Market Insight

Rakuten expands into communications with $900m acquisition of Viber

February 14, 2014

Jack Kent Jack Kent Director, Media and Advertising

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Leading Japanese online retailer, e-commerce and content company Rakuten has acquired messaging and communication app provider Viber Media in a deal worth $900m.

Founded in 2010, Cyprus-based and Israeli-founded Viber claims more than 300m registered users of its app which offers free calls and messages. In 2013, the company made its first moves into monetisation with the addition of in-app purchases for credit to make outgoing calls to landlines and mobiles and for stickers and badges.

The Viber deal is the latest in a number of recent content and services investments and acquisitions by Rakuten. Other deals aimed at expanding its global content range include: the 2012 acquisition of Canadian ebooks and e-reader company Kobo; an investment in online scrapbook provider Pinterest in 2012; the 2012 acquisition of Spain-based online video service (now active in Spain and the UK); and the 2013 acquisition of Singapore-based online video provider Viki.

Our Take:

Unlike many of its competitors in the increasingly congested mobile messaging and communication app space, Viber has not raised any VC funding, though IHS understands it has received backing from private investors. Having only recently made its first moves into monetisation and with a growing user base to support, the size and timing of the deal represent a good exit for Viber.

Viber is popular in numerous of Western and Middle Eastern markets, but in terms of app downloads and user activity IHS data suggests Viber lags behind more established players such as Skype, Facebook Messenger, and market leader WhatsApp.

In lucrative Asian markets such as China, South Korea and Japan local messaging apps WeChat, KakaoTalk and Line have taken a lead when it comes to monetisation – with integrating premium content a key driver of revenues.

These Asian apps have deep pockets and are increasingly looking to expand into international markets putting further pressure on apps such Viber to drive monetisation and user acquisition.

For Rakuten, the acquisition of a social and communication provider will help it pursue the same strategy as many of the messaging apps; integrating communications, content and commerce services to drive monetisation.  Rakuten’s already established content and commerce business and in many cases direct billing relationships with customers will give it an advantage.

Acquiring Viber helps Rakuten expand its global footprint, but monetisation still presents a longer term challenge as it will need to work hard to find a way to integrate content services within the app.

As with its other recent acquisitions, Viber brings Rakuten outside its domestic Japanese market. Viber does not rank among the leading apps in Japan and so it may still need partnerships with local players to drive integrated commerce, content, and communication revenues or Rakuten will need to invest to acquire domestic users.

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