There’s been a run on the big over-the-top communications apps lately. Last week, we saw Asian e-commerce giant Rakuten scoop up Viber for $900 million, but on Wednesday Facebook announced it is buying the biggest OTT enchilada in the oven, WhatsApp, in a deal that could eventually be worth $19 billion.
So now that the WhatsApp is joining Facebook, does that mean we’re going to see a massive rush in the tech industry to buy its dozens of smaller competitors? Not necessarily. We are sure to see some more consolidation in the OTT space, but not all of these peer-to-peer messaging, voice and video apps are going to find homes.
WhatsApp is the granddaddy of OTT with 450 million monthly active users. It has the largest global footprint and messaging traffic that’s set to surpass the total volume of SMS sent over every carrier network in the world. What surely attracted Facebook to WhatsApp — and it may even have participated in a bidding war with Google for the prize — is its enormous scale. The only other OTT players with that kind of scale and reach are Skype, which is already owned by Microsoft, and Facebook Messenger itself.
Viber isn’t the second-largest independent OTT player — that distinction likely goes to China’s WeChat — but it is definitely one of the heavyweights in the space with 300 million registered users (though keep in mind a registered user is different from an active user). Yet Facebook is paying more than twenty times for WhatsApp than Rakuten paid for Viber. The difference in market value between the OTT king and mere OTT nobility is huge, to say the least.
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