Money for messaging — BlackBerry mines BBM for dollars

It’s hard to pin down David Proulx, BlackBerry Ltd.’s senior director of BBM, on when exactly the company started to see this application as something that could generate revenue directly. “Starting off by saying this is something that can be monetized either directly or indirectly, I think, misses the point, because it needs to have not just casual usage but really frequent, deep meaningful usage, which is what we see on BBM,” Proulx said in a phone interview this week with The Wire Report. BlackBerry reports 85 million active users each month on BBM, 65 per cent of which use it on a daily basis. “When you get that level of engagement, when you’re providing that level of value to your consumers, the monetization opportunities, it might be dramatic to say they’re endless, but they are many and they are significant,” Proulx said. When Facebook Inc. announced its $19-billlion US purchase of WhatsApp Inc. in February, Facebook said WhatsApp had 450 million users, with about 70 per cent of them using the service on any given day. Proulx has been with BlackBerry, formerly known as Research In Motion Ltd., since 2001. He has seen the company grow into a smartphone giant and then fall behind as Apple Inc.’s iPhone and devices running on Google Inc.’s Android software became more popular than the BlackBerry. More specific to his current role, Proulx was there as BlackBerry Messenger was introduced in 2005 and saw its role, for both users and the company, evolve over time. The company’s public musings about generating revenue from BBM are relatively recent. Last month, a company blog post said it was testing sponsored content in its BBM Channels feature, which brings a social-networking element to what had traditionally been a tool for two-way communications. Proulx explained in the interview that companies can pay for the right to invite BBM users to subscribe to their channels. Users are targeted based on characteristics such as where they live and what channels they already subscribe to, he said. A recent announcement involved the introduction of “stickers” from its new BBM Shop. They are kind of like emoticons, but as BlackBerry said in a recent press release, they are “larger, bolder and more expressive images than emoticons.” They include likenesses of certain characters such as professional wrestlers. They go for as much as $1.99 for packs of 20 or 25, and can be used in perpetuity for people to “further personalize and enhance their chat experiences,” BlackBerry said. More virtual goods will be available in the near future from the BBM Shop, Proulx said. Other elements of the BBM monetization strategy include the upcoming launch of a subscription-based, extra-encrypted version of BBM for enterprise users, and future possibilities for using the service to make financial transactions. Kevin Restivo, a London-based analyst for International Data Corp. (IDC), said BBM is the ideal division for BlackBerry to look to for additional revenue opportunities. “It’s one of BlackBerry’s crown jewels, and so if BlackBerry is going to generate growth from any of its assets, BBM is one of those assets that it can exploit,” Restivo said in a phone interview. “And that’s because the market for mobile messaging is a high-growth one, and smartphone usage is growing as is mobile messaging, which, theoretically, gives BlackBerry a chance at not just growing the BBM user base, but also generating revenue growth from it.” Restivo added: “That path to revenue growth isn’t entirely clear though. What’s happening right now is that mobile-messaging providers like BlackBerry or WhatsApp — soon to be Facebook — are in land-grab phase. So, what that means is all these mobile-messaging providers are scooping up as many users as they possible can in a short period of time.” Of the ideas BlackBerry has put forth to monetize BBM, Restivo said he sees the most potential in providing BBM services that appeal to business users and getting involved in financial transactions. “Financial transactions and being able to take a slice of those is the Holy Grail for really any messaging provider,” he said. Carl Howe, a mobile-service analyst for the Yankee Group in Boston, said it’s too early to say what ideas for monetizing mobile-messaging services will work. He said the main goal of companies in this space now is to boost their user numbers. “Most of the companies in this market make no revenue from their messaging service,” he said in a phone interview. “You’re really after capturing a large number of users. … Frankly, I think most of the investors are saying, ‘and we’ll figure out how to monetize some time in the future.’ … That was the way Facebook got started.” It was apparent that BlackBerry was changing the way it looks at BBM last year when the company announced it was making the service available to users of iPhones and Android devices. More recently, BlackBerry said BBM would become available for Microsoft Corp.’s Windows Phones and Nokia Corp.’s X smartphones. “The decision to make it available to other devices was very much consumer led, or market led,” Proulx said. “The value of any service like this is the number of addressable endpoints, and the more you restrict that and force people to qualify their usage of it by saying, ‘Does my friend have a certain device or not?’ you begin to compromise the basic utility of the product.” Proulx it was at the time BBM opened up to iPhone and Android that BlackBerry stopped using the full name, BlackBerry Messenger. “We had to have an identity for BBM that could be easily represented on a third-party device in app stores at the point of acquisition,” he said. “Certainly since that time we’ve been using BBM as the handle. Whether there was ever actually a formal cutover or not is sort of beside the point.” Proulx would not say how much revenue BBM is generating so far. Nor would he comment on how BBM fits into the proportions BlackBerry generally provides in its quarterly financial reports on where its money is coming from. For example, BlackBerry’s report for the three months ended March 1 said it generated 56 per cent of its revenue from services, 37 per cent from hardware, and seven per cent from software and other sources. A year earlier, it said 61 per cent came from hardware, 36 per cent from services and three per cent from other sources. Facebook’s $19-billion US deal to purchase WhatsApp brought attention to just how valuable mobile-messaging businesses can be and prompted discussion about whether BlackBerry would ever sell BBM. Proulx said, rather than changing the perspective people at his company had about the potential of BBM, that blockbuster transaction confirmed previously held convictions. “It’s sometimes lost on people that we kind of created this mobile IM or mobile-messaging space, putting aside SMS for a moment,” he said. Looking at the Facebook deal and other large transactions that have taken place involving mobile-messaging companies, Proulx said: “It just goes to say that other companies in very different spheres of operations, whether it’s ads or e-commerce or whatever, are looking at mobile messaging and saying, ‘That’s such a critical part of the mobile experience, I’ve got to participate there.’ That has been unambiguous to us from Day 1.” — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Peter Henderson phenderson@thewirereport.ca

Money for messaging — BlackBerry mines BBM for dollars

News | April 4, 2014

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Money for messaging — BlackBerry mines BBM for dollars

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