Alternate Messaging Heats Up with $900 Million Viber Purchase - The UpStream

Alternate Messaging Heats Up with $900 Million Viber Purchase

posted Saturday Feb 15, 2014 by Scott Ertz

Alternate Messaging Heats Up with $900 Million Viber Purchase

It is always interesting to watch an industry who has been stable with the same players for years get shaken up when a collection of new players decide to enter. The market that currently everyone seems to be jumping into is messaging. Now, the messaging industry has been fairly consistent with Skype, AIM and Yahoo! Messenger being the big players for ages. Near the end of their run, Myspace tried to enter the market unsuccessfully, and Facebook has certainly made a name for themselves in the market, but in the last couple of years, we have seen a plethora of new names.

With services like Kik, Snapchat and Whatsapp bringing both similar and new features to the market, it is time for the big boys to rethink their places in the market. It is also time for companies who are newly successful Internet conglomerates to snap up some of the small guys, sometimes for a lot of money. For example, Microsoft recently picked up corporate messaging startup Yammer for $1.2 billion.

This week, Japanese retailer and purchaser of all things digital Rakuten has purchased Viber, a direct Skype competitor, for $900 million. This is not Rakuten's first purchase of a successful brand, with retailer Buy.com and ad platform Linkshare joining their family as well.

What can we expect from a Rakuten-owner Viber? Under Rakuten's leadership, Buy.com had their largest ever Thanksgiving weekend in 2013. Linkshare has become the first and only continually sustainable affiliate network and the largest pay for performance affiliate marketing network on the Internet. That means we can almost certainly see Viber find a financially stable place in the market, probably quickly.

Their current business model is not bad: free service-to-service calls, and paid off-network calls. This business model is almost identical to the Skype model, with Skype having the added bonus of business users, who pay a premium for added video quality options.

Hiroshi Mikitani, founder of Rakuten, gave a look into some of his plans for Viber, saying, "With Viber, we're going to link up messaging with e-commerce." Considering the company has always been focused on retail and marketing, it makes sense that the plan for the acquisition would have to do with retail. He added,

In the future, e-commerce will become a more communication-based transaction. Live interaction is going to be critical for all Internet services. Rakuten is at the start of a new era.

My guess is he is speaking about more than just "Click here to talk to a live agent" buttons on the Internet. It could mean something more like Amazon's "Mayday" button on the Kindle HD products, or it could be something more than we can come up with.

How do you think Rakuten plans on using their newest acquisition? Let us know in the comments.

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