Are These New Smart Phone Apps. Facebook, Google+ and Twitter Killers?
Facebook, Google+ and Twitter Killers?
In the fiercely competitive market for smartphone applications, two Asian contenders are starting a trend from the Far East—and sending a message to Silicon Valley.
China's WeChat and Japan's Line may be unfamiliar to most U.S. smartphone users. But the apps, which combine instant messaging with social networks, are well-known to hundreds of millions in Asia and other parts of the globe, challenging the global dominance of U.S.-based WhatsApp Inc. and even posing a potential threat to Facebook Inc., Twitter Inc. and Google+.
For many Chinese users, WeChat is more than just a text-messaging tool. "I can't imagine my life without WeChat," said Kevin Hung, a 31-year-old Taiwanese who works for an electronics maker in Beijing and spends up to two hours a day on WeChat. Mr. Hung says he likes WeChat's "moments" feature, which somewhat resembles Facebook and allows users to share photos and status updates.
Line, developed by a Japanese subsidiary of Korean Internet portal operator Naver Corp., offers text messaging and voice calls as well as photo-sharing, games and other Facebook-like social features. Line Corp. Chief Executive Akira Morikawa said the app is trying to become a gateway for various forms of online communication and entertainment—a role once played by sites like Yahoo Inc. and now, to some extent, by Facebook.
Line, like WeChat, is free to download and use. In the three months through June, Line generated revenue of about ¥10 billion ($103 million) from virtual items sold in free games and virtual stickers that users buy and send as messages. WeChat, meanwhile, hasn't generated much revenue yet.
In the broader category of social networking services, Line and WeChat are still tiny compared with Facebook, which had 1.15 billion monthly active users in the second quarter. In that quarter, Facebook users in Asia increased 33% from a year earlier to 339 million, even though the service is largely blocked in mainland China. On top of its regular services, Facebook also offers its own instant messaging app.
Twitter, in its recent filing for an initial public offering, acknowledged that these Asian apps could stand in the way of its international expansion as they occupy more of smartphone users' time. Line and WeChat have been adding some Twitter-like features, such as official accounts for companies and public figures that allow them to distribute promotional messages to followers.
Google+, Facebook and Twitter Declined To Comment
The strong growth in users could give Tencent, which makes online games and other web services, a leg up as Chinese gamers switch to playing on smartphones.
Tencent plans to use WeChat, which competes against U.S. rival WhatsApp, to distribute games, apps and advertising to users. A new feature, for example, gives the app the potential to function as a mobile wallet.
The company is spending to grow its user base. Tencent said its profit rose 19% but missed expectations in part due to marketing costs for WeChat.
Line and WeChat owe part of their success in Asia to strong demand for alternatives to costly text messages. Also fueling their growth is the increasing number of first-time smartphone users in emerging markets who are replacing feature phones with low-cost Android handsets.
In India alone, where only about 8% of 900 million mobile-phone users have smartphones, the untapped market is huge. Since Line started running television commercials in July, its registered users in the country have increased to 5 million from less than 1 million.
In Thailand, 33-year-old librarian Supinya Sritanaviboonchai loves sending the whimsical, humorous emoticons known as "stickers" on Line. "The stickers really spice up the conversation," said Ms. Sritanaviboonchai, who is one of 18 million registered Line users in Thailand, the app's second-largest market after Japan.
Both Line and WeChat have been ramping up marketing to extend their reach. Tencent is spending up to $200 million this year to advertise WeChat abroad, mainly in emerging markets such as Southeast Asia and Latin America. The company said in August that WeChat's overseas users doubled to 100 million from 50 million in May.
Line and WeChat are also competing against fast-growing Asian messaging apps such as South Korea's Kakao Talk, which has about 110 million users.
Similar to the early days of social networking, the stakes are high. Customers tend to gravitate to one or two networks used by the bulk of their friends. As Line and WeChat spread around the world, they will have to contend with WhatsApp. The Silicon Valley company has 300 million monthly active users and remains the most popular messaging app in many parts of the world.
"In many markets we enter, WhatsApp is already there," said Jun Masuda, Line's chief strategy and marketing officer.
People can download and use WhatsApp free for the first year, but the company then charges 99 cents per year as a way of securing a source of revenue while keeping the app free of advertisements.
The U.S., however, is a tricky market for them all. Mobile plans commonly offer unlimited text messaging, making messaging apps unnecessary for most users. But where WhatsApp has focused on messaging, Line and WeChat are hoping their wider features will keep attracting users.
WhatsApp Declined To Comment
Pablo Lasso, a 39-year-old Argentine who lives in Madrid, started using Line in February, when his free trial period for WhatsApp was about to expire. He also uses Line to call his family and friends in Argentina. "Most people over there are still using WhatsApp, but some are already moving to Line," he said.
For its global ad campaign, WeChat hired Argentine football star Lionel Messi, who plays for Spain's FC Barcelona. Mr. Messi stars in a commercial in which he pacifies a crying baby by live-streaming his football skills over WeChat's video call. The commercial has helped WeChat add new users in Europe and Latin America, according to Tencent.
