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Why Apps for Messaging Are Trending
By MIKE ISAAC and MICHAEL J. de la MERCED
A team at BuzzFeed, the news and entertainment site, knew it had struck gold when it came across a decades-old photo of Dwayne Johnson, the musclebound wrestler and film star known as The Rock, wearing a fanny pack and dated bluejeans.
To drum up more attention, the team changed the picture’s background to a holiday theme and added “Rockin’ around the Christmas Tree” in big lettering. But then, instead of posting the image to BuzzFeed, the team uploaded it to Instagram, the hugely popular photo-sharing service.
The image then took on a life of its own. Mr. Johnson quickly embraced the joke, reposting the picture to his own Instagram account. Nearly 390,000 people indicated they liked the post, and the image became the top topic of conversation on the message board site Reddit.
“We didn’t pour gas on it. We didn’t post it to the home page,” said Summer Anne Burton, editorial director of the 10-person BFF team at BuzzFeed that is dedicated to posting photos and videos to photo and messaging apps. “We just stuck it on Instagram and it took off all over the place. That’s the dream.”
BuzzFeed’s tactics could also offer a glimpse into how some personal messaging apps like Instagram, WeChat and Snapchat — already used by millions of people sharing text or images among friends — will be used in the future.
Some publishers, game makers and e-commerce companies are using the apps as a new distribution and moneymaking platform. Developers have been expanding the uses of the apps, making new functions possible. And investors, seeing huge potential, have driven the apps to ever-higher valuations.
“The most popular apps that sustain themselves day after day, month after month, at the top of the leader board, are messengers,” said Fred Wilson, managing partner at Union Square Ventures and an investor in Kik, a messaging app popular with young users. “That’s a reflection of what people do on their phones.”
He added, “Once they become full-blown ‘portals’ for mobile content and mobile commerce, we will really see how massive this opportunity is.”
The initial appeal of the apps is simple. They are faster to use than email, and they generally allow you to send text, links, video and photos to friends more cheaply than traditional texting services offered by wireless carriers like Verizon or AT&T.
The uses are multiplying, though. On the app KakaoTalk, for example, people can discover other new smartphone apps and share them with their friends. On Snapchat, users can send money to one another inside the app. And Line, a messaging app popular in Japan, lets people pay for things at brick-and-mortar retail stores using Line Pay, the company’s payments service.
Soon, media outlets like ESPN, Vice and CNN will be publishing original content directly to a new editorial section in Snapchat, according to people familiar with the matter who spoke on condition of anonymity because they were not authorized to speak publicly.
“Media and communication are converging,” said Jonah Peretti, chief executive of BuzzFeed. “Some of what we’re all creating now will be a huge part of these messaging apps over the next one or two years.”
Now, 40 percent of mobile subscribers in the United States use an instant messaging app on their phones at least once a month, according to data from comScore, a research firm. Globally, the use of mobile messaging apps grew 103 percent during 2014, according to Flurry, a mobile analytics firm.
Some of the most popular options are Viber, which says it has more than 200 million monthly visitors; Line, Japan’s most popular messaging app, with 170 million users; and WhatsApp, the leading service, which has more than 700 million regular visitors.
For now, though, not all of the apps are generating big revenue. WhatsApp, which is owned by Facebook, reported just $10.2 million in sales in 2013. The revenue came from the small fraction of users who paid $1 to use the app.
Still, the valuations of many messaging start-ups continue to rise. In February, Rakuten, the big Japanese online retailer, bought Viber for $900 million. The next month, the Chinese e-commerce behemoth the Alibaba Group led a $280 million investment in Tango, valuing the nearly six-year-old start-up at about $1 billion. Facebook paid $21.8 billion for WhatsApp in February.
For investors, the thesis is a Silicon Valley adage: Get millions of people to use the service first, and eventually it will find a way to make money.
