Asian Chat Giants Covet ‘Exciting’ Indonesian Mobile Market

Asian Chat Giants Covet ‘Exciting’ Mobile Market

By Hayat Indriyatno,Stephanie Hendarta& Diska Putri Pamungkas on 1:05 pm July 13, 2013.
The strong adoption of mobile social media, including chat apps,by Indonesian youths has seen major players from South Korea, Japan and China scrambling for a slice of the year ever-expanding market. Natasya Sandjojo is the quintessential Indonesian university student, constantly keeping in touch with her friends by firing off phone messages or calling them up. And like many tech-savvy Indonesian youths, she has found a way to do that virtually for free. “I prefer using a mobile chatting application over texting because it doesn’t charge me every time I send a message,” she says. “I originally decided to download KakaoTalk because a lot of my friends were using it. I can use the app to call my friends, free of charge. There’s this feature in it that lets me call using different sound effects, such as a cat’s voice. It makes calling friends a lot more fun.”

KakaoTalk is one of several mobile messaging applications that have taken Indonesia by storm over the past couple of years. Their popularity is underpinned by the fact that they allow users to send messages and make voice or even video calls over a mobile data connection or Wi-Fi network — known in industry parlance as “over the top” services because they bypass the traditional cellular phone and text messaging platforms.This method of communicating is hardly new; BlackBerry built up an avid following in the country thanks largely to its BlackBerry Messenger service, while US-based WhatsApp has since 2009 provided a similar offering across different mobile operating systems.

The new generation of OTT apps coming out of Asia is likewise not tied to a particular OS and, crucially, goes beyond simple text and multimedia messaging, while not requiring users to have premium-specification handsets.

“That’s why BlackBerry lost its edge,” says Sudev Bangah, the associate director of the Indonesian office of the International Data Corporation, an analyst house.

“BBM today just isn’t the differentiator that it used to be in the early days.”

Indonesia, he tells the Jakarta Globe, is an “absolutely app-hungry — and an absolutely free app-hungry — market.”

“Barely 5 or 6 percent of [Indonesians] are willing to pay for applications,” he says, adding that most of the popular OTT apps fall under this category.

“As long as I can get LINE, I can get WhatsApp, KakaoTalk or WeChat on [my phone], I’m very happy. And even an Android 2.3 phone, which goes for Rp 500,000, can run those apps.”

That message has not been lost on the companies behind the apps.

KakaoTalk, which has more than 100 million users worldwide, calls Indonesia its primary market outside of its native South Korea, and has averaged 120,000 new users a day since launching a TV ad campaign in late March; LINE, whose biggest market is Japan, says Indonesia accounts for more than 10 million of its 160 million users, making it one of its top five markets; and WeChat, from China, with 300 million users globally, has seen its Indonesian user base grow fifty-fold since launching here in February.

None of the companies, however, would disclose precise figures for their current Indonesian user bases.

The KakaoTalk show

Yujin Sohn, the Jakarta-based vice president for global business development at Kakao, acknowledges that when KakaoTalk is stacked up against LINE and WeChat on basic text and multimedia messaging, “I think it’s kind of difficult to differentiate from one to the other.”

But she says that it’s in the advanced features and history of innovation where KakaoTalk — first launched in South Korea in March 2010, making it the oldest of the three — stands out. Those features include free voice calls and conference calls, photo album sharing, a variety of games, and the ubiquitous “stickers” popular among users — essentially outsized animated emoticons that can be used in the chat app.

The app also boasts a feature called “Plus Friend” in which Kakao has partnered with local companies to offer users promotions such as discounts on meals or movie tickets.

Localizing the content, says Sohn, is a key part of Kakao’s strategy in Indonesia.

“For example, we’re the first messenger to provide local emoticons designed by Indonesian designers,” she says.

The company has also worked with mobile carriers Telkomsel, XL and Indosat to offer free data usage for KakaoTalk users.

“We’re aware that in Indonesia the users are very sensitive to 3G data fees. It’s very different from Korea. We’re always thinking of how we can improve our features and our partnerships to provide the best messaging features for Indonesian users,” Sohn says.

“Localization efforts and innovation — those are the two keys that will differentiate us,” she adds.

Going on LINE

Localization is also a key focus for LINE, says Simeon Cho, the general manager of the LINE business office at South Korea-based NHN Corporation.

For Earth Day this April, the company offered users free orangutan stickers, and for each download pledged a donation to WWF Indonesia.

“Apart from a new social movement like the orangutan campaign with WWF Indonesia, we are planning for more localized services and activities in partnership with various local enterprises,” Cho says in an email to the Globe.

These include stickers of Agnes Monica, a popular singer who is also LINE’s local brand ambassador, and Ramadan-themed stickers introduced this month.

Cho cites “hockey stick” growth in LINE’s Indonesian user base — more than 23 million downloads of apps from the LINE suite, including the chat messenger and games, were recorded in the first five months since its official release here — but says the company doesn’t expect to begin making money immediately through the sale of stickers and other add-ons, like it does in Japan.

“Users who seek more variety and dynamic service can purchase additional functions,” he says.

“However, currently we’re solely interested in providing LINE users with a satisfactory mobile experience, not in generating revenue from the Indonesian market.”

Sohn says Kakao takes a similar view. She notes that the company took two and a half years to become profitable in South Korea, and that it will take the same approach in Indonesia, first building up a strong user base and ecosystem with business partners before thinking about monetizing the platform.

I chat, WeChat

Tencent, the Chinese firm behind WeChat, already generates hefty revenue from mobile and social gaming — $7 billion last year, according to its earnings report in March — and in Indonesia is focused on rolling out new features for its messaging app.

Where WeChat differs from the others is in how it takes advantage of more of the hardware built into most modern smartphones. In addition to voice calls, it offers video calls, which the others don’t. It also features a range of location-based services that make use of the phone’s GPS receiver and accelerometer.

One of these is called “Look Around” and it does just that: It searches for other WeChat users nearby, based on GPS data, to initiate a chat. “Shake” allows users to exchange contact details or multimedia with users nearby by shaking the phone.

David Audy, the chief executive of MNC Tencent, the joint venture between Indonesia’s biggest media company and WeChat’s parent company, insists that WeChat is the most feature-packed of the three mobile messaging apps.

He says the app is proving particularly popular with users in the 20- to 30-year-old demographic and the user base has grown by 50 times since launching in February, but is reluctant to give a figure.

“This is such a great start, and we will continue to improve our services for our users,” David tells the Globe, adding that e-commerce services like those available to WeChat users in China will soon be available in Indonesia.

So who comes out on top in the battle of the apps? Everyone’s a winner, it turns out.

“The Indonesian market is very exciting and dynamic, with great growth potential,” Sohn says.

“Economic growth is phenomenal, the middle class with buying power is rapidly increasing, and people are very social digitally. All these make Indonesia a very exciting market for any chat platform.”