When WhatsApp was bought by Facebook for a massive fee that exceeded $19 billion, many thought that this price was too hefty for an application that only offered messaging services alone.
However, this seems to be the trend as more and more messaging apps have been getting unimaginable market valuations, especially after diversifying of its services to incorporate more than just personal communication.
One good example to look at why many instant messengers have begun attracting these huge valuations is WeChat. This messenger has more than 600 million users and unlike most of the Western apps that only offer instant messaging and voice calling services, this application also offers a digital wallet as well as car booking services, among other add-on services. As a result, a recent valuation meant WeChat is probably worth more than $83 billion.
Just recently, Snapchat made it public that it will be monetizing its services and as a result, the app’s market valuation shot to about $19 billion. Another app to take this monetization direction is Kik and now that WeChat is at the center of things thanks to a massive investment of $50 million, the valuation of this application is currently standing at $1 billion. People tend to spend more time exchanging messages rather than browse the web or maybe shop online. As a result, these messaging apps have turned out to be some of the hottest properties in the world of business.
Building for the future
Now, a host of apps in the U.S. market is yet to start monetizing their services. However, it can be true to say that these applications are making plans to incorporate services that will earn them some significant revenue. For instance, WhatsApp, Snapchat and Facebook Messenger are working towards including transport, e-commerce, payment systems, advertising and many other business opportunities.
Messaging is probably the only form of communication that will keep attracting more and more masses. In essence, this is basically why these messaging apps are receiving huge market valuations. WeChat has seen tremendous growth in terms of a number of users. However, it is nowhere near the leading messaging app, QQ, which has more than 840 million users. Conversely, WeChat is miles ahead when it comes to innovation with respect to revenue generation. The app already boasts of things like in-app games, shopping, online payments, features that other players are rushing to come up with.
Another app that may soon be offering a better picture for investors to value messaging apps is Japan’s LINE. However, it may still be too early to write off other players such as Viber, Kik, KakaoTalk and Facebook Messenger.