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BlackBerry’s big moment: Can it make money with BBM?

Published Mar 26th, 2014 3:55PM EDT
Can BlackBerry Make Money With BBM

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The messaging app market has really started to heat up after Facebook bought WhatsApp for $19 billion and after Alibaba’s investment in the far more obscure Tango granted it a $1 billion valuation. As popular entries like Viber, WhatsApp and Tango have found big strategic partners, the number of stand-alone messaging apps with more than 100 million registered users has dwindled. BBM and Kik are among the most notable indie messaging apps left looking for sugar daddies and their futures will hinge upon whether they can show real potential to generate revenue. That’s why BBM is now at such a crucial juncture: It is dipping its toes in the advertising market for the first time.

BBM’s entry into the world of sponsored content seems carefully calibrated. The number of sponsored invites is limited to three per month. When a brand asks the consumer to subscribe to its channel, a simple push of an “ignore” button ensures that the brand request won’t pop up again. BlackBerry can also be selective with the brands it promotes to BBM users, limiting certain campaigns to geographic areas where they are most appropriate.

Will it work? Can BBM turn into an ad powerhouse?

Against industry expectations, BBM has been able to retain powerful download performances in meaningful markets like South Africa, Nigeria and Indonesia. But in the lucrative U.S. and Western European markets BBM has faded badly in recent months, leaving only the U.K. and Canada as notable Western markets where it retains a top 50 slot in the iOS download charts.

Nevertheless, in emerging markets BBM is still doing impressively well, maintaining robust momentum in places like India, Saudi Arabia and UAE. The combined strength BBM is showing in emerging markets would seem to place it above Tango in these regions. Tango’s valuation was recently pegged at $1 billion, yet it currently lags well behind BBM in iOS download volumes in Latin America, Africa, the Middle East and key Asian markets.

Ultimately, much depends on BBM’s strength as a content distribution platform. LINE just recently announced adding 100 million game downloads since last September, a dazzling example of just how effectively a messaging platform can turn into a content channel. Even if BBM’s ad initiative works well, the real money is going to be in content sales — and that is an area where BlackBerry has yet to roll out a comprehensive strategy.

LINE was roughly where BBM is now when it started dipping into game distribution, so in that sense BBM isn’t behind the curve and may benefit from studying and copying the best features of content champs like LINE, Kakao and WeChat.

The mobile app market remains an extraordinarily fluid place, as LINE’s stunning recent resurgence in America is demonstrating. Having been written off as a weak also-ran in the U.S. market, LINE has become a Top 30 iPhone download in U.S. iPhone chart since Facebook bought WhatsApp. This places it above such hot apps like Vine and Netflix. BBM may well deliver a surprise or two in the coming year as it rolls out new features.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.