LINE 101

TC just reported that LINE’s revenues have doubled YoY to $192m USD in Q3 2014. And just like that, LINE is back in the news again.

Since I seem to repeat the same answers to the same questions about LINE over and over, here is what I wrote in 2013 for TNW. The piece is about messaging apps but I  go over all the basics of LINE. From history to adoption, features, business model, etc., this should cover any and all questions so it’s really, really, really long.

Enjoy — and feel free to ask any questions in the comments.


 

Line’s rise in Japan

Take the Line story, for example. Line, wasn’t an overnight success and there is good reason for that. Line’s biggest marketshare is in Japan. Japan’s smartphone market really began growing in 2011 — some four years after the US — and analysts have found a near-150 percent rise in smartphone adoption between 2011 and 2013.

Of the 127 million people in Japan, smartphone ownership finally passed 50 million users in August, but things are developing rapidly. Japan overtook the US as the biggest spenders on apps only this week, and the market is potentially hugely lucrative for makers of popular apps.

idc japan 520x279 Silicon Valley, you are tardy to the messaging app party

This market shift also affected Japan’s text-based communication.

Text-based communication in Japan is very different from the US and other parts of the world. Japanese telecoms have advanced emailing systems, where carrier-issued email addresses are attached to every mobile number. The email system functionally operates like SMS: simple, free and unlimited. SMS in Japan is charged per text, so before mass market smartphone adoption, text communication was done by keitai meru (cell phone mail).

With the rise of smartphones, apps quickly became popular. As users got used to beautiful, gesture-based UIs, text-based cell phone email no longer fulfilled their needs. That’s when Line started gaining serious traction. People go where their friends are and Line happened to be in the right place, at the right time.

Line changed Japanese mobile communication.

And it’s easy to see why people quickly adopted Line. An Internet connection gives users free unlimited voice calls, unlimited free messaging, unlimited instant photo sharing, group chats and video communication. The interface is cute and Line is very easy to use, but, most importantly, it offered a solution to the ‘pay for all and everything’ Japanese telecom model — and Line disrupted the Japanese mobile industry.

line 300m 730x588 Silicon Valley, you are tardy to the messaging app party

Continue reading

SEAsia Messaging App Share

BqieJL4CQAAmH-o

 

LOTS of opportunities in SEAsia.
To recap on LINE:

  • 60% of LINE’s revenue came from the mobile games
  • LINE was the world’s top app publisher by monthly revenue
  • LINE Posts $143 Million In Revenue, Up 123% Year-Over-Year
  • $1.5mm USD revenue for user generated sticker marketplace

Granted, we may not see the same sorts of revenues from SEAsian countries, as most are developing nations and notorious for not spending (ex Path is Indonesia’s largest market, yet they never boast revenues or lack thereof).

The next few years will be fun to watch as chat apps mature and become more dominant.
(Sources 1,2,3, image via here)

 

WeChat 101- Quit Comparing WeChat and WhatsApp

WhatsApp, Viber, Telegram and Snapchat are not like WeChat, LINE and KakaoTalk.

I’ve written about LINE and KakaoTalk but now it’s time to intro the last player – WeChat. WeChat is not – I repeat NOT anything like WhatsApp or Viber.

Aside from multi-media communication capabilities: photos, video, walkie-talkie and broadcast features, in August of 2013, WeChat completely overhauled their product with v5.1 to add a bunch of new features and functions.

They keep differentiating themselves from the rest of the chat apps and this is why:

  • in-app payments
  • P2P (peer to peer) and O2O (offline-online) core strategy aside from games <– HUGE
  • multiple monetization streams

Payments

WeChat-2

WeChat Payments connects bank card to WeChat account so users can make payments in-app.
Users can make transactions happen through 1. payments to WeChat authorized partner retailers 2. P2P (peer to peer) or in plain English other WeChat users – example: users can send one person a specified amount, or send money to a group and divide the lump sum among a group of friends.  If I had a penny for every time I’ve had issues with group payments where one person pays too much, too little I’d have about four extra iPhones sitting around. Or think about that one person who never has cash, etc., etc. WeChat group payments is the perfect resolution for group events / activities.

