KEY POINTS

  • Messaging apps are wildly popular and disruptive for several reasons, but the main one is that they have become platforms in their own right, hosting lucrative game and app ecosystems, photo and video features, payments tools, marketing solutions, and e-commerce tie-ins.
  • No other app category has grown as quickly in the last couple of years. The most successful messaging platforms have quickly accumulated tens of millions — if not hundreds of millions — of users. They continue growing quickly: Our data show that WeChat, LINE, WhatsApp, and Snapchat are all growing their user numbers in 2014 at a quarterly rate of 15% or higher.
  • Usage is also growing quickly. New Flurry data show that user sessions on social and messaging apps increased 203% in 2013, a faster leap than for any other app category.
  • The key role played by messaging apps may be in cutting through the noise in the crowded world of mobile content and apps. Messaging apps help people connect with one another, share photos, video chat, and, increasingly, play games, buy digital goods, and even shop offline. For many smartphone users in Asia, messaging apps have become their gateways to everything they do on mobile. 
  • While WhatsApp has pulled ahead of the messaging app pack in terms of the size of its user base (500 million monthly active users) and its geographic footprint, other apps have taken the lead in terms of monetization. Asian messaging apps LINE, WeChat, and KakaoTalk drive hundreds of millions in revenue from games, stickers, and advertising. 
  • While WhatsApp's management team has vowed not to include advertising in the app, even after the Facebook acquisition, the Asian messaging model offers clues as to how WhatsApp might be monetized: The most promising area for WhatsApp monetization might be payments, which would help Facebook diversify its revenue streams away from mobile and Web ads.
  • In our case study of Japan-based LINE, we discovered that the key to its success is a multipronged business model. LINE draws revenue from stickers, in-app game purchases, marketing and ad products, and even retail sales of [...]