Line sticks to the global shad­ows de­spite its IPO

Fo­cus on tak­ing mes­sag­ing to the next stage

Kuwait Times - - TECHNOLOGY -

It staged one of the year’s big­gest IPOs but mes­sag­ing app Line, while a huge draw among teens in Asia, says it has no big am­bi­tions to take on Western giants such as Face­book on their home turf. The Ja­pan-based com­pany known for its pop­u­lar car­toon “stick­ers”-a vir­tual com­mu­ni­ca­tion tool for users too busy to write a text-in­stead means to fo­cus on tak­ing mes­sag­ing to the next stage in its core Asian mar­kets of Ja­pan, In­done­sia, Tai­wan and Thai­land.

“Our goal at Line is for the app to be­come the gate­way to ac­cess all on­line ser­vices,” chief ex­ec­u­tive Takeshi Idezawa told AFP in an in­ter­view at the an­nual Web Sum­mit in Lis­bon.

Line’s ser­vice lets users make free calls, send in­stant mes­sages and post pho­tos or short videos, along with a host of other paid ser­vices.

It com­bines at­tributes from Face­book, Skype and What­sApp with games and a mo­bile pay­ment ser­vice also on of­fer. The com­pany, which grew out of Ja­pan’s 2011 quake-tsunami disas­ter and is owned by a South Korean In­ter­net provider, staged a $1.3 bil­lion ini­tial pub­lic of­fer­ing in July with a dual list­ing in New York and Tokyo that it said would help its in­ter­na­tional reach.

That was met with some skep­ti­cism by an­a­lysts at the time who won­dered how ef­fec­tive Line’s lineup of prod­ucts would prove be­yond Asia, and Idezawa agreed it was hard to crack Western mar­kets where Face­book-owned What­sApp or Messenger are al­ready the leader.

“A chat app has a very strong net­work ef­fect (across the busi­ness), so we are fo­cussing on the four Asian coun­tries,” he said. “Asia is go­ing to see very big eco­nomic growth and it is also a mar­ket where Amer­i­can com­pa­nies are not find­ing it so easy to en­ter.”

Line reck­ons there is plenty of room to grow closer to home. Ja­pan, de­spite pi­o­neer­ing ad­vanced hand­sets in the pre-iPhone 1990s, still only has 60 per­cent mar­ket pen­e­tra­tion for smart­phones while in In­done­sia the fig­ure is less than half.

Keep em com­ing

And the com­pany be­lieves it can ex­tract much more from its 220 mil­lion “ac­tive monthly users”, as WeChat is do­ing in China. Idezawa aims to make the ba­sic app a “one-stop shop” of­fer­ing mul­ti­ple ser­vices such as games, mu­sic and pay­ment ser­vices built on a chat­bot that, ex­ploit­ing ar­ti­fi­cial in­tel­li­gence, can guide users’ needs.

“If users don’t see a ben­e­fit in stay­ing on­line, they won’t stay, and that’s where we have to be cre­ative to get users to stay.” The app can al­ready con­nect to a smart fridge and tell you if your beer

sup­ply is run­ning short. But Idezawa down­played se­cu­rity con­cerns sur­round­ing de­vices plugged into the “in­ter­net of things”. “Our se­cu­rity level is high,” he in­sisted, tout­ing Line’s end-to-end en­cryp­tion as ri­valling that of­fered by What­sApp.

In the first nine months of 2016, the com­pany’s rev­enues in­creased year-on-year by 17 per­cent to 103 bil­lion yen and net profit came to 5.3 bil­lion yen, against a net loss a year be­fore. It plans to in­crease the rev­enue share for ad­ver­tis­ing from 40 per­cent now; among the rest, 30 per­cent comes from games and 20 per­cent from the stick­ers. The stick­ers, a kind of an­i­mated lan­guage anal­o­gous to emoti­cons which users can buy in­di­vid­u­ally or in sets, have proved hugely pop­u­lar in Ja­pan. The com­pany is also ex­per­i­ment­ing with lo­cally de­signed ones to en­tice cus­tomers in fledg­ling mar­kets such as France.

Branded spon­sor­ship of the stick­ers com­bines ad­ver­tis­ing with Line’s most em­blem­atic fea­ture. Idezawa pulled out his phone to dis­play cutesy an­i­mal images sent to mil­lions of Ja­panese users-one by e-com­merce com­pany Rakuten and an­other from Ya­hoo Ja­pan. “The gen­eral view of us is that we’re very strong at mon­eti­sa­tion,” he said. “Other chat apps haven’t suc­ceeded so much at that.” — AFP

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