It was a surprise to everyone when Facebook bought the messaging service giant Whatsapp for $19 billion and people were even more surprised when Mark Zuckerberg, the CEO of Facebook went on to say that Whatsapp was worth even more. What has happened now is that the analysts at Credit Lyonnais Securities Asia have evaluated several messaging apps and have come up with a statement which says that WeChat, a Chinese competitor, owned by Tencent, is worth at least $60 billion. They claim so because according to their study, WeChat has more active revenues streams incorporated into its service than Whatsapp does. CSLA ranges the valuation between $35 billion and $64 billion this year.
Though the users of WeChat are less as compared to Whatsapp, it has more revenue streams. Analysts Elinor Leung and Terry Chen write, “WhatsApp only generates US$1/download. WeChat could generate revenues from mobile games, advertising, eCommerce, O2O, mobile payment and Internet financing. Asia leads the global smartphone game market especially Korea, Japan and China. eCommerce, online to offline payments and mobile payment are unique business opportunities in China given the poor offline infrastructure. Tencent has also invested heavily and made aggressive acquisitions such as JD and Dianping to secure the business opportunities.”
Also, it seems like WeChat is likely to hit 450 million users this year, with each subscriber worth some $142. Whatsapp has been maintaining for a while now that it will continue to operate under Facebook in the same way without advertisements. On the other hand, WeChat has taken a quite delicate approach when it comes to advertising for now at least.
“While most online and offline corporates are eager to tap WeChat users, Tencent has been careful controlling the promotional activities by its public accounts,” the CLSA analysts write. “Users can only find and follow the public accounts unless they know the name. Tencent doesn’t provide a list of public accounts for users. Tencent has also limited the daily promotional messages sent out by public accounts.”
However, CLSA goes on to note that Tencent “will likely turn more aggressive on monetizing through social advertising once user penetration is mature. Display ads may not be the best advertising format on mobile social messaging platforms.”
WeChat has made some interesting developments in terms of incorporating some additional features like payments. Tencent has launched apps like red envelope and taxi apps which will also be integrated with WeChat to complete transactions for things like paying bills, buying things, red envelopes and subscriptions.
“WeChat payment registered users reportedly jumped 5 times given the viral effect of the red envelope app,” CLSA writes.