Viber is a popular voice over Internet protocol (VOIP) application that is used by 360 million users in 193 countries worldwide. One of the reasons behind Viber’s popularity lies in its mandate to never charge for its software, never display any ads, and never charge for Viber-to-Viber calls or text messages. This of course begs the question—does Viber make any money, and if so, just how do they make their revenues? Furthermore, can Viber learn from its peers and successfully monetize itself, while maintaining the free-to-use platform in the very competitive chat and messaging application arena?

Is Viber Profitable?

The short answer to this question is “no.” Although having been around for nearly five years and boasting 249 million monthly average users, according to Statista, Viber still has yet to make a dime. In 2013, the company was acquired by Japanese Internet giant, Rakuten, for $900 million as part of their global Internet services takeover strategy. (Rakuten holds notable stakes in other social media services such as Pinterest and the failed Kindle-esque app, Kobo.) On the day the sale was announced, Rakuten’s shares plummeted by 9.5 percent, the most in four years, as shareholders and bears assumed this was just another folly in a series of blunders committed by a management whose lavish spending was depleting the company’s financial resources.

This bearish sentiment was not without support, as official documents from Rakuten showed that Viber made a total of $1.5 million dollars in revenue and incurred net losses of $29.5 million in 2013 and $14.7 million in 2012. While Viber’s strict adherence to keeping the app free of advertisements and free to download is laudable, it is quite obvious that its current monetization model is woefully inadequate and requires a revamp if Rakuten is to justify its $900 million/ $3.61 per-user investment.

So How Does Viber Make Money? 

Unfortunately, Rakuten’s official earnings releases are of little help. Viber is lumped together in an ambiguous “other sources of income" category along with Rakuten’s stake in a baseball team. So far, there have not been any official releases of a segment-by-segment comings and goings of money into this category. For now, based on official promo materials, Viber’s website, and third-party sources, we can infer that Viber makes its money through the following channels: Viber Out, Viber Stickers, Viber games, and potentially from a 2013 soft launch of international call “termination” services (the current status of which is unknown).

Viber Out is a fee-based service that allows Viber users to make long distance calls to non-Viber users, for example, to landlines. The service was launched in 2013 following the aftermath of Typhoon Haiyan, allowing residents of the Philippines to contact their loved ones in impacted parts of the country. Since then, the service has gone global and offers competitive rates against a similar service offered by Skype.

As for stickers and games, Viber users can download for free or pay for sticker packs designed by Viber or through licensing deals with artists, as well as play downloadable freemium games with other Viber users.

Finally, in 2013, Viber initiated a soft-launch of an international call termination service. What this means is that each time an international call is placed through a local carrier, say AT&T Inc. (T), the call is routed to a central private branch exchange (PBX) server, which then transfers the call to a “terminator” (chosen on a contractual basis), and in the terminator routes it to the local carrier within the destination country and finally to the receiver. As reported by Geektime, the soft-launch was initiated with a Dutch carrier, and the process would allow Viber to act as terminator for all outgoing international calls to other Viber users. Non-Viber calls will have to be routed through alternate channels. An official response from Viber to the Geektime article stated that the test was run on an extremely small number of users, reflecting “less than .0002% of call volume on the Viber system” and the service will only be available on an “optional basis” should it reach full commercialization. As of this writing, there have been no further updates on this project, and it remains to be seen whether it will become a permanent source of revenue.

Going Forward

Although official figures are scarce, it seems that Viber is taking the right steps to monetize. It can be surmised that Rakuten’s executives have noticed competitor Line’s breakaway success, for example. Line reported $656 million in revenue for 2014, generated primarily through freemium games and stickers, a strategy that Viber has also implemented. Viber will no doubt seek to increase its revenue stream through further replications of its competitors’ successes while pursuing some initiatives of its own. Some of the options available to Viber include:

  • Social networking: In 2014, Viber introduced Viber Public Chats, a step towards making Viber a hybrid social network utility in the vein of TenCent’s WeChat. Users are able to follow conversation streams of public individuals and are able to comment if they are a follower of said individual.
  • Shopping: Rakuten already enjoys a large share of the e-commerce market in Japan, and it would be beneficial to integrate Viber’s large user base into this ecosystem. The launch of Line’s Line Mart, a peer-to-peer marketplace earlier this year will add further support for Viber to enter the online shopping world.
  • Brand pages: Similar to Kakao Talk’s Friendsplus, users can make “friends” with their favorite brands and, in return, get exclusive deals and features through direct messaging.

The Bottom Line

Although Viber’s official revenue numbers have not been released, it can be inferred that Viber makes money through its phone services, stickers, and games. As of 2013, Viber has yet to turn a profit (although this could have changed), but if the company can successfully implement call termination services, as well as, the profitable strategies of its competitors, the future could be bright for this popular VOIP application.   

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