LINE: The Chat App That Grew Up To Be A Platform & Offered IPO
The story of the app LINE is the story of the interesting times we live in. A small chat app grows up to be a big revenue spinning platform. In the short span of five years a chat app which is experimentally launched after a disaster, launches its IPO, creating big waves in the tech circles. Its IPO was offered a few days ago. Shares of LINE Corp were received very well by the markets. With billion dollar listing LINE was easily the biggest tech IPO of the year. It has more than a billion users supporting its stupendous growth.
Let’s find out what makes it tick.
#A leading Messaging platform
LINE is a leading messaging platform of Asia. It provides free text messages, voice calls, and group chats locally and internationally. It had 218 million monthly active users in March 2016 spread across 230 countries. The LINE app is available in 19 languages. About two-thirds of its users are based in its top four countries — Japan, Thailand, Indonesia and Taiwan. According to an estimate its users exchanged about 20.4 billion messages a day in March 2016 .
#South Korean –Japanese Ownership
LINE is owned by Naver Corporation, a South Korean internet company. It runs Korea’s largest search engines. According to some assumptions Naver chose Japan to base LINE in as it did not want to compete with Kakao, South Korea’s dominant chat app. Earlier there were plans to make LINE a photo sharing app somewhat like Instagram. After 2011 earthquake there was a need for a good messaging app and Naver decided to shape LINE in Japan as a messaging app. It became hugely popular quickly. In 2013 after seeing the success of LINE app, Naver Corporation announced LINE Corporation-a spin off from Naver. LINE Corporation is headquartered in Japan and is a subsidiary of Korean giant Naver Corporation.
#Localization remains the key
LINE’s key strength lies in its ability to attract and amass users from different countries. It customized the app for different countries and users responded well. It localized its stickers according to each country’s popular culture. It adapted some of its features accordingly too.
#LINE app as a platform
LINE has been a trailblazer. While the world took its own sweet time in understanding the potential of an app as a platform, LINE grew from strength to strength adapting and integrating with other apps and services. WhatsApp, Facebook Messenger, Slack, Telegram, Google’s Allo app are all following LINE’s lead and integrating chatbots and other services into their apps; slowly growing the standalone apps into platforms that provide different services to users while providing basic messaging service.
#Diverse Portfolio of Integrated Apps
LINE’s stable revenue growth doesn’t depend on one app. It has a diverse portfolio of integrated apps that bring in the revenue. You can see in the chart above, LINE’s profits come from several different apps from its stable. There are more than 40 LINE apps from LINE Corp. The lesson- having different apps helps. Don’t bank on just one app to bring in the revenue. Have a portfolio of apps as a strategy. And if you are good, you will crowd out the competitors.
#More than a messaging Platform
It is more than a messaging platform. Users can book hotels, make reservations in restaurants, order taxis or search for jobs on the platform. It offers stickers, social games, video calling and a range of other apps that are integrated within the LINE eco-system like LINE Game and LINE Camera. LINE includes LINE pay, a mobile payment app since December 2014. It also has LINE Live, a video streaming service. LINE has stand-alone apps too like LINE Here, LINE Music, LINE Games and more. The users who have account with the LINE app get to download and use these other LINE apps. LINE offline is an animated series which has all the Line Friends in it. All the episodes are 3 minutes long. The video series helps the users in engaging with the app and enhances the LINE IP.
#Consistent Top Publisher
LINE app has been a consistent performer and according to App Annie it has held the top spot for global non-gaming revenue earners on combined revenue from iOS and Google Play. It has been the top publisher for three years in a row now. Its in-app strategies are remarkable.
#Cute Stickers are Big Business
Stickers available at LINE help it in a big way to earn revenue. According to an estimate LINE users sent approximately 389 million stickers a day in March 2016. There are different grades of stickers. Some are free and then there are premium grade stickers available for users to buy. There are sponsored stickers provided by marketers which the users can use freely in their conversations. You can also find licensed ware like Doraemon, Hello Kitty and Snoopy stickers. More than 45,000 sticker packs are available at LINE for the users. These stickers are like big emojis which are very popular among the LINE users. “We believe that stickers have made communication both more convenient and more enriching,” the company says in its prospectus.
LINE has some of the most loved cartoon characters as stickers. There is Sally (a duck), Moon (Known for his big head), Cony (a bunny), Brown (a bear), Leonard (a frog) and many more. LINE has been marketing its cute characters very well and you can see these characters promote almost everything from a water bottle, biscuits to toilet papers. They are popularly known as LINE friends.
#LINE Friend’s store
There are several physical stores in Taiwan, South Korea, Japan and China that sell LINE friend’s merchandise. There are three permanent stores in Korea. These stores also help earn revenue for LINE as LINE Friend’s related merchandise is very popular with both young and old. There are LINE goods that cater to the grownups. Along with Swarovski cut-glass figures LINE has been working on different products with Swedish paper-goods producer, Bookbinders Design and Finnish housewares maker Muurla.
#LINE Games are money spinners too
LINE games provide maximum revenue. The games are free but offer in-app purchases to progress rapidly. LINE games have been making into the list of top 10 games worldwide. LINE collaborated with Disney to make LINE: Disney Tsum Tsum. This game was the most downloaded game in Japan in year 2015- a block buster. Three other games made it to the list of top 10 games of 2015, Japan. LINE sells games that can be played solo or with other LINE users.
According to TechCrunch LINE games have been downloaded 628 million times. 16 of its games titles have reached about 10 million downloads each.
#LINE rivals social networks
LINE has been rivalling social networks like Facebook and twitter. It has a private timeline feature which enables you to check out the posts of people you follow, your LINE friends like it is done on Facebook but unlike Facebook brands can join LINE only if they pay. Brands and celebrities can go for special official LINE accounts which can be then followed by the users.
Brands, Restaurants and shopping malls encourage you to follow their social account on LINE for a discount or special coupons. LINE cuts impressive marketing deals with brands, artists and celebrities who want to reach its user base. Sir Paul McCartney is most popular celebrity in Japan on LINE. Taylor Swift, Linkin Park and Maroon 5 also have LINE accounts.
# LINE leverages User Base, sells engagement
Having gathered massive user base, LINE now leverages it. Unlike Facebook or twitter it doesn’t allow promoted ads, instead LINE sells its official account. There are official accounts of celebrities and brands which are followed by users. They promote their products, provide free sponsored stickers or discounts to users. Engagement on LINE costs the advertisers money. Blasting messages to followers, or eliciting responses from them — LINE charges the advertisers for all these different engagements. Users are happy with the freebies and discounts. LINE is happy with the revenue it gets from the advertisers — the official account holders.
Before offering its IPO, LINE announced that it was offering end-to-end encryption as its default feature. It also launched a lite version of its mobile messaging app for the markets that have slower networks or less powerful smartphones.
At a time when the likes of Facebook and twitter are still grappling with the issues of monetizing their services, LINE has shown the way and has proved to be a success. The next step for it would be to expand in regions it isn’t very visible in, and try to repeat the successes it has seen with Japan, Thailand, Indonesia and Taiwan. Its success is inspiring for the app ecosystem. It would need to keep the momentum on and ensure that its growth is sustainable. And that the subscribers of its IPO get the returns they have been hoping for. We wish it luck.
Originally published at www.openxcell.com on July 27, 2016.