This document discusses the rise of over-the-top (OTT) messaging applications and how they have disrupted traditional telecommunications companies. It analyzes popular OTT apps like WhatsApp, Facebook Messenger, LINE, WeChat, and KakaoTalk and their rapid growth in users. It also examines lesser known apps and discusses how OTT apps differentiate themselves through features or disrupt existing services by transferring value to users for free. Finally, it outlines traits of apps that focus on social affinity versus task fitness and how both approaches can achieve widespread adoption.

1. ♒ Innovation
in a Red Ocean
Navigating tides and preparing for tsunamis
Benjamin Keyser, 2013
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Telefonica Digital

2. TU Me – A case study
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Started design and build of TU Me and TU
Go in February 2012… Infrastructure + Apps
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TU Me published in about one hundred days
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Less than a year later, TU Go goes live in
the UK
TU Me concluded all new development in
August and taken offline in October 2013
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3. What happened to TU Me?
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Except for the UX and a few subtleties, TU Me was
+/- “me too” on features
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No cohort traction… “tumble weed” syndrome
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Our planned disruptive features could not be
released as the TU Go build-out took precedence
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The OTT alternatives exploded over the 12 months,
putting us further behind every day
☞ We could not go faster than the competitors, and had too
many competing priorities
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4. ❦ How the OTT garden grows
Making an impact when the conditions are right
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5. Messaging, briefly
Informa Telecoms & Media 2012
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6. Subscriptions & broadband
PCMagazine, 2013
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7. Two cases of OTT explosion
McKinsey & Company, 2012
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8. This is the vital recipe
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Smartphones
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Broadband
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Negatively incentivizing tariffs by telcos
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But what’s the final ingredient?
Why some gain success but not others?
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9. Skype
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Founded in 2003 in Luxembourg
User base 680+ million, and in January 2013 50m reported online
concurrently. Skype Carried 115 billion minutes of calls in Q2 2012.
In 2012 had 34% of the International call market share
Android (100m), iOS, BB, WP, Symbian, WebOS, Xbox One, Linux, PSP,
PSVita, PS4, Windows, and OS X
16 languages
Last reported revenue $800m in 2011
Skype name is a conflation of ‘Sky Peer-to-Peer’
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10. Whatsapp
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Launched in 2009
Text, groups, share location, audio, video files
23 languages
Available on Android, iOS, BB, Nokia S40, Symbian, WP
The don’t release numbers.. But…
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‘WhatsApp CEO Jan Koum said the company now boasts a bigger base than Twitter, (which
claims 200 million monthly) and processes 18 billion messages a day… by comparison,
Facebook is processing 10 billion/day…’
–Verge, April 2013
Fun fact: ex-Yahoo! founded it
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11. Facebook messenger
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Launched August 2011 on mobile
Text, VoIP in some markets, groups, photos/audio
22 languages
User base 680m
Wolfram Alpha data mined Facebook chatter over time and found that
young people talk more about Facebook, relationships, and school…
Older people talk about the weather and health.
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12. LINE
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Line, launched in Japan in June 2011
Text, VoIP, group chat, social timeline, share location, audio/video
Available on Android, iOS, WP, BB, Nokia Asha series… Also desktop
Microsoft Windows, Mac OS X
100 million users within eighteen months … 150 million in 24 months
Revenues of $59m in Q12013 from games, stickers and branded accounts
Built by a South Korean company, mainly web portal and gaming
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13. WeChat/Weixin
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Launched January 2011, built at the R&D group of Tencent Holdings
Text, VoIP, group, HD video chatting, photos, walkie-talkie, video,
photo wall
15 languages
User base 300m
WeChat launch event in India, July 2012
Tencent owns QQ, a popular IM client, and encouraged WeChat to compete
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14. KakaoTalk
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Founded March 2010
Text, VoIP, group, photos, video, photo wall
13 languages
User base 90m
Reported revenue of $45m in 2012
Popular boy band “BigBang” chosen for a broad TV campaign for their “artistry and
wider pop appeal” to which KT chairman drew a parallel with the service
Benjamin Keyser, 2013
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Telefonica Digital

