However, as Rakuten CEO Hiroshi Mikitani mentioned in a conference last week, Viber has huge growth potential in terms of users, especially in emerging markets. In exchange, Rakuten will be paying almost $3 per user, which may sound high if we consider that Viber generated $1.5 million in total revenue last year. Viber, which has users in 193 countries, will bring 300 million additional users to Rakuten's network. As a result, despite obtaining the core of its revenue from its e-commerce business in Japan, Rakuten managed to establish a global network of 200 million users, the first step in its globalization process. Given this difficult context, why did Rakuten buy Viber?Īlthough Rakuten started its business as an e-commerce shop, the company quickly built a rich portfolio of media services, as it bought a Canadian e-reader company in Kobo, UK website, American website Buy.com, a baseball team in Japan, and expanded into financial services.

With most competitors offering free messaging and calls, monetization in this market is known to be extremely hard. The deal gives Rakuten exposure to the fierce market of instant messaging and freemium voice-over-IP services, where Microsoft's ( MSFT 1.70%) Skype, Facebook's Messenger, and Tencent Holdings' ( TCEHY 5.96%) WeChat are the main players. Viber is a call and messaging app company run from Cyprus by Israeli entrepreneur Talmon Marco.Viber, which obtains most of its revenue from selling stickers and emoticons to users, has never made money, logging a net loss of $29.5 million on revenue of $1.5 million for the year ended in December. Japanese Internet company Rakuten, a 10,000-person e-commerce giant with a $20 billion market capitalization , announced last week it will buy Viber for $900 million, in a deal that would add 300 million users to Rakuten's user base.

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