From tsunami lifeline to listing, Line sends message to chat rivals

From tsunami lifeline to listing, Line sends message to chat rivals

TOKYO - A messaging app launched in the aftermath of Japan's 2011 earthquake and tsunami, Line is moving towards a possible dual listing in Tokyo and New York as it jostles for space in an increasingly crowded and imaginative market.

Combining instant messaging with shopping, gaming and other features such as letting users send each other cute cartoon "stickers", Line is hugely popular in Japan, particularly among teenagers.

But competition is fierce when it comes to expanding into emerging markets.

Its plans for a reported US$9.8 billion (S$12.2 billion) Tokyo listing would help on that front - coming after February's rush of deal making, including Facebook's purchase of WhatsApp for as much as US$19 billion and Japanese online retailer Rakuten's US$900 million spend on Viber.

Other rivals include WeChat, owned by Chinese giant Tencent Inc, and South Korea's Kakao Talk - both of which have also developed their own popular cartoon "emoticon" messages.

"Competition among messaging applications is heating up worldwide," said Hitoshi Sato, senior analyst at InfoCom Research, Japanese telecom giant NTT group's research arm.

"Line's challenge is how to diversify its sources of profit in the future." Sato said a roughly US$10 billion value for Line was reasonable given that its finances eclipse some of Japan's most successful smartphone game developers.

Line, which says it has more than 400 million registered users in Japan and other parts of Asia, lets users make free calls, send instant messages and post photos or short videos. It combines attributes from Facebook, Skype and WhatsApp.

About 88 per cent of Japanese smartphone owners use messaging apps including Line, according to a survey by the Communications and Information network Association of Japan.

"I get in touch with friends mostly through Line - for example, when I want to go somewhere together with them," Kanako Baba, a 25-year-old Japanese translator, told AFP.

"I don't use emails very often," she said. "Line is toll-free and handy."

Sticky business

Line's messaging service was launched in 2011 by the Japanese unit of South Korean Internet service provider Naver Corp. after the quake-tsunami tragedy damaged telecoms infrastructure nationwide, forcing millions of people in Japan to resort to online resources to communicate.

But boosting its user base alone is not enough to generate profit, say analysts. More than 60 per cent of its revenues come from games, but what differentiates Line from some of its rivals like WhatsApp is one of its main selling points - its stickers.

Users can post these to friends after purchasing them from Line's online store for a fee of around US$1-2. Many feature a rabbit called "Cony" and her bear boyfriend "Brown", allowing users to express themselves with pictures as much as words.

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