Kik introduces a virtual currency to encourage engagement and (potentially) make money
Messaging apps are the flavor of this year, as evidenced by Facebook's $19 billion WhatsApp deal, but lately we've barely heard from Kik, the Canadian startup that beats WhatsApp, Snapchat and others in the US market.
Context & Ripple Effects
Kik arrived fast in late 2010, when its viral mobile-chat debut briefly made it the app to beat on SMS replacement — before early questions about its standing under Apple's terms surfaced in TechCrunch's TOS coverage. Four years on, it holds a claimed US lead over WhatsApp and Snapchat while its larger rivals command headline valuations.
The backdrop is Facebook's confirmed $19 billion acquisition of WhatsApp earlier this year, which turned messaging from a feature into a market. Against that, Kik's move to introduce a virtual currency reads as a smaller player answering the same question the deal raised: how does a chat app turn engagement into revenue without ads?
First-order effects
- Kik gains a direct monetization lever inside chat — users can earn and presumably spend virtual currency, giving the startup its first native revenue experiment beyond growth.
- Kik's US users, the segment where it claims leadership over WhatsApp and Snapchat, now have an engagement incentive layered onto everyday messaging.
Second-order effects
- Rivals without a monetization story of their own — Snapchat among them — face pressure to test equivalent in-app value systems or cede the 'how do we make money' narrative to Kik.
- If the currency works, Kik becomes more attractive as an acquisition or investment target, since a proven revenue mechanism narrows the gap that Facebook paid $19 billion to close with WhatsApp.
Third-order effects
- The pattern points toward messaging apps evolving from free utilities into platform economies where conversation itself carries a transaction layer — the model WeChat has demonstrated in China and Western players are only beginning to probe.
- If virtual goods become a standard revenue line for chat apps, valuation benchmarks for messaging startups may shift from user counts toward engagement-monetization ratios.
The trend: Messaging apps are moving from pure user growth toward in-app economies, testing whether virtual currency can turn chat engagement directly into revenue.