Mobile Messaging Apps: LINE App

An OnDevice research conducted in November last year noted that the preference for mobile messaging app market is split across geographies. While Facebook Messenger and WhatsApp may be clear leaders in the American and EMEA markets, the Asian market is a different story. Asia is dominated mostly by home grown apps who are now planning to make it big in the international markets as well. China is led by Tencent’s Weixin, also known as WeChat and the Japanese market is headed by South Korean Naver’s LINE App.

LINE App’s Offerings
Naver Corp is a big name in the South Korean online business segment. They are the proud owners of LINE App, which was developed by their Japanese subsidiary after the fateful tsunami in Japan in 2011. Naver’s Japanese employees were not able to communicate with each other after the tsunami because most phone lines were down after the catastrophe and developed LINE to be able to contact each other.

LINE may have begun as a mobile messaging service, but since then, it has evolved to a lot more. Like Tango and WeChat, LINE too aspires to be a version of a social networking site that offers advanced messaging features. As part of their messaging service, they offer the ability to exchange free messages, voice and video calls, and group chats both locally and internationally. But, they have integrated the messaging service with other social networking elements such as stickers, Home and Timeline, LINE GAME, and LINE Camera. The Home and Timeline feature is similar to Facebook’s wall that lets users share details of their life by posting pictures, videos and other information. LINE has also tied up with several celebrities and lets users communicate with them real-time.

LINE has seen a very rapid adoption of its app. Within 18 months of its launch in 2011, their user base had grown to over 100 million. As of November last year, they had more than 300 million users of which more than 73 million were monthly active users.

LINE’s Financials
LINE app is free to download across multiple platforms including traditional PCs. Like others in the segment, LINE earns revenues through sales of premium features such as stickers, emoticons, and in-app purchases on their gaming platform. LINE does not disclose detailed financials, but they had reported that for the quarter ended June last year, revenues grew 45% sequentially to 12.8 billion yen (~$132 million). Analysts estimate that the company is valued at over $10 billion.

So far, LINE has been a hundred percent subsidiary of Naver. But recent news reports suggest that LINE may be preparing for an IPO in Tokyo, New York, or the Hong Kong stock exchanges. The IPO is estimated to help them raise 800 billion – 1 trillion yen (~$8.2 billion-$10.3 billion) and place them on the global mobile messaging app market map. But LINE has remained silent about these speculations.

LINE’s International Growth
LINE plans to expand their geographical footprint in the near future. They are already seeing strong adoption in emerging markets like Spain and Thailand where they boast of more than 15 million and 18 million users respectively. To help grow in these markets, LINE has been spending heavily on sales and marketing efforts. In Spain, their ad campaign featured tennis star, Rafael Nadal and in India, they tied up with Bollywood actress, Katrina Kaif. As part of their Latin American expansion, they also entered into an exclusive agreement with Latin American telecom carrier, Telefonica. Through the tie-up Telefónica subscribers have exclusive access to the LINE app. Telefonica has more than 320 million subscribers to their network and the tie-up will open a big user base for LINE to tap into.

According to market researcher Ovum, the number of messages projected to be exchanged on social messaging apps will grow 2.5 times this year to 71.5 trillion from 27.5 trillion in 2013. Ovum also expects mobile messaging apps to go beyond messaging services and players like LINE are already doing that. Surely LINE has a strong growth curve ahead.

This segment is a part in the series : Mobile Messaging Apps