Despite strong revenue and better than expected earnings, Twitter delivered a jaw-dropping decline in timeline views between 3Q and 4Q of 2013. The most fascinating aspect of the sequential plunge was that it cut across both US and International audiences. US timeline views declined from 43 to 41 Billion – but International views also dropped, from 116 billion to 107 billion. This is something that practically nobody anticipated. In 2012, the sequential growth in pageviews into the Christmas quarter was OK in US and downright robust among International users of Twitter (vaulting from 73 Billion to 81 Billion).
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What has changed in a year? One thing we know for sure is that the usage of mobile messaging apps exploded between the end of 2012 and the end of 2013. The registered user base of LINE exploded from 80 M in November 2012 to 300 Million in November 2013. WhatsApp’s monthly active user (MAU) base soared from 350 Million to 400 Million between October 2013 and December 2013. That meant adding 50 M active users in just two months.
I wish we could use the same metrics for all of these companies, but that is not yet possible. We have to make do comparing MAU performance of WhatsApp to the registered user base growth of other messaging apps – but by both measures, messaging apps are still enjoying an absolutely explosive growth period.
What would the specific threat to Twitter be? One factor here is that many of the giant messaging services are really thriving in Asia, the engine of global mobile content consumption growth. Kakao dominates Korea, WeChat has a lock on China, LINE reigns over Japan. These apps have reached 80%-plus smartphone penetration in their core markets, while also showing rapid growth in South-East Asian markets like India, Malaysia, Philippines and Indonesia. Leading messaging apps are also locked in intense rivalry in markets like Brazil, Spain, Italy and Middle East. One of the most popular features is group messaging that enables teens and college kids to send photos and texts to 5-50 closest associates. This helps young consumers to share commentary and images about sex, booze, drugs and/or emotional turmoil without exposing them to wider scrutiny. The same mechanic helped Snapchat explode in the US market in 2013. Could the limited exposure offered by a variety of messaging services be stunting Twitter’s international growth?
Leading messaging apps like WeChat, WhatsApp, LINE, Kakao, Kik, Viber and BBM have added more than half a billion new registered users over the past 12 months. That may be enough of a force to have suddenly derailed Twitter at the end of 2013. These apps are now rapidly adding new features like music and comic distribution (LINE, Kakao) as well as embedded browsing aimed at making sharing content easier and faster (Kik’s latest innovation). They are all attempting to tear chunks off the sides of Facebook – but what if this content sharing explosion of messaging apps has actually ended up hurting Twitter worse than Facebook?
If this phenomenon is behind Twitter’s troubles, there is no easy fix. Twitter does expose its users to merciless, global scrutiny. That is its nature. If particularly younger consumers feel safer within the confines of Kik or LINE group messaging, there is nothing that Twitter can do about it in the short term. Is it Facebook’s turn to suffer next or is it somehow better protected from messaging app competition due to its more private nature? Social networking industry may turn out to be a lot more turbulent in 2014 than anyone expected.