Many entrepreneurs see WeChat, the hugely popular Chinese service run by the Internet giant Tencent, as the ideal model for building a business in messaging. Released four years ago, the app now claims nearly 500 million monthly active users — who not only send image-laden messages, but play games and book car rides and plane tickets.
The rapid growth in messaging apps, some say, has been a response to the more public nature of popular apps like Twitter and Facebook, where status updates and posts are visible to the many rather than the few.
“It’s a much more intimate experience,” said Marissa Campise, a partner at SoftBank Capital, the venture arm of Japanese telecom giant SoftBank. “Messaging apps are smaller and less visible than the public networks and far more engaged and trusted. It often feels like a more controlled, real-time replacement for email,” she said.
Messaging users tend on average to pick up their phones several times an hour, Talmon Marco, the chief executive of Viber, noted in an interview late last year. That makes messaging apps an ideal place to introduce other offerings like games, virtual stickers or even physical goods.
Asia has been a particularly fertile breeding ground for expanding the uses of the apps. In 2013, for example, WeChat joined Xiaomi, the Chinese smartphone giant, to offer a limited quantity of the company’s newest phone for purchase on the chat app. Users could reserve and then buy the new smartphone entirely inside the WeChat app using Tenpay, the payments service owned by Tencent. Xiaomi said it sold 150,000 phones in less than 10 minutes.
The WeChat app is also one of the biggest hubs for Chinese consumers to find new mobile games. Last quarter, Tencent’s mobile games revenue alone was 2.6 billion renminbi, or about $420 million.
“They’re aggregating people’s attention and linking it to other forms of commerce,” said Mitch Lasky, a partner at the venture capital firm Benchmark and a Snapchat board member.
Ted Livingston, the chief executive of the messaging app Kik, based in Canada, has argued that younger users are coming of age in a world where their portal to the Internet has been the smartphone, and they are more willing to try new forms of commerce and discovery.
“We view this as being a race to be the WeChat of the West,” Mr. Livingston, whose app is predominantly popular with young North American audiences, said in November. “For us, it’s a once-in-humanity great opportunity.”
Tech Giants Invest in New Dreams of Grandeur
By QUENTIN HARDY
In the last two weeks, investments from some of the biggest technology companies have raised an important question: Have they gone crazy?
The short answer is: Probably not. The reasons show just how big their ambitions have become.
First, Qualcomm, which makes semiconductors for smartphones, invested with Richard Branson’s Virgin Group on a constellation of satellites. Google went into orbit too, joining Fidelity on a $1 billion investment in SpaceX, Elon Musk’s private rocketry company. The Internet search company also seemed interested in reselling the wireless assets of established phone companies.
Microsoft on Wednesday showed off the latest version of its single most important asset, the Windows operating system, along with some gee-whiz holographic goggles, a device with virtually (pun intended) no market. On Thursday Amazon, an online retailer with a big cloud computing business, said it was buying an Israeli maker of advanced semiconductors for about $350 million.
All of this could be ascribed to the kind of behavior often seen in the late stages of a bubble, when some companies have more money than ideas, and it has become hard to tell what anything is worth.
“One theory is that Silicon Valley has lost its mind,” said Chris Dixon, a partner at Andreessen Horowitz, a leading venture capital firm. In reality, he says, “They are building something, and large parts of the economy haven’t adapted to it yet.”
While Andreessen Horowitz receives a lot of attention for flashy investments like Facebook and Skype, Mr. Dixon says that 30 percent of his firm’s deals are in now-obscure businesses that will turn out to be important in the new industrial landscape.
History offers parallels for big companies making strange moves. When George Eastman was building Kodak, he included railheads to his industrial park, for cattle whose hooves were used for gelatin on consumer film stock. Eastman couldn’t find the quality he needed from conventional sources, which had never before had to supply a business like Kodak. In 1926 the Firestone tire company acquired one million acres of Liberia for rubber trees, because the company was worried that colonial powers would cut off its supply.
