
3) Since its acquisition by Facebook, WhatsApp has batted away questions about justifying its $19 billion price tag by making more money, saying it needed to focus on growing its user base. During deal talks, Zuckerberg had told WhatsApp’s founders that he’d give them the freedom to focus on growth alone for the first couple of years under Facebook. But that was two years ago, and now that it’s about to hit 1 billion users (equal to one-seventh of the world’s population) WhatsApp is finally going to start inviting businesses onto the network and will probably trial new ways of charging them.
Businesses have been flooding WhatsApp with emailed enquiries over how they could access the network for some time but the company has ignored all of them, according to a person close to the firm.
Many businesses have also tried setting up shop on WhatsApp in a more basic form. It’s common in Hong Kong, for instance, to book a table at a restaurant by simply texting it on WhatsApp. You can text the BBC on WhatsApp if you have a news tip. You can WhatsApp diamond experts at one forward-thinking diamond seller in London if you’re in the market for an engagement ring.
Yet none of these interactions are any different from how regular people communicate on WhatsApp, and businesses want more: analytics, infrastructure for sending messages to large numbers of customers at once, automated messages or “bots” which are fast becoming a tool for businesses on other messaging apps like Facebook Messenger, Kik, Telegram and in particular WeChat.
WeChat is the standard bearer for bringing businesses into the world of messaging. It started inviting businesses onto its network in 2013 with official accounts, and over the years has expanded the kinds of features that those businesses can use to reach out to users, including payments, advertising and automated bots for responding to questions.
Today, WeChat (or more precisely its Chinese-focused product Weixin) has more than 10 million of these official accounts, including McDonalds, Asian healthcare store Watson’s, media organisations and even the Chinese Communist Party. Around 80% of WeChat’s more-than 600 million users are now estimated to follow at least one official account.
WeChat’s broad engagement with businesses goes well beyond anything that other big messaging apps in the West have managed to achieve.
Facebook first announced it would invite businesses onto Messenger with in March 2015, with retailers Everlane and Zulily its first beta users, and since then it’s also partnered with Uber to let Messenger users track and hail a ride from the Messaging app. But Facebook’s masses of users have yet to embrace businesses through Messenger, and it’s unclear when and how much Facebook will be able to make money from giving businesses deeper access to the platform.
Earlier this month TechCrunch reported that Facebook was also releasing a toolkit that would allow developers to build bots on Messenger. Bots are the simpler cousin of apps, and right now they’re blowing up on chat services like Kik (where companies like Skullcandy and Burger King can hold automated chats with its teen user base) and on app stores as standalone digital-assistant apps like Luka and Magic.
In sum, WhatsApp has several examples it can look to for how to set up its first integrations with businesses: the features WeChat gives corporate customers for its official accounts, Facebook Messenger’s SDK and Kik’s more simple chat bots used by around 70 brands as a marketing tool.
Given its founders’ hatred of advertising, WhatsApp will probably steer clear of the marketing-focused features that Kik initially introduced, and even the broad breadth of bot and advertising features that WeChat offers, and limit its early corporate user to simple, focused services. It’ll probably do this by opening its API to a select few customers and at some point down the line, charge them for access.
How much it charges, and how many customers it gets, will help determine how much money it can make from the whole venture.
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