CEO Talmon Marco: “I have no idea where this is coming from. I don’t know what they want from us.”
According to Israeli news site Calcalist and independently confirmed by sources close to Geektime, Viber – the Israeli based Web and mobile instant messaging app – is in acquisition talks with an undisclosed Asian IM platform to be purchased for $400M.
Viber: Asian IM X-Factor
Founded at the tail end of 2010, Viber has been on its own acquisition tear in the form of users. Surpassing the 200M mark this past June with 67M coming from Asia, it’s not too surprising Viber has been turning heads. Perhaps even more attractive to their Asian competition has been their embrace of Stickers as a revenue model beginning last October. The large emoticons have become a fairly lucrative revenue stream for the Asian market. LINE, the relatively new Japanese mobile messaging company attributed 30% (about $17.4M) of their Y5.82B ($58M) Q1 earnings in 2013 to Stickers.
Incidentally, LINE is one of the big players in the market but few believe they have the kind of asset value or cash flow yet to slap down $400M on the negotiation table, just like that. WeChat and QQ are two of the largest IM services in China; WeChat has been on fire in its own right securing the 6th highest earning position of a non-gaming app in China in 2013. They’re also competing heavily with Viber in India. It would be very Sun Tzu of them indeed, buying out the most dangerous rising threat to their plans for East Asian dominance.
Kakaotalk, South Korea’s top messaging service broke 110M this past November and saw $200M in revenue at the close of 2013. That revenue, although impressive, would not justify a $400M purchase. Furthermore, the company is expected to IPO on the KOSDAQ midway through 2014 at a $5B valuation. Throwing away a full 10% of that on an M&A deal half a year before seems highly unlikely.
Aside from WeChat, the other likely Asian suiter would be that other South Korean company, Samsung. The hardware giant has a lesser known and struggling messaging app built into some of their mobile devices called ChatON. Samsung has been working overtime to increase their reach and they managed a commendable doubling of their user base in just four months from 50M to 100M by the end of 2013. Still, that’s while having the native device embedding advantage plus a juggernaut’s marketing budget – and they’re still falling far behind the little startup on their home turf, Kakaotalk. $400M is a drop in the bucket for Samsung and considering how strongly they’ve been pushing user growth for ChatON, and how much they’ve already spent on their user acquisition drive with lukewarm results, buying Viber would be a far surer and smarter bet for their dollar.
Having laid out this well crafted and highly interesting analysis of the Asian IM market’s current topography, it all might amount to nothing more than an intellectual exercise. Having reached Viber Co-Founder and CEO Talmon Marco for comment, Marco’s response was “I have no idea where this is coming from. I don’t know what they want from us.”
Oh yes you do Marco, they want your 200M users. The question is; are they for sale and for how much?