Japanese Online Retailer Rakuten Acquires Viber Messaging Service
February 14, 2014

Japanese Online Retailer Rakuten Acquires Viber Messaging Service

Enid Burns for redOrbit.com - Your Universe Online

In an effort to expand its footprint to a worldwide customer base, Japanese online retailer Rakuten bought the online messaging service Viber for $900 million. Rakuten hopes to tap Viber's user base to sell goods and online services.

Cyprus-based Viber is an online service provider that provides free VOIP calls, text and picture sharing with desktop computers including Windows 8, as well as mobile platforms such as iOS, Android, Windows Phone, BlackBerry, Bada and Nokia. Viber says it has over 200 million users in 193 countries. The company was founded in February 2010 and has remained privately held.

Profit for Viber has been a challenge. In the year ending in December 2013, the company reported a net loss of $29.5 million on revenues of $1.5 million, the Wall Street Journal reports. Even with reported losses, Rakuten chief executive Hiroshi Mikitani said it was the right time to buy the company.

The Wall Street Journal puts Viber's user base at about 300 million users, which might be a more current figure, meaning Rakuten paid roughly $3 per user.

"If we didn't buy [Viber] now, I don't think we could have bought it later, it's growing so fast," said Mikitani, in a presentation announcing the acquisition.

Rakuten will take on Viber's user base of between 200 and 300 million users. Many of those users are located in countries where Rakuten has had trouble getting a foothold, especially emerging markets. Viber's operations extend to Brazil, Russia, Vietnam and Myanmar, among other locals, the Wall Street Journal reports.

With the completed acquisition, combined user base of Rakuten and Viber will number close to half a billion, Reuters reports.

While Rakuten will continue to offer Viber's messaging service, it will also expand its offerings to those users. Rakuten hopes these customers will log in to Viber's service and buy goods from Rakuten. The company also hopes to bring games to the Viber network in the future, among other services. Rakuten believes that offerings from Viber, such as virtual stickers, will bring in cash for the company.

Viber is the latest in a string of global acquisitions for the Tokyo-based Rakuten. Rakuten holds a stake in Pinterest and also acquired Canadian e-book firm Kobo for $315 million in 2012, according to WSJ.

Even with its attractive assets, Viber will count as a portion of Rakuten's bottom line. Rakuten reported a full-year 2013 profit of 90.2 billion yen, an 80 percent increase over the year before, Reuters reports. Rakuten offers a broad range of services that spans from financing to online shopping to online video and consumer electronics such as e-readers.

"But in the face of a shrinking population and weak consumer spending at home, Mikitani is trying to re-invent Rakuten as a one-stop-site for a global audience," the Reuters article said.

"This acquisition … will take Rakuten to a different level," Reuters quoted Mikitani saying. "Developing this messaging system on our own would have been impossible," Mikitani added, saying Rakuten users could, for example, use Viber's instant messages to contact an online store while considering a purchase.