As Internet penetration has increased
throughout Asia, more and more messaging apps have become available to this
tech savvy population. As this trend continues, Southeast Asia becomes an
important battleground for companies engaged in the business of creating
messaging apps.
There
is a lot of room for the growth of messaging apps in the region – Southeast
Asia has more than 600 million people, many of who still do not have
smartphones.
According
to the research firm Nielson, only 50 percent of Thailand’s mobile phone users
own a smartphone. Other countries’ smartphone numbers are much lower. Indonesia
is at 23 percent and the Philippines is at 15 percent. In comparison,
smartphone penetration in China has reached more than 71 percent.
An
additional incentive that is stoking the online competition in this region is
the fact that, for many people, smartphones represent the main way that users
access the internet.
The
majority of smartphone users in the region have more than one messaging app on
their phones; many of these users have three or more.
One of
the strongest competitors in Southeast Asia is Japan’s Line Corporation. With
their Line Messenger App, the company has seen strong growth ever since its
inception in 2011. In fact, in 2013,
Line became the number one non-gaming app in terms of revenue. It is now spreading throughout Southeast Asia
and competing with the likes of Kakao Talk, WeChat, and Viber. Line has also become a serious competitor
worldwide against big players such as Facebook, WhatsApp, Skype, and Instagram.
Additional
important players in the region include Viber, which was recently bought for
US$900 million by the Japanese e-commerce company Rakuten. Vietnam’s homegrown
messaging app Zalo has a stronghold on that country’s market with more than 12
million users.
Many of
the companies that are competing for dominance in the Southeast Asia market
already have strong leads in certain countries throughout Asia. Line dominates
Japan; WeChat is in the lead in China; Kakao Talk rules in South Korea; WeChat
is the most popular app in Malaysia; Viber and Zalo are battling for the top
position in Vietnam. In Indonesia, Blackberry Messenger remains very popular,
despite the company’s financial woes in the West.
Show me the money
While
the majority of these apps are free to download, many of them make sizable
revenue off in-app purchases, such as stickers and virtual goods for games.
Stickers are hugely popular and it is common for people to carry out whole
conversations using the expressive images. An additional reason for the
popularity of stickers is that they can make communication quicker for those
who find it hard to type quickly in their own language – this is perhaps why
Line’s selection of stickers for its Japanese customers is so extensive.
While
apps like WhatsApp remain dominant globally, they have struggled somewhat to
assert themselves in the Southeast Asia market. Companies like Line have found
ways to make themselves stand out from the crowd through clever advertising
campaigns and creating stickers tailored for the tastes of the local markets.
WeChat
has sponsored television programs throughout the region, such as “Indonesian
Idol,” and occasionally provides users with downloadable discounts for coffee
and other products.
However,
users of these messaging apps can be fickle. Switching costs are low – users do
not have to spend time building up their social networks when they switch to a
new app because the app simply pulls the information from the user’s address
book, photos, etc. Therefore, all of the companies mentioned share the same
worry that they will be replaced by a competitor or by some new startup that
has yet to show its face in this ongoing battle for dominance in Southeast
Asia.
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.
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