With WhatsApp off the market, who’s the next big OTT acquisition target?

There’s been a run on the big over-the-top communications apps lately. Last week, we saw Asian e-commerce giant Rakuten scoop up Viber for $900 million, but on Wednesday Facebook(s fb) announced it is buying the biggest OTT enchilada in the oven, WhatsApp, in a deal that could eventually be worth $19 billion.
So now that the WhatsApp is joining Facebook, does that mean we’re going to see a massive rush in the tech industry to buy its dozens of smaller competitors? Not necessarily. We are sure to see some more consolidation in the OTT space, but not all of these peer-to-peer messaging, voice and video apps are going to find homes.
WhatsApp is the granddaddy of OTT with 450 million monthly active users. It has the largest global footprint and messaging traffic that’s set to surpass the total volume of SMS sent over every carrier network in the world. What surely attracted Facebook to WhatsApp — and it may even have participated in a bidding war with Google(s goog) for the prize — is its enormous scale. The only other OTT players with that kind of scale and reach are Skype, which is already owned by Microsoft(s msft), and Facebook Messenger itself.
Viber isn’t the second-largest independent OTT player — that distinction likely goes to China’s WeChat — but it is definitely one of the heavyweights in the space with 300 million registered users (though keep in mind a registered user is different from an active user). Yet Facebook is paying more than twenty times for WhatsApp than Rakuten paid for Viber. The difference in market value between the OTT king and mere OTT nobility is huge, to say the least.

Marc Lefar Vonage Andreas Bernstrom Rebtel Mobilize 2013

Rebtel Andreas Bernstrom (center) at Gigaom’s Mobilize conference (c) 2013 Pinar Ozger [email protected]

Last year, I had a conversation with Andreas Bernström, CEO of OTT voice pioneer Rebtel, regarding his thoughts about consolidation in his industry. He predicted either Google or Facebook would buy WhatsApp, and the other would pick up Viber. He turned out to be half right, but I think his basic argument was sound. Internet companies are interested in these OTT players not because of their technology or their business models — most of which are non-existent — but because of the way they’ve been able to attract incredible volumes of mobile users in relatively short periods of time.
That said, Bernström feels that there are really only a few big global players of any value to the internet companies, and two of them are now accounted for. So who’s left?
There’s Tango, which specializes in video chat and its 150 million users, and rising stars like Kik Interactive. The Asian messaging apps — WeChat, Line and KakaoTalk — would all seem like good candidates, each with their hundreds of millions of users on their rosters (though WeChat is already owned by Chinese internet giant Tencent). But Bernström pointed out that the Asian OTT companies all tended to focus on their home regions, which would make them less attractive to a big global internet company like Google.
Tango's video app

Tango’s video app

That, however, is starting to change. A recent study by On Device of OTT usage in four different countries found that Line and WeChat were starting to spread beyond their home countries, taking root in the U.S. and Australia. Surprisingly, On Device also found that BlackBerry Messenger was starting making big gains globally, now that BBM is decoupled from the BlackBerry OS. If BlackBerry decides to sell off its valuable assets, BBM might get some takers.
So is Google still in the market for an OTT app? It’s hard to say. There’s no single purchase it could make that would give it the sheer customer volumes or global reach that Facebook just achieved by acquiring WhatsApp. Buying Line or KakaoTalk would bring in a large volume of users, but they would still be concentrated in Asia (though if it’s Google’s goal to expand its services rapidly into Asia then these companies are the perfect targets). Buying a smaller player like Kik would give it users closer to home, but not the scale of WhatsApp of Viber.
But Google, Yahoo, and every other internet communications company and mobile carrier is probably taking pause at this transaction. Combined, Facebook and WhatsApp will control a plurality if the not the majority of the world’s mobile messaging transactions. Compared to that, Hangouts looks like an also-ran app buried in Google Play.