The Exchange

The Race Is on as More Message Apps Go Social

Tango, a leading mobile messaging service, is getting more social this week, letting users create profiles and share them with friends online locally or more widely with anyone who is using the app nearby.

With millions of phone users shifting from old-fashioned SMS texting to more-modern apps such as Tango, WhatsApp and WeChat, the app makers are in a pitched battle for new customers and added revenues. They also have to fend off social-networking giant Facebook (FB), which features its own mobile messaging apps.

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Tango has been one of the most active messaging services when it comes to adding social features. Last year it added photo sharing and created a simple gaming platform so users could challenge each other to contests of checkers or tic tac toe. In June Tango offered itself as a gaming platform, letting outside developers such as Bubble Gum Interactive add social connections to their online games.

The most social yet

But the new location-revealing features are the most like a true social network yet. The location-sharing option could raise privacy concerns but Tango users will be able to choose whether to reveal their location and profile just to friends, to any nearby users or not at all. Users also have the option to ignore a contact initiated by someone they don’t want to communicate with.

Gaming quickly became one of the most popular activities among Tango users, with over 1 million games played a day, says co-founder and Chief Technology Officer Eric Setton.

“We were already halfway into the social space,” Setton says. “Now we’re stepping in with both feet.”

Chinese messaging giant WeChat has started testing its own gaming platform. Owner Tencent Holdings (0700.HK) says it plans to offer in-house and licensed games, including popular titles "Temple Run 2" and "Plants vs. Zombies." And newer apps such as MessageMe are starting off with all kinds of social features, allowing users to share pictures, videos, music and locations.

The battle for new users is raging as more people shift away from plain old texting with their phones. The apps let users avoid pesky texting fees, although typically they can only communicate with others running the same app. Tango claims 130 million members, trailing WhatsApp’s 250 million active users and WeChat’s 400 million total. Facebook has over 750 million mobile monthly users but hasn’t said how many are using its new messaging apps yet. Apple (AAPL) and Google (GOOG) also offer their own messaging services.

None of the developments are great news for mobile carriers. Texting traffic garners tons of fees while using minimal bandwidth. But carriers' texting revenue is sliding and projected to drop further. The industry lost about $25 billion of potential texting revenue to app-based competition last year and figures to forgo $33 billion this year, research firm Ovum says.

To some degree, customers shifting from texting to messaging apps are using more data. That ultimately helps the carriers sell more data plans but they’ve also been forced into costly spectrum purchases and network equipment upgrades to meet the growing demand.

Still, many people continue to rely on texting. Messages sent via U.S. carriers totaled a still-healthy 171 million per month last year; this was down from 193 billion in 2011, according to the industry’s trade group CTIA.

With hundreds of millions of those users just starting to look for new messaging solutions, the race is on between Tango and its app-based competitors.

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