Tuesday 19 January 2016

WhatsApp's Excellent Business Move

WhatsApp, the popular mobile messaging service used by almost a billion people worldwide, has recently announced a massive decision that will affect all its users- for the better.

In what seems rare in a world of monetisation and prices generally rising, the Facebook-owned firm has announced that it will be making the application free to use- forever. The established system was that users got the first year free, and would pay 99p for each subsequent year of service (on Android, iOS users only paid 99p once for lifetime use). But now, we won't have to pay a penny for using the app.

So, the usual story of such a 'demonetisation' goes onwards with the app becoming home to various advertisements, and the availability of a 'premium' paid version without these. But, as promised many years ago by WhatsApp, there will be no such advertising, and no such paid version.

Some might be surprised that the company has sacrificed what seems like a sizeable subscription revenue, but this decision makes great business sense in multiple ways.

Firstly, WhatsApp is owned by Facebook, so it's not exactly desperate for greater revenues. The $19bn acquisition of the company by the social media giant reflects the fact that WhatsApp is not in shortage of money to further develop their app and services, so they can definitely afford to take a financial hit.
And that financial hit is not exactly substantial, either- with each Android user paying just 99p a year, iOS users 99p just once and millions of users still in their free first year, WhatsApp is not a massive money maker, especially for a business as wealthy as Facebook.

Furthermore, WhatsApp is replacing, rather than removing, its income streams. Plans have been announced to earn revenue from introducing a commercial side to WhatsApp- features that allow businesses to contact individuals via the app. In contrast to ads, these will be services that the user subscribes to- it is about functions such as "communicating with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight". Unlike most advertisements, these services will actually be useful for users. And it has massive potential- as well as from your bank or airline, you could receive texts from your pizza place about your order being sent out, or from Amazon about the status of your order.
These businesses will be expected to pay WhatsApp for such services to its customers, thus enabling WhatsApp to continue making money- perhaps even more money than its past subscription model.

This is also a great PR move for WhatsApp. As mentioned earlier, it's rare for businesses nowadays to revert from paid to free services, especially without some form of advertising involved. And the move away from subscriptions to free service will enable a great expansion of the user base, especially in developing markets where access to debit/credit cards for payment may have prevented many users from signing up. Such a rise in user numbers would consequently make the planned expansion into services for businesses more lucrative.

Do you use WhatsApp? How do you feel about this change and the planned new commercial aspect? Leave a comment with your opinions down below!
Lone Editor

1 comment:

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