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

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Only a few reasons I love emerging markets

During conversations with one of my favorite VCs and separately, with one of my favorite tech bloggers, services I never heard of were brought up. I also learned a few things I’m just going to leave here — more like a note to self — before I forget.

Old age, the struggle is real.


 

Opera still has 300M MUAs.
Opera Mini (the mobile browser
– Indian users of the Opera Mini mobile browsers used 75% less mobile data in the first half of the year
– is compatible with over 3,000 mobile devices, dumb phones and smartphones
-works on basic Java to the latest Android and iOS platforms

Wow – who knew. It’s such a perfect browser for emerging nations where cost and access are barriers source


 

Random thought: I wish I was passionate about logistics. So much money and room for disruption there. Imagine “between x and y is z” (where x, y = time and z = service ex: delivery, internet, cable, food, etc) is non existent. Time is precise. Or in plain English, parcels will be dropped off and service rendered at exact times.

The solution would involve an algo that calculates most cost efficient delivery radius in a way that’s never been done before. Combine that with a notification app like Yo, that’s a billion dollar business right there. And I believe the solution will come out of Asia.


 

Binu Screenshot_9_15_14_9_26_PM

Which reminded me of Frontline SMS Screenshot_9_15_14_9_28_PM

 

Google APAC has WiFi enabled rickshaws to help people go online

*Pardon the lazy post

Global Mobile Payment Market

To further reinforce the previous post on the mobile payment market, I came across a BI deck on the The Future of Mobile Payments.

1. Might be difficult for people in developed nations to digest, but in emerging nations, billions of people don’t have access to banks.  Southeast Asia is leading the pack:

enjoy-our-deck-sign-up-for-bi-intelligence-below

 

2. Global share of payment opportunities in these emerging markets are beyond ridiculous. YoY of MENA is the steadiest, while Southeast Asia and Latin America are predicted to steadily grow as well (granted, these numbers seem to be pulled from Cap Gemini — would be interesting to see Merrill Lynch, Morgan Stanley and GS’ predictions)
jpg-1

 

3. And of course, global numbers of mobiles — billions of handsets, most still feature (flip phones or the ancient Nokias). What this means, is, citizens of emerging markets are reliant on capabilities away from smartphone apps we in developed markets are used to. Ex: M-Pesa is the first that comes to mind. Their major market share is Kenya, Tanzania and they are increasing efforts into Middle East (Afghanistan, South Africa, India and Eastern Europe, respectively).

jpg

 

Neat tid-bits I’m digesting with a grain of salt. The market can rapidly change, especially with the amount of funding going into Bitcoin ventures, the payment sector in developed nations is unpredictable. The question lies, would the trend trickle over to emerging markets? Distribution of wealth amongst emerging markets is also a factor (ex: even if Indonesia has highest GDP, population of <1% of the population are the only ones with purchasing power, would it make more sense for a startup to look at Thailand first, where spend per population is more evenly distributed?) And so on and so forth, there are still many, many questions.

Biggest takeaway though is how Southeast Asia is still up for grabs for payments. I really want to see young entrepreneurs beat Rocket Internet and SMART’s initiative in Southeast Asia. Exciting time to be in APAC and especially, SEA as technology is still very much in its infancy.

See the entire slide deck on BI’s site here.

Mobile Money

Leaving the US has opened my eyes to a lot of things, especially how the world outside of America operates. Because the iPhone isn’t as adopted in other parts of the world, there are many solutions to make communication between iOS and Android possible — which is why I became so fascinated with chat apps.

Then, I fell into the chat app rabbit hole and became obsessed with learning, using and following the big players outside of the US: WeChat, LINE, Kakao and WhatsApp. Which lead to learning about the different use cases and the reason I keep piping on about how SnapChat, WhatsApp, FB Messenger are not like WeChat, Line and Kakao. I also argue WeChat is in a league of its own. (If you’re interested, my messaging app series is here). Living in Asia, it’s easier to appreciate various ways people and cultures use their mobiles as I am an actual user vs. reading about use cases.

When I visited various Southeast Asian countries with Dave McClure’s Geeks on a Plane tour, my mind was blown. In countries still considered emerging nations ex: Malaysia, Thailand, Philippines, Indonesia, the way phones are used are so different. Actually, everything is different. Most mobiles are pre-paid. Mobile internet connection is mostly 3G and the majority of the population still uses flip phones. I even saw old Nokia phones with the green, pixelated screens. Remember those? I was really good at Snake. Reading and researching about mobile, I was aware of the numbers but to actually see how low smartphone penetration actually was, is a moment I will never forget.

The biggest opportunity I see in emerging nations is how technology is solving dual objectives: social problems and monetization. And the biggest opportunity I see is in mobile payments. I’ve said it once and will probably keep repeating, that because WhatsApp has capabilities on flip phones and older phones, their biggest missed opportunity is moving from a communication utility into a full fledged platform.

I really wish I knew more about payments or was passionate about the topic enough to jump into creating a product. But I am, super excited to see who will be the first to solve across SE Asia.

qz really sums it up best:

At the end of April, nine mobile operators with 582 mobile connections across 48 countries in Africa and the Middle East committed to make their mobile money offerings work across their networks. With interoperability comes greater cohesion and opportunity for new services.

And the kicker:

If it’s done right, it could form the foundation of a whole new global financial-services industry. And the US and Europe will be far behind.

