Can “Hello” Threaten Facebook’s Growth In India?

by Trefis Team
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Facebook (NASDAQ:FB) is the undisputed leader in the social media space with competitors such as Snap and Twitter being much smaller and catering to certain sections of users. With nearly 2 billion users, Facebook is dominating the market and getting a lion’s share of advertising revenues. However, if an equally large player such as Alphabet’s subsidiary Google enters into the social media space, Facebook can face intense competition. While Google is attracting advertisers through various services beyond search, such as Maps and its YouTube platform dedicated for videos, the company’s social media platform, “Orkut,” which was immensely popular in India, had to shut down in 2014. Orkut was back in 2016 in the form of a new app termed “Hello” launched by its founder Orkut Buyokkokten. This app connects users with similar interests and Google has invested in this venture. Google already has a messenger app called “Allo” which competes directly with Facebook’s Messenger and its stake in the networking app indicates that the company might look at social media as a business arm in the future. Orkut was extremely popular in India and Brazil and the Hello app was recently launched in India.  This app is targeted at users in the age group of 18-30 years and is already seeing high user engagement in the regions it is functional in. The company is targeting international markets before entering the U.S.

Strong User Base Makes Facebook The Leader

India is the second largest market for Facebook in terms of users and the company has more than 200 million users in the country. Experts believe that there is space for other players in this segment, however their success is not guaranteed. Hello’s target is to gain around 100 million users in India and currently the company is seeing high engagement levels. The monetization plan of this new network is to use gamification features and adding audio and video calls. India has a strong base of android users who can get attracted to this new app. However, whether loyal Facebook users will shift to a new app remains to be seen. There can be an overlap between users on both platforms,  however, eventually users will choose to remain active on only one social media platform.

Both Facebook and Google are looking to build an online platform which will become the “go to” place for all online needs of the user such as e-commerce, audio and video calls, sharing photos and videos, and making payments. Facebook has a huge advantage in the social media segment in terms of user base and engagement levels. However, users are increasingly becoming “passive” on the platform and not sharing personal content in the wake of privacy concerns. Facebook is looking at publishers to create engaging content on its platform. In view of this trend a platform (Hello) which bring users with similar interests together and encourages them to share content on their hobbies and interests (and not personal photos) might attract users and engage them better. Further if Google eventually decides to acquire this platform, it can fuel significant growth for Hello in India and other international markets.

For now, Facebook appears to be on a strong ground in India and the company is working on several measures to keep users engaged. However, if large players look to enter the social media space, competition in this segment can intensify in the long term.

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