Line IPO

Does Facebook need to watch its back? Three things you need to know about Asian tech darling, Line

This blog post is by Francesca Boughton from our Digital & Social team.

Japanese messaging company Line made headlines this week as it went public in the largest tech listing this year. The dual Japan-USA IPO raised more than $1 billion, a figure that has had many in the Western world begging the same question: What the hell is Line?!

Line boasts 213 million active monthly users predominantly based in Japan, Indonesia, Taiwan, Thailand, plus Turkmenistan. By comparison, WhatsApp is the messenger app of choice in 109 countries, with approximately one billion active monthly users. So why then is Line, a comparatively small, Asian-centric company suddenly making global waves?

1)    It is much more than just a messaging app.

Line comprises 35 apps around messaging, cartoons, music streaming, and even car services. The plethora of functions Line offers has meant that it has far more value-add than just messaging, driving exceptionally high engagement and frequency among its user base. 61% of Line users are active daily, with that figure jumping to 73% in its key markets. Furthermore, the average time spent using Line is a whopping 40 minutes per day, compared to 27 minutes per day on WhatsApp. Those extra 13 minutes of engagement are crucial for increased ad views and thus, revenue.

2)    It has taken the lead on a number of messenger app trends, such as stickers, social games, but most importantly, monetization.

Stickers, a visual gimmick initially seen as a fleeting trend, have evolved into a fun, unique way for users to express themselves. Last year, Stickers accounted for $270 million of Line’s revenue. Line’s continually high platform engagement is cultivated through an ecosystem in which revenue opportunities can flourish, without cluttering the interface with non-UX friendly ads.

3)    Line is the envy of messenger companies looking for ways to bring in those dollar bills, having already successfully executed the personalised advertising model Facebook have yet to roll out.

Line is a pioneer of official accounts within messaging apps, which allow users to opt-in to receiving sponsored messages from brands they have chosen to follow. This provides a powerful, personalised way for brands and companies to directly interact with consumers. In 2015, the company grossed more than $1 billion in revenue, with this advertising model accounting for approximately one third of those sales. Facebook, Line’s biggest threat, is planning to execute a similar model for Messenger, in line with its strategy to expand the app further beyond its core chat function.

It’s far from breaking into Facebook-dominated Western world, however investors and tech experts will be keeping a keen eye on Line’s future innovations and how other tech companies react. Although it continues to focus its efforts on its core Asian markets, Line poses a significant threat to Facebook as the tech giant attempts to edge in and secure a more engaged user base in emerging nations. The two are likely to clash in the future, and it will definitely be an interesting dynamic to see. Watch this space.