In Britain users spend as much time on WhatsApp as they do on Facebook mobile and Snapchat accounts for 75% of all messaging data traffic on Vodafone's UK network. However, it isn't just the UK where chat app popularity has exploded: the 10 biggest messaging apps - Facebook Messenger, KakaoTalk, Kik, Line, Skype, SnapChat, WeChat, WhatsApp, Tango, Viber - boast more than 3 billion users.
We're not the first to notice this emerging trend, as industry sages such as Benedict Evans have already explored the consequences of the shift to messaging, but it is a space we know from experience (Instant Messaging, Skype) and one where Mosaic is again spending a lot of time. One reason is messaging's potential to become the next-generation "horizontal" platform in a post-Facebook world, although there is more to this than just the next very big thing. Chat is also becoming a very popular UI and can work effectively for a certain class of apps traditionally considered outside the core "messaging" domain.
This all provides context for the first in our series of posts about messaging, intended to share our thinking and encourage entrepreneurs working on breakthrough new ideas in the space to get in touch.
A good first question we asked was: what's different today versus messaging v1.0-ICQ, Yahoo! IM, MSN Messenger; and then messaging v2.0 - e.g. Skype. One obvious answer is how the ubiquitous smartphone is a natural social platform, with you all the time and equipped with your address book - a rich social graph, full of valuable metadata. And it turns out TCP/IP provides a better stack for "messaging" than SMS, catalyzing the potential for next generation messaging platforms to extend into seemingly unrelated areas.
Indeed, calling it a smart "phone" now seems wildly anachronistic. Time spent actually speaking is losing share to the phone's true killer app - asynchronous messaging. We see a huge proliferation of messaging applications with different features and use cases. The one-touch ability for someone to import their own social graph into a new messaging client is driving tremendous adoption/innovation. In addition, it's super-easy to post and share photos and video directly from the camera roll. Users can also keep in touch with their apps via push notifications, a far superior experience to hitting refresh on email. GIFs, emoji and stickers are exploding in usage to help make the experience highly personalised and fun.
All of which perhaps explains why messaging apps dominate the mobile user experience: 6 out of the top 10 most used apps globally are messaging apps according to Mary Meeker's Quettra data. And messaging apps have six times the retention rates of all apps after 12 months and daily session frequency of five times all apps, according to Flurry data from March.
One of the most notable developments in messaging is the evolution of both product and business models in Asia, where notably WeChat and Line are attempting to become broader platform plays.
WeChat's platform - over 500 million active users - provides APIs and web views for third-party app developers to build compelling experiences (inside WeChat), all leveraging a user's identity, location and payment wallet. Popular applications include booking flights, sending money, ordering taxis, and tracking ecommerce orders. Users tend to stay inside WeChat, unlike the browser/desktop experience where they are just a click away from leaving the site. Clever use of push notifications and messaging, drive viral user adoption and there is no need to install new apps to access these services. It feels a bit like web services at my former company Yahoo!, or Facebook, updated for mobile.
It is too late for Yahoo!, but Facebook is not sitting still as messaging expands its role in users' lives. Facebook Messenger now allows third-party app "installs" via its new "sticker" API. And content from third-party apps can become separate threads inside Messenger. This is a different approach to WeChat which avoids the app install problem by putting everything into web views inside the WeChat app, however that does limit user functionality such as video editing.
Facebook Messenger provides rich native code to make cool stuff, while not requiring the full app install. Users can enjoy the features of a new app without installing it - a smart approach by Facebook as they give users third party innovation while retaining control over the social graph. In addition, Messenger can act as a communication channel from merchant to consumer, so if you bought something from a merchant while logged in via Facebook, the merchant can message you even if you don't have their app installed. This increases the utility of Messenger while locking merchants into it if they want to talk to their customers.
Search has been the way to find and discover web information for 20 years. As a user-driven "pull" model, it has worked extremely well while the big web giants like Amazon, Facebook, and Yahoo! have dominated traffic and revenue. Google prospered as the dominant provider of traffic to the web giants.
Mobile initially began with a similar "pull" approach with search and discovery of apps through the app stores. As the app universe has exploded, app usage has fragmented. Users may have hundreds of apps installed but only use a small number of them with any frequency. Consumers continuously try new apps and have shown limited loyalty across most categories, except messaging. User engagement tends to be triggered by push-driven notifications rather than the old pull model, and apps that can grab users' attention through relevant notifications are rewarded. Users are triggered to use an app in two ways: smart notifications or offline stimuli.
Apps like Uber that connect your phone with the offline world are triggered by your regular offline needs and become habits. For all other apps, if they do not figure out how to add value to their users through smart notifications, they will quickly find themselves on the churn list, as the average app loses 80% of its daily users within a week of install. (Dumb) notification fatigue is already setting in
It feels like smart notifications will be the future home screen on your phone, to address the balkanised user experience of switching between multiple specialized apps. We have almost retreated to the "walled gardens" of AOL and CompuServe, forcing users to go in and out of segregated apps with limited and suboptimal deep linking.
If notifications do become a third runtime, Facebook has a relatively weak strategic position compared with Apple and Google. As mentioned above, Facebook's strategy is a notifications panel inside its own messaging app, as their platform effort attempts to co-opt other apps to use Messenger to reach their customers. Not owning a leading messaging app, Apple and Google may move instead towards an intelligent notifications layer that aggregates important activity from your apps, using personalisation smarts to filter and prioritise the incoming stream of notifications. Google Now is a step towards this using cards, but with a narrower use case.
Ultimately the question is probably whether users want a messaging app to aggregate their notifications (Facebook, WeChat or WhatsApp) or an intelligence layer that monitors activity across all apps and prompts actions to be executed in-app (Google or Apple). This will be an important battleground and there is a role to play for startups such as Intercom.io and others that develop smarter messages as cards within messaging apps which could be very disruptive. We are also seeing early versions of intelligent bots that sit inside messaging apps to enable users to engage with important services via a text-input stream - Telegram has released one of the most interesting efforts here with their new bot API and platform. More on this topic in a future post.
I would be remiss not to mention Slack, the killer B2B messaging app run by my friend and former colleague Stewart Butterfield. Slack's beauty is that instead of inundating workers with individual messages in a one-size-fits-all email inbox, Slack separates the digital onslaught into more manageable "channels", for teams, projects, topics or even customer segments. Users are able to create channels, subscribe to channels, post messages, links, and upload files, and interact with third party applications (e.g. CRM, invoicing or employee benefits systems)- and all interactions are saved and searchable. This offers a tremendous time saving for those whose lives are consumed by managing email, and a deep, useful and auditable body of knowledge that gets created and can be used by employees handling new tasks or responsibilities. Slack is potentially an operating system for a whole new class of apps. And as Slack continues to grow, a new market may emerge for apps that run on the Slack platform, using Slack as their primary user interface, and provide all sorts of features that otherwise might live in a web, desktop or mobile application.
All in all, there is a tremendous amount of exciting innovation in messaging, both for consumers and businesses, and we believe significant value creation will accrue not just to successful platforms but also players which back platform winners and build killer apps inside those ecosystems. There is also ample room for innovation around the notification layer and chat as a new user interface for certain classes of apps (again, a subject we'll also cover in this series). If you are working in this space, we would love to hear from you.