These may have been the acts of rapacious monopolists who wanted to control ever area of their domain, but that wasn’t entirely the motivation. Necessity was; they were building new businesses, and they needed unimpeded quality supplies.
Today’s new industry is computation everywhere, fed by mobile devices and sensors, managed in so-called clouds of a million computer servers or more, then returned to businesses and consumers in the form of social networks, music, data analysis, online software and a thousand other services.
Consumption is monitored and tweaked, in a seemingly endless and growing feedback loop. Software, which has automated things for over six decades, is finally automating itself as well. In the way that Eastman needed a purer gelatin, these companies need purer, faster ways to gain, move and use data.
The chip company that Amazon bought, Annapurna Labs, appears to be involved in some kind of advanced data networking, which could make Amazon’s cloud faster and more powerful. Amazon had already hired experts in building low-power computing cores. Put them together, and you are talking about faster data in, faster data out, at a lower cost in Amazon’s cloud.
Qualcomm has an interest in consumers using superfast phones from every point on the planet. So does Google, and Google also wants all the information it can get from floating over the planet with specially made sensors. (The company already makes its own semiconductors.)
Once that ever-increasing data load is gathered and processed, it must be consumed. Three-dimensional objects are a great way to do it, which is why Microsoft jumped on a bandwagon that Google and Facebook already rode with their own investments in goggles.
“There is absolutely no part of the process that is not touched” by taking computation to a global scale, said David Campbell, the chief technical officer of Microsoft’s cloud and enterprise group. “We’re creating self-optimizing systems, and it will touch all industries.”
Which again raises the “rapacious monopolist” issue. How far will the big guys go when there is seemingly no part of the world they don’t want to touch?
Mr. Campbell says that an industrial power made of combining mobility, cloud and data analysis makes possible a winner-take-all situation for an Airbnb or an Uber, in a way a hotel or taxi company could never before have achieved.
Optimists note that the sheer amount of invention makes possible new businesses. Big data, for example, emerged from new methods created by Google and Yahoo 10 years ago. Now, digital homes, drones and virtual reality are plausible industries because of this new infrastructure. Google is already in the digital home business, buying both Nest, a maker of smart thermostats and smoke alarms, and Dropcam, which uses the cloud to store and manage home video monitoring.
“I’m not superconcerned about one company running seven or eight of these things — it’s just too much to manage,” said Joshua Reeves, a founder of ZenPayroll, a start-up in San Francisco that uses cloud and mobile technology to pay workers and help them manage money. “The power companies couldn’t control everything people did with power.”
The pessimistic version is, they won’t stop, anywhere –- including Mr. Reeves’s business. Either way, they are likely to keep coming for a while.
Mi
Microsoft made a big announcement last week, revealing that Windows, a lucrative legacy franchise, was about to be unleashed into the physical environment through a set of goggles called the HoloLens that superimposes the operating system on the actual world. In one sense, it was heartening. Business reporters are frequently hung up on the new and the insurgent, but seeing mature companies adapt to a changed world is equally interesting.
But something about Microsoft’s new technology creeps me out, and it probably has less to do with the threat of holograms populating our everyday lives and more to do with something I’ve been watching on a different screen.
“Black Mirror” is a three-season, seven-part anthology series, which first appeared in 2011 on Channel 4 in Britain and recently became available on Netflix, eliciting a lot of provocative chatter stateside. The show shares DNA with “The Twilight Zone,” but is very much about the present future we are living through.
Created by Charlie Brooker, a former video game reviewer, a writer for The Guardian and the host of his own television show, the series uses technology as a way to reflect on who we are becoming in the increasingly screen-infested environments we move through. The black mirror of the title refers to the blank screens that live on our walls, on our desks and in our pockets.
The show came to mind when I watched a video demonstration of Microsoft’s HoloLens, because as screens have proliferated, the amount of actual, unencumbered reality we experience seems endangered.
I am not some sad-eyed romantic for a pretechnological age. I have five tablets, four remotes on my night stand and three screens in my backpack. Our lives have been enriched by the Internet and all the devices that allow us to play there, at least to a point.
