I am not entirely sure how we might have missed this news, but FaceBook’s news definitely dwarfed this out. With less than half of Whatsapp users, the amount offered by Rakuten and accepted by Viber is tiny compared to FaceBook’s and Whatsapp deal. Nonetheless, the result was similar – Rakuten had a steep drop of 9.5% for its stock, equivalent to $2billion.
How is Rakuten going to turn people who use Viber to cheap out on calls/SMS to spend big dollars on e-commerce, especially in emerging mkts
— Om Malik (@om) February 14, 2014
Many believed that this was not the wisest move for Rakuten, simply because they believed that Rakuten could not and would not be able to monopolize Viber effectively.
Also, another point to note is that Viber, which obtains most of its revenue from selling stickers and emoticons to users, has never made money – it logged a net loss of $29.5 million on revenue of $1.5 million for the year ended in December.
The company decided to acquire Viber to strengthen its global platform through the use of Viber’s range of customers in the company’s e-commerce and digital contents services. In the past, consumers had been using conventional televisions and fixed line telephones for contents as a means of communication, but this has been shifting to mobile contents and apps. Viber’s globally popular messaging service is seeing a rapid increase in numbers of registered users, and this will strengthen our digital strategy. The company aims to be the global No. 1 internet services company
Unlike Facebook, Rakuten will be paying cash for the deal, largely financed by its own reserves and bank borrowings. The deal is expected to close in March.
Rakuten aims to integrate Viber with the other online services in its ‘Rakuten ecosystem’ which currently includes 200 million users, especially to expand the linkage between messaging and transactions. Viber claims some 280 registered users and 100 million active monthly. In comparison WhatsApp has 450 million registered users and claims that 70% (315 million) are active daily. Facebook agreed to pay $4 billion in cash and $12 billion in Facebook shares, plus a further $3 billion in shares which vest four years after the deal completes.
So, could this be the next industry that will pop like a bubble?