O2O / P2P Commerce

WeChat also partnered with sites and services – whether through acquisitions or buying a stake in the company – doing flash sales or becoming the preferred payment partner. To date, DianPing – China’s answer to Yelp, with a Groupon type group buying feature DianPing also offers coupons and discounts and users can even order food for delivery – is one of the most notable.

The other is Didi Dache – China’s Uber – where users can order a taxi and make payments, all in-app. Since forming the partnership in Jan., WeChat reports

  • 21mm cab rides have been booked via WeChat
  • 700k daily bookings via WeChat
  • Didi Dache and WeChat also pay cab drivers bonuses when the drivers use their services vs a competitor

WeChat also aggressively positions themselves as the entry point for global brands who want to reach China’s youths. Most recently, Vivienne Tam and WeChat collaborated to bring NYFW (NY Fashion Week) to WeChat users.

They’ve also done campaigns with Mc Donald’s, Starbucks, Burberry, Pepsi and Maybelline – bottom line, they are making money becoming a payment solution and by advertising as well.

Another monetization channel through partnerships is content. WeChat and Chinese media outlets bring news and entertainment to users. However, instead of solely bringing content into the app like Flipboard or Facebook’s Paper, they have their media partners build proprietary micro-sites into WeChat with proprietary URLs ie: mp.weixin.qq/majorchinesenetwork and charge users subscription fees.

They’ve also ventured into streaming video, launching a standalone TV with CNTV (major Chinese tv network).

If you think that’s all, they are also China’s small business e/m-commerce solution (like Etsy or even Amazon).
Small business accounts are

  • free to create — fee is dependent on level of API customization and how much a business wants to integrate their products and services into WeChat
  • transactions are conducted inside WeChat — which leads to increased time spent inside app
  • bar-code scanner capabilities so people can scan a bar code in a store of something they see and shop for it online for example
  • built in loyalty cards and point card systems

Major brands and retailers to even a college student with a fruit stand can buy and sell on WeChat – that’s how simple it is.

WeChat states they have 300mm active users per month and YoY growth of 124% (note: these numbers are before the Red Envelope campaign that reportedly activated 20mm transactions within 9 days and announcement of all their partnerships).

WeChat is not fucking around.

I’m sure there are so many more features and functions, products and services I may be missing. This is information I gathered through English sources (FT, Economist, WSJ, Techcrunch, The Next Web, Tech in Asia and some random Chinese sites I ran through Google Translate) but even if I don’t know all the details, it’s pretty clear they are one step above the rest of the chat app herd.

One can argue their success is due to the uniqueness of the Chinese market and how the economy is intertwined by a select few and with the government, but strip away all that noise and look at WeChat as a product. They are still several steps ahead of the rest — even LINE, that I am a massive fan of.

2014 is going to be a year to closely watch Asia.

Scale of Chat Apps in Asia

unnamed

I don’t think America still understands how big chat apps are in Asia and that’s ok. Like I keep saying, the US is email, iPhone (iMessage), SMS and Facebook Messenger reliant.

In Asia, it costs money to SMS. It costs money to make phone calls. Not as much as Europe maybe, but it still adds up. The US may be the only country where SMS and voice are flat fee, unlimited.

Because we are charged by telecos, chat apps have become a solution to avoid fees for something basic and ubiquitous as communication.

In Asia we are so chat app reliant, my personal and even work emails have been reduced by at least 85%. The only people who actually email are my American friends and colleagues.

Because I stopped relying on email as my main form of communication, I now see what a massive burden email is and how much of my time email dictated.

Chat apps don’t restrict texts with character counts, but because of the context of the core products (real-time interactions, short mail, instant messaging like features and functions), it cuts out a lot of unnecessary bullshit and people just get straight down to the point.

Granted, this is only from my experience and doing business with the Japanese, but I much prefer interacting with colleagues on LINE or company approved Viber as we communicate more efficiently. (Quick contextual background: the Japanese language has four different ways of speech, two honorifics. The honorifics require buffer language — a lot of set phrases before getting to the point. Chat apps tend to cut all that out.)

