Making money from mobile messaging

South African mobile messaging companies are generating healthy revenues through a range of services, including advertising and paid-for premium services.

MXit is one of South Africa’s most successful online start-ups, with 50 million registered members, and 750 million messages sent daily.

Mxit CEO, Alan Knott-Craig Junior said that the company is planning to add at least 12 million users to its platform this year.

Knott-Craig also said that the company is planning to triple revenues – from R100 million in 2011, to R300 million in 2012. The CEO continued, saying that he plans to make MXit profitable in 2012 (MXit’s consolidated bottom line was a loss in 2011).

Although under the shadow of the high-profile MXit, another South African mobile messaging company is also doing well.

2go – which was founded in 2007 by Alan Wolff and Ashley Peter while studying computer science at Wits – is generating healthy revenues and is already profitable.

2go’s Peter Lockhart explained that the company did not need any funding, and was “bootstrapped and grown into profit without any investment”.

“We have had interest from investors, but so far have not found a good match, but we are open to this,” said Lockhart.

2go uses a ‘freemium’ model similar to MXit, where users can send messages to each other for free, but with certain features in the application requiring payment. The paid-for services include chat rooms and downloadable content.

2go uses an internal currency called ‘Gocredits’ for payments, similar to MXit’s ‘Moola’.

“Users are given free GoCredits when they sign up, but when they do run out, they purchase [more] by SMSing a premium number, which deducts from their airtime balance and credits their account for use in the application,” explained Lockhart.

2go, which recently relocated to Cape Town, has big plans. The company will be offering more content this year through the client, and are working on improvements to the service which users have been requesting.

2go is also investigating mobile payment platforms, and are planning to get more involved with local content in each of the countries where 2go is popular.

The company is also looking at boosting their revenue streams with their own advertising and active polling platforms.

“We’ve built a smart advertising platform, and we’re working with agency partners to spread the word about the success of 2go as a platform,” said Lockhart.

“We have built an active polling system that allows us to poll our users on topics of interest and generate results immediately. This is an excellent tool for companies to get relevant, immediate opinion on what a certain demographic think.”

The mobile messaging market is fiercely competitive with international players like BlackBerry Messenger (BBM), WhatsApp, Gtalk, Skype and ChatOn all fighting for market share.

Despite this competition, MXit and 2go are growing their subscriber numbers and are generating revenue, showing the potential of both local start-ups, and the potential which the mobile phone market holds.

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Making money from mobile messaging