Tencent unveils its own film unit, Tencent Penguin Pictures. (Photo : www.technode.com)
Kik Interactive Inc. said that it has Tencent Holdings Ltd. for a $50-million investment to value the company at $1 billion.
The deal gives Kik a financial boost to help it take on its rivals, Snapchat Inc. and WhatsApp.
The Kik Messenger app has amassed more than 200 million registered users. Recently, it integrated games and other apps, like SoundCloud, to attract more users.
According to Kik's founder and chief executive Ted Livingston, the company hired Qatalyst Partners to explore possible discussions with Internet companies in Silicon Valley and Asia regarding a possible investment or sale. In the end, Kik decided to raise the money from Tencent in a "purely financial" deal.
"Of all the people that really understand chat, Tencent is by far the farthest ahead in where we want to go," Livingston said.
A spokesperson for Tencent stated that the main objective of its investment is to help Kik develop various services on top of messaging, that are within the expertise of Tencent.
Tencent also improves its foothold in the U.S. messaging market, having invested in both Kik and Snapchat.
"There was this period where all the messengers were competing everywhere," Livingston said. "What is happening is there are locally dominant messengers. WeChat has no focus in the U.S."
Last week, Tencent announced that its core online-games business was slowing down, leaving online advertising and messaging to serve as a larger source of revenue.
According to a January study commissioned by Kik, the app's users spend around 35 minutes per session, more than they do on Facebook Messenger and Snapchat.
One reason users, especially teenagers, use Kik is that, unlike other chat programs, it does not require a phone number to sign up. According to Livingston, this makes it popular among those who do not like sharing their number.