While being a poster boy for WeChat, Mr. Messi is also playing for the other side as a virtual cartoon sticker for Line, as FC Barcelona recently agreed to open an official Line account and let Line offer virtual stickers of its popular players.
Mobile messaging applications from Asia, such as Japan’s Line and China’s WeChat, are ramping up their marketing efforts to find new users around the world. Both Line and WeChat combine text and voice messaging with various additional features such as photo-sharing and status updates.
WeChat, launched in 2011 by Chinese Internet service giant Tencent Holdings Ltd. dominates the domestic market with 300 million registered users, according to a recent report from Macquarie Securities. Tencent is spending up to $200 million this year to advertise WeChat abroad, mainly in emerging markets, and the company said in August that WeChat’s overseas users had doubled to 100 million from 50 million in May.
South Africa, for example, is one of the markets where WeChat has gained more attention. In addition to a TV commercial featuring international football star Lionel Messi, WeChat has held iPad giveaway campaigns and also sponsored some major local events. In Cape Town, the annual Loerie Awards, a flashy advertising event held last month, used an official WeChat account to distribute information to participants.
In June, WeChat hosted a competition on a South African radio show offering listeners a chance to win a Samsung Galaxy phone. Listeners entered the competition by downloading WeChat on their smartphones and sending a voice message to the show.
Mikey Mashila, an 18-year-old fashion designer in Thohoyandou, a small town in the northeastern part of the country, recently started using WeChat on his BlackBerry. “I’m a person who likes to try new things,” Mr. Mashila said.
“We have gone aggressively with marketing campaigns,” said Brett Loubser, a marketing professional who is in charge of promoting WeChat in South Africa. Given fierce competition from other messaging apps, it is challenging to sustain daily user activity on WeChat, he said.
According to data from South African technology research firm World Wide Worx, WhatsApp Inc. is the most popular messaging app in the country. The app, developed in Silicon Valley, is used by about a third of South Africa’s adult mobile users.
Other than WhatsApp, another major competitor for WeChat is Line, developed by a Japanese subsidiary of South Korean Internet portal Naver Corp. Line has more than 250 million registered users world-wide, and about 80% of its users are outside Japan.
Both Line and WeChat see enormous untapped demand in emerging markets, where many people are still replacing their basic cellphones with smartphones.
In July, Line started running TV commercials in India. One commercial facetiously portrays two groups of students causing mayhem in a classroom as they duel by sending stickers back and forth. Within the ad, each emoticon has an actual impact outside the smartphone; a fist causes students’ heads to jerk back as if punched and a cartoon drawing of a rabbit passing gas leads them to hold their noses. Line said its users in India have increase to 5 million from less than 1 million since it started running the commercials.
Tencent, meanwhile, has been promoting WeChat in India with tie-ins with Bollywood movies, offering virtual stickers of local movie stars that WeChat users can send each other.
Given rapidly changing consumer preferences for mobile apps, the prospects for WeChat and Line are far from assured, and it’s unclear how well they can establish themselves outside Asia. Still, their expansion could upend the established pattern of a U.S. tech trend spreading to the rest of the world, as has been the case with most social networks.
As more people around the world use smartphone messaging apps like WhatsApp, Line and WeChat to communicate with each other, the companies running those apps are offering additional features to retain users.
WhatsApp, developed by a Mountain View, California-based startup, this week launched a new feature that simplifies the process of sending recorded voice messages. A similar feature helped WeChat, a massively popular text-and-chat app in China, expand in domestic and overseas markets.
WhatsApp users are already able to record a “voice note” and send it as a message, but the new Voice Messages service makes it easier to do so, and comes with additional functions such as notifying the sender that the recipient has heard the message.
The move by WhatsApp marks a rare moment in which an app developed in the U.S. is making more prominent a feature that first rose to popularity on a Chinese mobile product.
Voice messaging has long been a defining feature of WeChat, since Chinese Internet giant Tencent Holdings Ltd. launched the app in January 2011. Line, another messaging app developed in Japan, started offering a voice messaging service in April last year, according to the Tokyo-based company.
WhatsApp’s voice messaging upgrade comes at a time when competition in the smartphone messaging app category is intensifying. In Asia, WhatsApp faces fierce competition from other locally developed messaging apps, which are also trying to expand even beyond the region. Meanwhile, social network giant Facebook, which initially expanded as a PC-based service, has been upgrading its stand-alone mobile messaging app launched in late 2011.
Tencent said in March that WeChat – which is called Weixin in China — had 194 million monthly active users in the country. Last month, the company said that WeChat’s registered users outside of China had topped 70 million. Line, meanwhile, said last month that it had 200 million registered users world-wide.
WhatsApp said in June that it had more than 250 million monthly active users.
This week, WeChat announced the latest upgrade, which included new features such as the “Hold Together” function, which allows users who happen to be in the same neighborhood to find and connect with each other by simply pressing a button.
As messaging apps expand services to take up more of smartphone users’ time, a broader range of activities – from videogames to online shopping — are starting to take place within the apps. Both WeChat and Line have photo-sharing services and offer games. WeChat said this week that it will open the Sticker Shop, where users can purchase virtual stickers of cute cartoon characters that they can send as messages. Line already sells such stickers.
Monty Henry, Owner
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