Mxit reported in 2013 that its monthly active user base was 7.5 million that year. But this figure has dropped to just 1.2 million monthly active users in July 2015, according to a Mxit statement on Friday.
Mxit, in its statement, said its application would still be available to the public as a download.
But as part of the deal, Mxit chief executive Francois Swart will depart after three years in charge. Almost 30 Mxit staff will also be transferred to The Reach Trust under CEO Andrew Rudge and ex-FNB CEO Michael Jordaan, who has been the chairperson of Mxit, will not be actively involved with the operations of The Reach Trust.
As part of the change Mxit will also exit its India and Nigeria businesses.
The Reach Trust has been providing free services such as text-based counselling and education initiatives to up to 10 million people since 2012. “Whilst Mxit overall has seen a decline in activity and engagement over the past 18 months, the use of services offered by The Reach Trust on Mxit has been stable and in many cases show an upward trend,” Swart said in the statement.
Mxit’s fall as a commercial service has come amid intense competition from international offerings such as WhatsApp and Facebook.
WhatsApp has over 10 million users in South Africa while Facebook has 13 million users in the country, according to recent research from World Wide Worx and Fuseware.
Founded in by Namibian entrepreneur Herman Heunis 2005, Mxit at one stage had 50-million registered users and had a larger presence on the African continent than Facebook.
Early on, it rode an explosion in South African mobile ownership and was especially popular among teenagers and young adults, for whom it provided a cost-effective means of communicating with friends and meeting strangers online. A little more than a year after launching, it claimed to have over a million registered users.
The user numbers Mxit claimed to have continued to grow rapidly. By the end of 2010, Mxit was being hailed as Africa’s largest social network, with 27-million registered users. It was seen as a vital communication tool, with its users able to communicate seamlessly across other platforms like MSN messenger and Google Talk.
Knott-Craig Jr was determined that the mobile social network mark the start of its era under him with a bang, hosting a lavish R1-million Alice in Wonderland-themed party in Stellenbosch.
Despite Knott-Craig Jr’s best efforts however, user numbers continued to decline. And as the numbers declined, trouble was brewing inside the company. Knott-Craig was forced to step down as CEO in October 2012, apparently over disagreements with Paul Harris around how the company should be run. A lack of user growth was believed to be one of the factors at the centre of the ouster.
The banker had apparently threatened to pull his share of the R100-million investment being ploughed into Mxit if Knott-Craig did not step down. According to Business Times, “Harris was unhappy with Mr Knott-Craig’s performance and style and was only prepared to invest his share of R100m — which shareholders are ploughing into the company — if the CEO resigned”.
Publicly, the company continued to tell reporters that its monthly active user number was moving up and down between 9.3 million and 10 million. At the same time, an industry insider told Moneyweb the number was closer to five-million.
By mid 2014, Mxit was down to 4.9-million monthly active users in South Africa (Swart said removing porn and profanity was partially to blame for the decline).
Mxit 7, the new version it had spent so much time and effort building and which was supposed to seamlessly bridge its smart and feature phone offerings, had reportedly been downloaded by 7.4-million users but only 55% of those were still active. In late 2014 meanwhile, it undertook a fresh round of retrenchments, with 45 staff — including some in key positions — offered packages.
That kind of decline is difficult for any company to deal with and it seemed that the end of Mxit as we’ve always known it would be inevitable.
The hope now is clearly that the Reach Trust will be successful in its aim of providing viable minimum-cost solutions to South African learners.
According to Mxit’s statement, more than 500 000 learners access educational apps on the platform every month.
“With the power of mobile technology in the hands of almost everyone in the country, we believe that it is critical to extend and expand the access to mobile content and services to accelerate social and economic change,” said Andrew Rudge, CEO of The Reach Trust, in a statement.