Has Japan’s Most Popular Messaging App Peaked?
Line Corp. is about to go public, in what could be the biggest tech IPO of 2016. The operator of Japan’s most popular messaging service now has its sights set on expanding across Asia, and - eventually - the U.S. Here’s what you need to know.
Inside the Line Ecosystem
Line’s messaging empire spans 218 million users and an ecosystem of services ranging from games and stamps to on-demand taxis and streaming media. The company is looking to expand further beyond its home market, which means raising money and taking on larger rivals Facebook and Tencent.
Line’s “smart portal” platform
LINE Applications
Games
Manga
Live
Tools
Camera
Fortune
218,000,000
News
Pay
active global users
Weather
Taxi
Participants And Contributors
Game Developers
Sticker Theme Creators
Brand Owners
Content Providers
Advertisers
Payment Processing Service Providers
Merchants
Play
Video
Music
Brush
LINE Applications
218,000,000
active global users
Games
Live
Camera
News
Tools
Weather
Play
Music
Fortune
Manga
Pay
Taxi
Brush
Video
Participants And Contributors
Game Developers
Sticker Theme Creators
Brand Owners
Content Providers
Advertisers
Payment Processing Service Providers
Merchants
Seeking New Users
Line dominates the messaging market in Japan, Taiwan and Thailand. Instead of competing with Facebook’s Messenger and WhatsApp in Europe and the U.S., the Tokyo-based company has set its sights, for now, on emerging Asian markets and the Middle East. It’s tailoring its service to countries like Malaysia and Indonesia, where smartphone adoption is still under way.
Line’s Market Performance
Percentage of messaging app users who use Line
Hong Kong
35%
UK
3%
India
25%
Japan
94%
USA
12%
Taiwan
83%
Saudi Arabia
41%
Mexico
19%
UAE
18%
Thailand
85%
Singapore
28%
Indonesia
66%
South Africa
6%
Australia
7%
Argentina
11%
Base: Messaging App users aged 16-64, Q1 2016
Japan
94%
Thailand
85%
Taiwan
83%
Indonesia
66%
Saudi Arabia
41%
Hong Kong
35%
Singapore
28%
India
25%
Mexico
19%
UAE
18%
USA
12%
Argentina
11%
Australia
7%
South Africa
6%
UK
3%
Base: Messaging App users aged 16-64, Q1 2016
Rivals Are Catching Up
Line has had a head start on other messaging apps in monetizing its user base, generating more than $800 million in revenue from stickers and games last year. But growth is slowing. And now rivals from Facebook to Snapchat are catching up and turning their apps into one-stop-shop smartphone platforms providing paid-for services. Going forward, Line’s ability to draw in users – and hold onto them – may increasingly depend on chatbot services, interfaces for the internet of things and artificial intelligence-driven offerings.
What’s the Big Deal With Stickers
1 out of 10 messages is a sticker, although usage has peaked
Messages and stickers sent
Stickers as percent of messages
Messages sent
Stickers sent
Usage peaked during the first quarter of 2014
and has been
trending down
14%
4,000
(in millions)
3,000
12%
10%
2,000
8%
1,000
O
6%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2013
2016
2013
2014
2015
2016
Messages and stickers sent
Messages sent
Stickers sent
0
1,000
3,000
2,000
4,000
(in millions)
Q1
2013
Q2
Q3
Q4
Q1
2014
Q2
Q3
Q4
Q1
Q2
2015
Q3
Q4
2016
Q1
Stickers as percent of messages
Usage peaked
during the first
quarter of 2014
and has been
trending down
14%
12%
10%
8%
6%
2013
2016
Line may have pioneered the business model its larger competitors have now emulated, but the app operator’s future success now depends on its ability to win over new audiences – and that will require further innovation.