Line: international success, or inadequate metrics?

A recent conversation with a former student from South Korea, and now good friend who had asked about the success of Line prompted me to look deeper into the Spanish instant messaging service, with which I was already acquainted, through my position as consultant to cloud messaging startup Spotbros.

When my friend asked me the same question a few months ago, Line was making a big deal to its investors about using its success in the Spanish market as a launch pad for international expansion. In my opinion, Line’s success came with some important caveats: it had invested a lot of money in a conventional advertising campaign in the mass media, raising its brand awareness significantly in the process, as well as prompting more downloads, but its use level was well-below expectations.

Now, Line is once again trying to attract the attention of international investors by highlighting its 15 million downloads in Spain, along with its more-than one million subscriber base, that includes channels such as leading soccer clubs Real Madrid and Barcelona, as well as tennis champion Rafael Nadal. But my problem remains the same: real use level of the application is still very low.

This is clearly a problem of erroneous indicators: free downloads of an application can mean many things, but not necessarily its success. In the case of Line, success would be better measured by the number of habitual users on the one hand, and on the other by the sale of products such as stickers and games. Is Line, which provides no information about these variables, really a success in Spain? Or is this a case of huge costs per customer due to cumbersome conventional advertising campaigns using celebrities and contracts with big-name entities that hide low use levels?

The company itself last week in Spanish financial daily Expansion that Spain was still a less-competitive market than it had hoped, and that “consumers are not inclined to change applications, as they do in other countries, but are instead long-term service users.” Line’s analysis seems to be somewhat faulty: it isn’t that Spaniards are more loyal to this or that service, or can’t be bothered to change provider, but that in the specific case of instant messaging, taking up a new service is hugely conditioned by a powerful networking effect: discovering that a large number of people you communicate with is using this or that service on a regular basis.

Actually, Spain stands out for the speed with which it adopts things, as well as the influence of social factors: once a certain critical mass is achieved, the adoption curve tends to rise more steeply than in other countries, which accounts for the high penetration levels of products such as Google or WhatsApp compared to other countries. In the case of an instant messaging took, the same networking effect protects it. WhatsApp, despite irritating users due to its constant security lapses, system failures, and confusing pricing policy, holds onto them because they see that everybody else does.

I have yet to detect any major uptake of Line among any particular group, and I would be surprised if I were to do so. I would be even more surprised to see any increase in the sale of stickers or games: I continue to see Line as an application with an overwhelmingly Asian look and feel, and that in cultural terms does not really fit the Spanish market: it is unlikely to be taken up by any important segment. Lots of people might download it, but not many bother to use it. The company has chosen the wrong variable, and is selling an image of itself that has little to do with reality.

In a case such as this, lots of downloads but no evidence of real usage, the best thing could be to ask openly to what extent do you see any demographic segment actually using Line — so far, at least in the case of Spain, very few seem to be providing any positive feedback. All opinions welcome.