Chat apps are a global resource for communications, whether it be between siblings in the same household or friends reconnecting from across the ocean, chat apps are invaluable to modern day communication. The most successful chat applications are Facebook’s Messenger and WhatsApp, both are owned by Facebook. They have a combined user pool of 1.9 billion people. However, though these applications might be king of the chat world for now, there is another player entering the ring, and at the closing bell of the Tokyo and NYC Stock Exchanges Japan’s Line made it out big.
Line is just now making their debut in North American markets, however it is the largest social media service in Japan. It is a proprietary application used for instant communication on electronic devices like tablets, smartphones, and personal computers. Line users can exchanges texts, videos, and photos, audio and conduct free VoIP conversations using video/audio. Line was designed by a subsidiary of a Korean company called Naver and was engineered by South Korean, American, Japanese and Chinese software designers.
Line first launched in 2011 as a tool for communication after the tsunami wiped out all other networks. The chat app reached 100 million users in eighteen months, and only 6 months after that 200 million users were recorded. Its growth, seemingly exponential at the time, has somewhat plateaued as this year there are a recorded 218 million users worldwide, predominantly in Asian and Southeast Asian countries. Line has only recently been introduced to North American markets, however grabbing hold of a substantial piece of the market share may be hard as Facebook has already laid deep roots with most of the almost 2 billion users.
In order to gain the market share they need, Line went public in New York City and then in the Tokyo Stock Exchange this week. Line is providing the opportunity for people to buy into the software industry, with a blooming app that promises even more gains in the future. Due to the sales in NYC and Tokyo on the stock exchanges Line is now valued at $8.6 billion USD. “Line opened at 4,900 yen on the Tokyo Stock Exchange, 48.5 percent above the initial public offering (IPO) price of 3,300 yen, thanks to demand from investors hungry for a rare chance to invest in a tech startup. The stock closed at 4,345 yen. The Tokyo offering came after Line sold about 70 percent more shares in New York which closed 26.6 percent above the initial public offering (Reuters, 2016).”
The special attribute of the 7th largest chat app in the world is its own Line Store. The app generates most of its revenue from the sale of games, emojis and stickers as well as advertising. Last year, revenue and other operating income at Line rose about 28.3 percent to 120.88 billion yen ($1.14 billion). But it reported a net loss of 7.97 billion yen, compared with profit of 2 billion yen in 2014 (Reuters, 2016). Line is predominantly used in Japan, Indonesia, Taiwan and Thailand. Japan and Thailand will be especially beneficial to the chat-app due to their relatively low rate of digital advertising. Line is hoping to increase their ad-based revenue in these markets first.
Line will continue to grow over the coming years with more and more investors looking to enter the software sector. Whether or not Line can extend beyond their core-Asian market is still to be determined. In the United States they will face their toughest competition yet.