A Look At BlackBerry Messenger’s MAU Trends And Monetization Plans


The use of mobile messaging applications has been growing rapidly, driven by higher smartphone penetration and the availability of affordable data plans in emerging markets. Installations of messaging apps nearly tripled over the last year, making it the fastest growing segment of the mobile app space. [1] There has also been a flurry of deal-making activity in this space, with messaging platforms seeing stratospheric valuations for their user bases. BlackBerry (NASDAQ: BBRY) has been looking to revitalize its once dominant BlackBerry Messenger (BBM), which is best known for its proven infrastructure and security, opening it up to rival platforms such as Android and iOS. BBM’s cross-platform strategy was off to a strong start when it debuted last year, with its monthly active user (MAU) base growing by around 20 million within a few weeks of the launch. [2] However, the momentum has died down since then and MAUs have remained nearly flat over the last two quarters at around 85 million users, though the company expects this to improve to around 100 million users as the Windows version of the application launches. [3]

See our complete analysis for BlackBerry here

Trefis has an $8.40 price estimate for BlackBerry, which is 20% below the current market price.

Relevant Articles
  1. Will Johnson & Johnson Stock Rebound To Its Pre-Inflation Shock Highs of $185?
  2. Should You Pick Eli Lilly Stock After A 4x Rise In Three Years?
  3. Down 9% This Year, What’s Next For Lululemon’s Stock Past Q4 Results?
  4. Down 14% In The Last Trading Session, Where Is Adobe Stock Headed?
  5. Will Higher Federal Government Spending, Gen AI Drive Digital Security Stocks Like CrowdStrike Higher?
  6. Up 30% In A Year Is FedEx Stock A Better Pick Over UPS?

Possible Reasons For The Sluggish MAU Growth

BBM’s popularity had been tied with BlackBerry smartphones, which have seen a precipitous decline in market share (less than 1% share globally as of Q1) over the last several quarters. [4] While the move to go cross-platform was definitely a step in the right direction, it may have come a little late since rivals such as Whatsapp, Facebook Messenger and WeChat have been able to scale up significantly on iOS and Android, which are currently the dominant platforms. Given that smartphone sales growth could begin to slow down going forward, with replacements accounting for a greater portion of sales,  it could reduce BBM’s scope for growth.

Moreover, close to 50 million of the active BBM users are on the BlackBerry platform, which is likely more popular with businesses. Business users are generally less likely to bring in additional users, unlike consumers who tend to follow their family and friends on to a compatible platform. BBM’s procedure for adding contacts could also be a factor hindering the growth of its active user base. BBM requires users to key in PIN numbers, email addresses or scan barcodes in order to add contacts, unlike rival apps such as Whatsapp that identify users based on their mobile numbers directly from their contact lists.

Monetization Strategy

BlackBerry is targeting revenues of roughly $100 million from BBM by FY 2016, and its monetization strategy is multi-pronged. The company recently introduced its BBM Protected offering, which provides end-to-end encrypted messaging for security-conscious enterprise users. The company is also looking to monetize its consumer user base through its mobile payments platform for BBM and advertising on its BBM channels. BlackBerry could also be looking to just divest this business, given the attractive valuations that mobile messaging properties have been witnessing of late. Some of the most notable acquisitions have been Facebook’s (NASDAQ:FB) purchase of Whatsapp (which has 450+ million MAUs) for around $19 billion and Rakuten’s acquisition of Viber (100+ million MAUs) for about $900 million. However, we believe that BlackBerry may not be able to realize such valuations for BBM given that a meaningful portion of its user base is likely to be business users who are less appealing to advertisers and marketers.

See More at Trefis | View Interactive Institutional Research (Powered by Trefis) | Get Trefis Technology

Notes:
  1. Mobile Use Grows 115% in 2013, Propelled by Messaging Apps, Flurry Analytics, and January 2014 []
  2. BBM adds 20 million new users since going cross-platform, iMore, October 2013 []
  3. BlackBerry’s (BBRY) CEO John Chen on Q1 2015 Results – Earnings Call Transcript, Seeking Alpha, June 2014 []
  4. Smartphone OS Market Share, Q1 2014, IDC []