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Meet the messaging apps trying to take on the likes of Facebook and WhatsApp

As the audience for messaging apps such as WhatsApp and Snapchat grow, several competing firms are emerging and are figuring out how to monetize their large number of users, according to analysts.

Messaging apps have become incredibly popular in recent years. Facebook Messenger, for example, has grown from 200 million monthly users in April 2014 to 900 million in April 2016, according to research by market data firm Statista.

As a result, many companies are trying to break into the messaging space and there have been some surprising examples. For instance, Japanese video game developer Nintendo's first official mobile app, "Miitomo," was not a video game but a social media and messaging app.

And in October last year, tech strategist Michael Wolf predicted there would be 1.1 billion new users of messaging services by 2018.

WhatsApp and Messenger are highly popular messaging apps.
Justin Sullivan | Getty Images
WhatsApp and Messenger are highly popular messaging apps.

So while services such as Facebook Messenger, WhatsApp and Snapchat currently dominate, several competitors are entering the space. One such app is Rawr, which launched earlier in May.

On Rawr, users can design a 3-D avatar which can perform animations when messaging someone else. The app is free to download, but can make money through in-app purchases including new clothes for the avatar.

"I think there is a ton of space [for new apps] to grow," Oskari Hakkinen, founder of Rawr's developer Futurefly, told CNBC in a phone interview. "Even though there are really, really big players there already, for new, innovative things there's always room," he added.

Hakkinen couldn't disclose how many users Rawr had, but said there had been more than 1 million interactions using the apps globetrotter feature, where users are paired at random to chat, and these conversations are lasting for up to 212 seconds on average.

"We've got a lot more things coming in the future," he added. "We're going to have mini-games in there, you'll be able to play rock, paper, scissors with your friends."


Oskari Häkkinen, founder of Futurefly which developed messaging app Rawr
Futurefly
Oskari Häkkinen, founder of Futurefly which developed messaging app Rawr

Messaging services initially gained popularity due to their low cost and user experience, according to Jack Kent, director of mobile for research firm IHS.

"Messaging apps provide free or very low cost communications compared with existing SMS or calling alternatives," Kent explained to CNBC in an email. "Messaging apps also provided a superior experience to traditional SMS by enabling things like group messaging and contact status that were ahead of what mobile operators could provide."

As messaging apps become more widespread, attention is turning to how these businesses intend to make money with them. Asian apps such as WeChat, Line and Korea's KakaoTalk have successfully monetized their services, according to Kent.

"Communications was only a first step to building a platform for wider content and services such as games, payments, taxi booking and deliveries," he said. "Taking a revenue share from these services – as well as some advertising – are the keys to their monetization."

Integrating payment systems will also be important if companies want to monetize these apps.

"By enabling things like peer-to-peer transactions, messaging apps can acquire users' payment information making it much easier to sell other content and services and also make advertising more effective," said Kent.

Going forward, many messaging apps will need to offer more than just basic functions if they want to be widely used. Services such as Slack and Facebook at Work, for instance, are trying to integrate themselves into the workplace.

"There is a big push to turn messaging apps into platforms for a very broad set of interactions spanning consumers and their dealings with businesses, or their work life," Martin Garner, senior vice president of internet at CCS Insight, told CNBC via email.

"Without a key context for users, it is hard for a new messaging service to build up a large enough user base to become a true platform that will attract businesses and developers in large numbers."

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