Facebook announced their acquisition of 55-employees-strong messaging firm Whatsapp for $19 billion in cash. How does Whatsapp complement or extend Facebook’s coverage of the social media realm? Or are there other considerations being made in the meeting rooms of Facebook? Facebook mainly derives its revenues from advertising income, and Whatsapp has a clear track record of never bothering users with advertisements. So how does this fit together?
From what I see, Facebook is trying to get as much “eyeball time” from their users. For instance, take the facelift of Facebook’s mobile app dubbed “Paper“. The app is aesthetically very pleasing and the user experience is intuitive. However, looking beyond the obvious improvements and gloss, one thing was surprising. The app allows Facebook users to ‘follow’ certain topics that interest them (e.g. news, technology, sustainability, and the list goes on). This looks like Facebook is attempting to take serious steps into news and entertainment media, rather than social media, the likes of LinkedIn’s Pulse, Flipboard and newspaper apps. Even though Paper has not yet gained traction (partially due to its limited release in the US only), it hints at a market expansion in terms of value proposition and target audience and not, per se, geographical market expansion.
A person only has a max number of hours and minutes a day in which he looks (“eyeball”) at an app, website or traditional media. Harvard Business Review conducted a research in which they break down how people use mobile. The more Facebook can get people’s “eyeballs”, the higher the likelihood for revenues in whatever business model (be it advertisements, subscriptions, nominal fees, etcetera).
Moreover, Facebook’s acquisition of Whatsapp puts further pressure on telecom giants in the world, with text messaging on slow but certain decline due to apps like Whatsapp.
With clear moves into news/information and messaging, the question remains: When will Facebook make strides into e-commerce or, perhaps, video, to further attract and retain eyeball time?