Aside from the communication utility, chat apps in Asia are evolving from tools to full fledged platforms. I keep repeating this but it’s almost necessary, as there are people still comparing WhatsApp, Viber, Telegram and Snapchat to LINE, WeChat and KakaoTalk. WhatsApp, Viber, Telegram and Snapchat are used for communication only. With LINE, WeChat and KakaoTalk  usres can text, call, video chat, edit photos, play games, get coupons/discounts… and now WeChat allows their users to shop. In their app. Asian chat apps are more than chat apps, they are turning into ecosystems.

The Asia chat app market is truly something else but I think one has to live in China, Korea or Japan to experience the phenomenon for themselves. At least for me that was the case. In a mere six months chat apps have completely changed the way I communicate and also purchase via mobile.

God, I love technology and I love being in Asia seeing, breathing and living the evolving products and market.

Messaging Apps are Communication Tools

Finally – I get it now. And by it, I mean the WhatsApp acquisition by Facebook.

It’s what I’ve been preaching — that messaging apps are not social networks. They are communication tools / utilities.

So basically, Facebook just bought a telephone company.

But I’m still wondering what is going to happen when messaging apps fully evolve to multi-faceted platforms (gaming, commerce, communication tools); basically the ‘what’s next‘. WhatsApp is going to be left behind.

Only time will tell. I guess.

 

Messaging Apps: What’s Next

Several have asked “what’s next?” after this post on messaging apps was published. By what’s next, I’m assuming people are wondering what I see as the ‘next big thing’. There are several ‘what’s next’ questions that need answering. Here is one. Who will win the messaging space?

I went into details about Line in particular because they are taking the right steps in differentiating themselves from the other messaging apps.

  1. product evolution — Line, continues building new features and functions that fit user needs. Most recently they released an event app Band, that is like Facebook events but a million times better.
  2. business models — like I said, stickers are not after-thoughts or novelty items. Stickers, are part of their monetization strategy. Line also does merchandising. They license their characters and collaborate with brand partners to bring things like thisbnr_crocs
    Aside from Crocs they partner with toy makers, accessories makers — basically about any company — to bring stuffed animals, plushies, cell phone accessories, and of course, stickers. [1, 2, 3] They recently collaborated with Maybelline to even bring Thailand users flash sales. Their next step, is eCommerce. Obviously.

Because of the above, I believe LINE will be the ultimate of messaging apps. And I still stand by my statement they will not successfully localize in the US. Messaging apps don’t have a place there.

As for the the Snapchat counter-argument, I am pasting a response to a comment.

I commend Snapchat and indeed their rise proves there is a need but if you look at the feature differences, you, too, will agree Snapchat is not on the same playing field as Line, KakaoTalk and WeChat. WhatsApp, Kik and Viber aren’t even on their levels.

Snapchat serves as a fun tool. WhatsApp, Kik and Viber are communication utilities like Line, KakaoTalk and WeChat. The differences are, the latter three have business models and strategies. Where the former are just…building to build.

In the American market, Instagram (if they lay out their product pipeline correctly and ultimately include text communication sans comment thread) will ultimately win the space (in the US).

As for ‘what’s next’, as in what is the next big thing?  Easy: wearables.

I think it’s absolutely fascinating though, how the US is moving back into hardware, while the software shift is happening around Asia. God, I love technology.

Added. Wired agrees wearables are what’s going to be hot, too.

Asia Lacks iOS Talent

This morning, LINE had a major update.

unnamed-1

Their new features are only part of the reason LINE differentiates themselves from the other messaging apps. They are truly, the leader in this space when it comes to long-term product and business strategies. Man, they are so smart.

The one thing that really blows my mind is how the iOS app is so much crappier compared to the Android app.

I only user banner notifications for apps because the little red circles drive me batty. Before, the banner notifications used to tell me who sent a message with a preview.

After the update:

unnamed-2

What is ‘MT’? Manual Transmission?? More Text??? Mt. Fuji???? Margaret Thatcher?????
This just makes no sense.

Hoping it was a bug, I switched the notifications to alert style and…

unnamed-3

Ummmm same thing. I really wonder what MT means.

Check out the notification for the Android though:

unnamed

Legit.

I don’t understand the thinking behind the iOS notifications but that’s neither here nor there. This only goes to show the dominance of Android over iOS in Asia, and how more emphasis is placed on developing on the former than latter.

Living in Asia makes me really want to switch to Android.