But “Black Mirror” asks fundamental questions about where this is all headed, not by creating an improbable dystopian future, but by hitting us right where we live. Its world is just one click away from the one in front of us.
This is a satire that is built not on laughs but on a deep melancholy. In one episode, the prime minister is forced by purported terrorists to perform an unspeakable act while the entire public stares. In another, a man’s suspicions about his wife are on vivid display, because nothing is ever secret anymore. In one of the more heart-rending episodes, a woman can’t resist reconstructing and tragically falling for an avatar of her deceased partner. In a Christmas special that is yet to screen in the United States, a character played by Jon Hamm uses virtual reality on unwitting subjects to dark and merciless ends.
In all of the episodes, the act of watching — not doing — implicates the viewer.
Remember Chance the Gardener from “Being There,” the classic Jerzy Kosinski book (and subsequent film starring Peter Sellers)? He was fond of saying, “I like to watch,” which struck those around him as wise, but he was actually an idiot.
In 2013, the movie “Her” made quite a splash by positing how a man, played by Joaquin Phoenix, could fall in love with an operating system. Now Annapurna Pictures, the production company that made the film, is forming a division to create virtual reality content. In this case, life imitates, well, an imitation of life.
What is it about our current reality that is so insufficient that we feel compelled to augment or improve it? I understand why people bury themselves in their phones on elevator rides, on subways and in the queue for coffee, but it has gotten to the point where even our distractions require distractions. No media viewing experience seems complete without a second screen, where we can yammer with our friends on social media or in instant messages about what we are watching.
Every form of media is now companion media, none meriting a single, acute focus. We are either the most bored people in the history of our species or the ubiquity of distractions has made us act that way. As Mr. Brooker said in a column he wrote for The Guardian several years ago, “If technology is a drug — and it does feel like a drug — then what, precisely, are the side effects?”
The individual need for placation and augmentation plays out in ways big and small. Because my daughters are grown, I used to worry about my friend’s younger children becoming bored when they stopped by to visit. Not anymore. The children are made to look up long enough to greet me, then they resume interacting with the screens in their hands.
And it’s not just those raised on screens who are prone to distraction. As adults, we make “friends” who are not actually friends, develop “followers” composed of people who would not follow us out of a room, and “like” things whether we really like them or not. We no longer even have to come up with a good line at a bar to meet someone. We already know he or she swiped right after seeing us on Tinder, so the social risk is low.
What matters more, the experience or the media representation of it? The president of the United States is in the middle of displaying mastery over all manner of new media, including but not limited to Medium, Facebook, YouTube and Reddit. Perhaps his traction on these platforms is distracting him from the fact that he has been less successful at the actual act of governing.
The growing appetite for screen time has not gone unnoticed by American businesses. Amazon was built on the idea of using the web to bring physical objects to your door — first books, then paper towels and finally groceries. So what has it been up to lately? Madly buying and producing content that can be streamed into your home, by investing in television, film and gaming sites like Twitch.
I was freezing the other day and resolved to buy a better pair of gloves. As soon as the feeling returned to my fingers, I went on Amazon, typed in “warm men’s gloves” and ordered a pair. But what if I could have — using a HoloLens — tried on several pairs to see how they fit and looked? On a recent trip to the International CES trade show in Las Vegas, I saw plenty of applications that would do just that.
If Windows or something like it becomes the operating system not just for my desktop but for my world, how much will I actually have to venture out into it? I can have holographic conferences with my colleagues, virtually ski the KT-22 runs at Squaw Valley in California during my downtime and ask my virtual assistant to run my day, my house and my life. After all, I already talk to my phone and it talks back to me. We are BFFs, even though only one of us is actually human.
By most accounts, Microsoft has created a technology that blends the real and the virtual into a helpful hybrid by overlaying a screen on what we see. I just wonder if more screen time is what we really need.
