WhatsApp Doubled Monthly Average Users But What Does This Mean?

Advertisement
Advertisement

WhatsApp's Chief Executive Officer this week announced the service had now passed eight hundred million active users, a near-doubling of its user base since being purchased by Facebook for $19 billion a year ago. WhatsApp has managed this growth against a backdrop of established social networks (many now offering integrated messaging functionality) and Internet services. Let's take a look at what WhatsApp's growth in numbers means, because as the company had been at pains to point out, the number of registered users is not the same as active users. Registered users include those who have installed the application, perhaps used it once or twice, then either uninstalled the application or simply not used or again. Active users are a narrower subgroup of users: those who in the stated time period have opened the application. This means that in order to qualify as an active monthly user of WhatsApp, a user simply needs to have opened the application once in the last month.

Unfortunately, WhatsApp don't (and will not) provide any additional information such as the number of messages sent a day, a week, or a more granular look at the weekly or even daily active users: how many people open the application on a daily basis? Because messaging applications have a way of very quickly becoming a core application on our devices as they represent a way to very quickly, cheaply and easily keep up with friends and family no matter the distance. Almost all active WhatsApp users must surely be using the service, the application, several times a day? Unfortunately, WhatsApp prefers to keep the more detailed usage statistics to itself.

Advertisement

Now let's take a look as to why WhatsApp's userbase is important, and it's simply because this is a key way that the business can monetize the service beyond the $1 a year fee that it levies. The future of messaging applications and making them earn money for a business is in connecting different services, which includes online to offline payments and business-to-consumer payments. We are already seeing messaging services start to take control when it comes to paying for services. Here, the strength of the local network is important. If the penetration of users in a given region is now high, it makes it extremely difficult to engage with local service partners in order to expand the service. However, if relatively many people use the service, it can quickly become something of a captive audience. An example is Kakao Talk, a Korean messaging service with under 200 million registered users with an estimated half that are active monthly. However, the messaging application is installed on 95% of Korean smartphones and the app supports a taxi-booking service and payments. It's supported by local retailers simply because Kakao Talk has a captive audience base. Kakao Talk has been profitable for a couple of years now and merged with local Internet giant Daum in 2014 for $3 billion.

WhatsApp have not disclosed where their local strengths are, presumably because this is privileged information. It will need a certain market presence if it is to change gear and move to the next stage of messaging service evolution, that of monetizing beyond the annual fee. There are challenges afoot: many local markets have their own home-grown competition plus a range of well known global messaging services such as Kik and Snapchat. Another potential issue for WhatsApp is the number of users not currently using Android or iOS devices, but instead using BlackBerry, Symbian OS and Windows Phone devices. It's been great that WhatsApp has built the service and applications for these non-dominant devices, but introducing the extra services to these smaller platforms will be technically challenging for the business. It may not be possible and instead this may be a way to encourage users to switch to one of the more mainstream platforms.

Eight hundred million monthly average users shows fantastic growth, but it's the detail behind the statistic that is of more interest to us and unfortunately at this time, WhatsApp is keeping quiet.

Advertisement