BOSTON, March 6, 2013 /PRNewswire/ -- As WeChat surpasses 300M users, iMessage exceeds 250M and LINE nears 100M users the over the top messaging craze is in full swing
According to the Strategy Analytics report, A LINE in the sand: How KakaoTalk and others messaging apps are destroying revenue, over the top messaging apps are a threat not only to messaging revenues; their success also demonstrates how apps can crater existing business models without replacing revenue.
Nearly all the over the top messaging apps share many common features – the most prevalent is a shared lack of a monetizing messaging. Instead, these services are seeking to build a large audience and look to monetize from the sale of virtual goods and other items. The runaway success of apps launched Asia Pacific – where LINE, KakaoTalk, TicToc Plus and WeChat are dominating – reflect the global innovation and do not necessarily ensure global dominance. Operators should be heartened that the virtual goods business model focusing on personalization may not play with the mass market in these regions or western consumers. With so many free alternatives, the ability to charge for messaging services seems unlikely, forcing messaging companies to find other ways to monetize. Failure to do so will likely doom some of the high flying companies today – unless those companies are acquired by larger corporations that use them as brand extensions.
According to Josh Martin, Director-Apps Research, "Apps will drive more than $36B in revenue by 2017. However, billions in revenue will also be destroyed and never replaced. The notion that over the top messaging services can be perpetually revenue free will proliferate until one service fails – making consumers face the stark reality that everything has a price. As over the top messaging services transition to social networks, the need for them to maintain eyeballs could provide an opening for Joyn – an operator backed OTT messaging initiative. Without the need for advertising revenue, Joyn could extend beyond a messaging app and turn into a platform that attracts third party developers and with them innovation. If operators can build a platform with robust API and developer support they can differentiate from the competition and perhaps open a new revenue stream for themselves."
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