15. ☄ Notable outsiders
Emerging elites? Future flops?
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16. Viber
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Founded December, 2010
Text, VoIP, groups, desktop video, share photos, location
User base 200m (no numbers on active users)
27 languages, broad platform support
It’s scientifically proven that Viber has achieved a brand that’s so humorless, bland and
soulless as to make GSM calls and SMSes seem glamorous by comparison.
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17. Snapchat–Youthful exuberance
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Launched in September 2011
‘Disappearing’ images and chat
iOS and Android
Primarily ages 13-30
5m active users, 200m images daily
“Ghost Chillah”
A 2013 UK study revealed that over half of all Snapchat users
had received an ‘inappropriate’ image or gesture.
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18. Path–Middle-aged introspection
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Launched November, 2010
Private and closed-network approach in a jewel-box
presentation
$15 per year subscription model introduced Sept. 2013
20m users, actives unknown, pay subscribers unknown
iOS and Android
Primarily ages 25+ (not youth market)
October announced twenty percent workforce reduction… happens when the board
doesn’t see growth and/or monetization has failed
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19. Ping–Striving for Zen
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Launched recently
Blends email + OTT
messaging
Contact-centric feeds
of all comms
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20. Wickr–Paranoid (or is it?)
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Military-grade encryption (AES256,ECDH521,RSA4096 TLS)
Not shared with strangers, deletes metadata (location, time, identification and edits)
Wickr requires no personal info from you and collects nothing about usage, claims the
app store
Secure File Shredder forensically erases unwanted files deleted from the device
FIPS 140-2, HIPAA, exceeds NSA Suite B Compliancy (Compliance for Top Secret
communication)
BUT.. sends files from Box, Dropbox, Google Drive
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21. ⚗ Distilling your proposition
You can do anything, but will the market notice?
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22. Classifying feature sets
Differentiation vs. disruption!
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Differentiation is cat-skinning… branding, convenience, suitability
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Disruption is transferring someone else’s value and give it away for free
or for very low cost
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Or radically simplifying previously complex process or interaction
(if time=money, then it’s the same as the above bullet!)
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Or by creating something truly new (generally hard to find examples)
Task fitness vs. Lifestyle affinity!
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Fit is how conveniently, cheaply, or elegantly the technology meets a
particular need or solves a problem
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Affinity is how well the overall proposition (technology + branding)
matches the user’s self-concept, aspiration, or tribal identity
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23. Classifying users
Cohorts vs. trend impacts!
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Cohorts are groups over time… you can market to a cohort
by focusing on sensibilities or access to resources
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Cohorts overlap… family and friends, for example
Trends are factors that move everyone… you can design or
engineer to a trend such as “more people carrying mobiles”
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Facebook’s core is a cohort of users
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Whatsapp feeds an appetite for cheap, asynchronous
comms… the trend brought about by changes in the
economics of data and devices
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24. Affinity traits
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Youth often the target because of the socially-fueled adoption rates and potential
for now and future monetisation
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Elaboration of the offering is critical to success: non-essential differentiation on an
essential core (like soap or orange juice)
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Sensory richness and playfulness become the branded experience
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Pop-culture references and inspiration throughout
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Focuses on cohort sorting and cohort building… “my tribe”
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Socialising via mechanics—indirect, low effort interactions such as likes,
scrolling a social page, gamification, and gifts
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Friction on sign-up is NOT a key consideration, and in some cases, adds to the
exclusivity of the experience (ie Path)
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Appear on top of moderately to highly matured technologies
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IM on desktop made Line and KakaoTalk possible (via Whatsapp)
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25. Task fit-ness traits
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Achieves adoption by being first to market with functionality that transfers value
from incumbents.. examples:
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Internet explorer (free web browser… bare knuckles KO of Netscape)
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Hotmail/Yahoo mail (free email without any related subscriptions)
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Craigslist (free local classifieds destroyed paid newspaper classifieds)
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Ebay (wide-reach selling by individuals gutted magazines and newspapers)
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Skype (free international voice for discretionary comms)
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Android (free OS for mobile)
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Whatsapp (unlimited, free texting over 3G)
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Dropbox (free cloud storage)
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Achieves momentum by being disruptive (transfer of value) and achieves “go to”
status over time fuelled by the network effect
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Friction is minimised… low barriers to registration, broad platform and devices
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Transparency of control… it’s a genuine, useful tool for the consumer and not
perceived as a Trojan horse
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26. Thanks, gracias, tack!
benjamin.keyser@telefonica.com
@benjkeys
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