Read the entire post here

Charts: Global Internet usage

I had to blog this vs tweeting  — it’s just too good not to share.
Take a look:

share-of-population-that-has-never-used-the-internet-2013_chartbuilder

  • 20% of Europeans have never used the Internet.
  • 34% of Italians have never used the Internet — via qz

Granted, there are still 13% of American adults in 2014 don’t use the Internet [1] but these numbers still astound me.

Then there is Asia — and I loathe using ‘Asia’ so loosely because Asia is BIG — but they are the global leader in online growth: 42% APAC vs 27% Europe — Comscore Asia forecast (PDF)

This is also a good opportunity to revisit the scope of technological adoption and revenues coming out of Asia.
Parallel with online growth; the increase of mobile traffic, combined with mobile revenues makes this region, the most interesting when it comes to disruptive technologies + monetization.

ChartOfTheDay_1088_Percentage_of_global_page_views_from_mobile_devices_n

 

Asia includes the following four countries: China, India, Japan and South Korea. Those four countries account for 66% of Asia’s population, 60% of Asia’s mobile connections and over 70% of regional mobile income. Four markets, four countries with four very different ecosystems.

China = population of 1.4 billion people, GDP of 8.2 trillion USD
India = population of 1.2 billion people, GDP of 1.84 trillion USD
South Korea = population of 50M people, GDP of 1.13 trillion USD
Japan = population of 127.6M people, GDP of 5.96 trillion USD

Then, there are the smaller countries with high GDPs and/or high population like: Hong Kong, Singapore, Taiwan, Thailand, Indonesia, Malaysia, Philippines, etc., etc.

To put that into perspective, the US has a population of 314M people (double Japan) with a GDP of 15.68 trillion USD. Compared to the big four Asian countries (Japan, South Korea, India and China), the US has been ahead of the race as far as development, access and economic distribution. This development gap the US has, is significantly wider with India and China than the gap the US has with Japan and South Korea, but the US is still ahead of these four countries.

WSJ just reported China is projected to overtake the US in mobile revenue [2] but as I said here, Japan should be the market to pay attention to, as

  1. smartphone penetration is still low
  2. spend is high — and keeps growing

Looking at global run rates and stats, it’s all about Asia and realistically, which markets and ecosystems one can penetrate.

 

 

 

Japan App Store Rapid Growth

Startling facts:

  • Japan app store is expanding faster than expected, especially for apps outside the top 3-5.
  • by Mar 2015, a #10 ranked game will earn ¥1.7bn/m, which is the same as #2 earned in Nov 2013

 

State of mobile in Japan:

Screen Shot 2014-04-10 at 4.13.16 PM

 

 

  • Japan has 10x the USA’s population density, used to spending with carrier (payment) settlement since the 90’s (with iMode)
  • over 30% of households are one-person == spend more on entertainment vs family

Innovation has come to a halt in Japan and indeed on the surface it may seem that way as Japan has always been known for their hardware: Sony and Nintendo the two leaders at the helm.

However the Japanese people are still spending and looking to spend. They are the users and ultimately, paying customers, even if Japanese companies like Sony and Nintendo fail to deliver ‘innovation’.

Isn’t spend more important than who or what is actually delivering?

When I see figures like these:

non-Japanese companies listed in Japan
1991 = 127
2014 =  21

I can’t help but to be baffled. I get the allure of the BRIC countries but China and India are such unique markets with distinct ecosystems. Why wouldn’t a company want to come to a country with consumers who are looking to spend?

One thing is for sure — like I keep repeating — the world is not going to know what hit them when Japan’s smartphone market finally matures and the numbers that will come out of this country will blow people’s minds.

There is still massive opportunity in this country and one of the biggest reasons I am here.

*above from Japan/Korea Market and Japan App Store Macquarie Research reports unavailable to public.
Listed companies in Japan via The FT

Popular Communication & Messaging Apps by Country

I spent the past week reading forecasts and reports from Goldman Sachs, McKinsey, Morgan Stanley, Deutsche, etc., etc.

It sounds a bit boring but really not. It was actually fun to read, consume, compare and contrast the different reports.

Quick takeaways:

Deutsche Engagement

Deutsche’s chart of messaging apps used in Brazil, Russia, China, South Korea, Japan and the US.

culture and distro

 

Cross referenced with AppAnnie’s spend by country chart tells us:

  • S. Korea consumes and spends on content. Kakao Talk’s success is likely due to that ecosystem.
  • Japan leads in gaming, explaining the success of gaming companies as Capcom, DeNA, Gree, et al., and the reason the Japanese spend the most in both Google Play and iOS stores. Also explains success of LINE
  • US has wide range of content spend but the US is a distinct market from the rest of the world with different economical factors.

This chart also from App Annie interests me more, as it shows spend vs device:

Device per spend

I agree with Goldman Sachs, stating BRICs (Brazil, Russia, India and China) are 3-5 years away from global scaling and spending.

South Korea, with the highest spend and technological advancements, is like China where the ecosystems are so tightly intertwined it’s a tough market to penetrate. Fun to watch, but just like China, certain models and strategies cannot be emulated because of the reliance on proprietary strong holds.

For people looking to enter markets, Japan, UK and US are the likely bets. Or at least if I were a VC, that’s where I’d be placing bets.

Still digesting but as my thoughts parse, I will be sharing.