WhatsApp was developed by Jan Koum and Brian Acton in the early months of 2009 as a status update application (hence the name WhatsApp). It was further updated to Whatsapp 2.0 which transformed it into an Instant Messaging Application and started the real story.
This Facebook-owned IM Application now provides service to more than 1 Billion users all over the world. But the question of how does Whatsapp make money has been in the minds of everyone ever since the beginning as WhatsApp proudly expresses its views against native advertisements and hasn’t been charging its users for a long time. There surely are some big plans in the minds of developers (and Facebook) regarding its revenue model.
WhatsApp doesn’t earn revenue through advertisements. The founders hated advertisements and created this ad-free platform focusing just on great user experience and interface.
They wanted to create an instant messaging platform for the users and not for the big companies to place ads. But at the same time, they had to pay their bills too. So they decided to come up with the paid version of the application where they charged an annual fee of $1 from the users.
IS WHATSAPP GETTING PROFIT? OR LOSS?
Try. Yes, WhatsApp is making money, but it is in Loss.
Whatsapp revenue $15M & Net Loss is 232.5M in 2014. In 2015, 16, & 17 also it got a big bucket. In 2017, its net loss increased to 400 million and 2018 and 2019 increased more than a billion..! Yes. They are just losing 1+ Billion every year..!
Whatsapp largest users are in India, But India’s revenue in 2019 is 6.84 Crore Rupees, which is equal to $1 Million in the US dollar only. It is making money, but not getting the profit. Whatsapp is giving free service. Now 1+ billion people are using Whatsapp, still, Whatsapp is getting a big loss. Why?
Facebook bought Whatsapp for 19 billion dollars and more than 20 million people are paying $1 dollar per year. Others are using free. The BIG question is why Whatsapp revenue is very low & Facebook revenue is high? Why WhatsApp can’t make the profit?
Whatsapp has the highest users than any other app in the world. But Whatsapp is getting a big loss. Its revenue is very low. So the conclusion is App business is not profitable? or the entire App business is getting a loss?
So many economists, business analyzers say app business has a huge potential. Is it all fake?
Because the world No.1 app the Whatsapp is not able to get any profit till now, then how can other apps make money?
There are billions of apps that are competing against one another. You may think the app business will end with a big crunch.
No. Never it will happen. One thing I want to tell you, Technology-based industry have always a potential business. You may say, so many technology companies failed. But net profits of all technology businesses in the world have a more profit range than other business industries.
There are so many app companies getting millions of net profits.
How online business works? Today entire online becoming free. Free service providing apps or websites makes money mainly from the advertisement. Google is free and it’s 97% of revenue comes from advertisements only. That is 100+ billion dollars..! As of 2020 research, Facebook is making money only from ads. 100% Facebook is revenue is depending on ads..! If you click any advertisement, the app will get money from the advertiser. Free service Online business works like this. Some apps make money from yearly subscription or one-time payment and you will get a lifetime license like Microsoft Windows. There are so many businesses depending on online. For example, nowadays all are applying for insurance on the internet only. Insurance companies making a good website to apply and pay. Without office work, Insurance companies getting a huge profit. They start to give advertisements to related websites like insurance guiding websites. Mainly they give Google AdWord advertisement platform. When you search on google like “Best and cheapest car insurance”, the first 3 results will come advertisement, even their website is not search engine optimized or higher rank. So many people simply click the first result. Then Google gets money for every click. At least one person will apply out of 100. That’s enough for Insurance companies to make profits..!!!
However, Whatsapp launched the Whatsapp business app in 2018. But it, not a good revenue generator. WhatsApp will charge anywhere between 0.5 cents to 9 cents per message depending on the country, according to a Reuters report.
Then Why Whatsapp Can’t Able To Make a Good Revenue While Some Apps Are Getting a Huge Net Profit?
Whatsapp CEO Jan Koum told one of his interviews that Whatsapp will concentrate only expanding, that is, they are concentrated only increasing its users and it’s current goal is not to make money. If you are not renewing your account with paying $1, don’t worry, it will automatically renew for you..! ( Except a few rich countries)That means Whatsapp never trying to get more revenue and it is only expanding its user base. So we can say clearly that Whatsapp is NOT making money. It is in big Loss, even it’s users are growing exponentially.
What Is The Ability Or Potential Of WhatsApp To Generate a Revenue In The Future?
If Whatsapp wants to make money, they can generate billions of dollars within a month. Let’s take a scenario or predictions.
- 1+ billion active users are there.
- Just imagine, Whatsapp displaying ads for 1 month
- Every person at least clicks one ad in a month. (I estimated minimum, In FB it is not 1, but 10+..!)
- Few people will click more than 30 ads.
- Take average as 3 clicks per person. (Take minimum)
- 1.5 Billion X3 ads =4.5 Billion Clicks
- If 1 click gets 2 dollar average, then 4.5 clicks X $2 = 9 Billion dollars..!!!
That means Whatsapp can able to generate $ 9 billion/month right now..!