Facebook and Google Want a Piece of Japan's Digital Sticker Business

Photographer: Toshiro Shimada

Japan was uniquely suited to create the digital-sticker phenomenon. Close

Japan was uniquely suited to create the digital-sticker phenomenon.

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Photographer: Toshiro Shimada

Japan was uniquely suited to create the digital-sticker phenomenon.

A craze coming out of Japan is now catching on in Silicon Valley: stickers. In the last few months, Facebook and Google have added digital stickers, basically oversize emoticons, to their chat applications. Venture-backed startups such as MessageMe and Path are also chasing the sticker fad.

They have Japan-based Line to thank for the sticker sensation. The app, which has nearly 200 million users, is developed by a unit of NHN, South Korea's biggest Internet search provider. The app allows feature-phone, smartphone and PC users to make free phone calls, send text messages and pick from an extensive library of cute, funny and silly stickers to share with friends.

Japan was uniquely suited to create the digital-sticker phenomenon, Satoshi Yajima, a senior manager in Line’s marketing communication department, said in an interview in Tokyo. The nation was one of the first to embrace smiley faces, or emoji, en masse for decorating text messages. Larger smileys enhance people's ability to exchange feelings without using words, Yajima said.

Line's free mobile app began generating revenue last year by selling sticker sets to users, and charging advertisers for using its service to promote their characters or products. For 170 yen or $1.99, users can purchase sets containing 40 stickers that are based on franchises such as Sanrio's Hello Kitty and Walt Disney's Lilo & Stich. More than 100 companies have opened accounts on the service to offer coupons and promote sales.

Line has quickly proven that stickers can be a real business. The company has said its stamp sales brought in about 1.75 billion yen ($17.4 million) in revenue in the first three months of this year.

Still, the company isn't focused on making money yet, Yajima said. Instead, Line is focusing on attracting more users outside of Japan, which accounts for at least 45 million of the app's base. Ten million users live in Spain, and the country shows promise for further growth.

The U.S. is another story. While Line has topped the charts of the most popular free downloads in 47 countries, the app doesn't crack the top 100 in Apple's App Store in the U.S.

Yajima isn't sweating the threat from Facebook and Google. "We are a market leader, so this development is working to our advantage," he said.

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