WhatsApp might still be basking in the afterglow of last month’s record-breaking acquisition by Facebook, but elsewhere in the world of messaging apps, there are big developments afoot. Chinese e-commerce giant Alibaba has just announced that it will be investing $215 million in the messaging service Tango, in exchange for a minority stake in the company.
“Alibaba very much like what Tango wants to do, and Tango felt Alibaba could be a good investor,” says Jerry Yang, co-founder of Yahoo (which has a 24% stake in Alibaba). “Tango as a messaging platform is enabling a lot of commerce and content. That is clearly, I think, an area of interest to Alibaba.”
Tango has a registered user base of over 200 million, with approximately 70 million active monthly users, and has been valued at $1.1 billion. Tango offers free calls, messages and video chat services to its users, in addition to a range of other features including free Spotify streaming and gaming. The platform currently generates revenue equally through advertisements and games.
This broader service proposition is becoming increasingly prevalent in messaging platforms, and gaining significant traction outside the United States, as Parmy Olson at Forbes points out: “Tango is among a collection of messaging services that are broadening themselves out to become social platforms on which users not only communicate, but play games and share photos as they might through Facebook. Asian messaging services like Kakao, LINE and WeChat have pioneered this platform strategy. Japan’s LINE, for instance, booked revenues of $338 million in 2013 from selling games, sponsored content and digital stickers.”
Alibaba’s investment will enable Tango to up-scale its staff, particularly on the engineering front, in order to compete with Silicon Valley institutions like Facebook, as well as competitive emerging start-ups in Beijing. “We’re competing in the most active space in mobile today,” stated Eric Setton, Chief Technical Officer at Tango, in an interview with Mashable. “In order to position this company and this service for the long term, I think we want to be able to be as aggressive as these other companies.”