Understanding Line, the chat app behind 2016’s largest tech IPO | Hacker News Reader

Understanding Line, the chat app behind 2016’s largest tech IPO

techcrunch.com

63 pointsupen60 comments

Overall solid article but strangely light on details.

>Gaming was 40 percent of Line’s revenue in 2015, its largest single line item for income.

>Gaming can be high-grossing but it is also subject to fads and trends. Line’s games have performed well but, as we have seen in the past, just one title underperforming can drag the company’s revenue down.

>“Historically, we have depended on a small number of games for a majority of our mobile game revenues, and we expect that this dependence will continue for the foreseeable future,” Line admitted in a filing.

For example, their gaming revenue is dominated by "Tsum Tsum", a falling puzzle style game that uses Disney IP and the Line platform. It's been a top 5 game in Japan for a few years now. The fact that the article doesn't call this out specifically is surprising.

Also, their sticker revenue is now about 20% of their revenues iirc (according to an article I recall reading last year), which I don't think was called out in the article. At one point this was 80%+ of their revenues.

They seem to have achieved diversification of revenue sources, but core user growth is the main risk.

But is the type of gaming that would be associated with line a fad in totality? And are stickers just a fad as well? Will people be buying them 10 years from now?

I actually think stickers fill a real need of

1) "I am not exactly sure how I can respond best to my friend's message in words, but I can be vague and generally pleasant by using this cute/funny with this sticker"

2) I am too lazy / don't care enough to craft a thoughtful and appropriate message.

You forgot the 3rd case, the stickers can express more than just words and really shape the overall feeling of the conversation. Its a completely different style of conversation when talking to American friends over LINE that treat it like Facebook vs talking to a Japanese friend that is adding in stickers in between the text to add an entire different dynamic to the conversation. People use stickers differently which also helps show their different personalities.

Using stickers well is also a form of eloquence, and of demonstrating empathy. They're often commentary for just-received messages, i.e. it's a way to say "I got what you just tried to say" by picking the right sticker (individual well-known sticker types - such as poses or facial expressions found in many different packs across different characters - become tropes/memes). And people also tend to appropriate certain characters, so it becomes a way to maintain an identity within group.

Given that there's a photo of a shelf full of merch of Line's characters in the middle of the article, I wonder how much of their revenue is just that. And how much of their game revenue is coming from games starring their characters.

Come up with simple, cute characters, and stick them on everything possible. Hey, it worked for Sanrio...

Interesting times we live in. A "free" chat app is going to be valued at >$1bn and they make money selling digital stickers and perks for their Tetris clone, while publishing companies can't stay afloat with ads. Maybe publishers should sell stickers.

Edit: 9 billion.

People don't care about the news or comprehensive journalism.

Bread and circuses.

Yep, Humans are social animals and chatting is just as crucial as eating (in 1st world countries). Reading the news? We can do without it. One is addressing a need, the other isn't.

Also it's enough for a few people to read the news; rest will learn the important things via chatting. For instance, I learned about today's massacre in France because my SO called me from work this morning to tell me about it. Otherwise I probably still wouldn't know it happened.

LINE has actually turned out to be my favorite messaging app. Stickers aside, it's one of the few ones with a native desktop app, support for sending video clips, it has a really good group chat implementation (you can attach notes to a chat which is useful for stuff like planning meetups). There's integration with their other services as well - if you subscribe to LINE Music you can embed a song into a chat. It just feels like they made a lot of good decisions overall.

I communicate with some workmates over iMessage which often has delivery problems (random delays), has very poor group chats, and obviously is Apple platform-specific and yet is still inconsistent among the few platforms they do support (you can send links on a Mac that can't be seen on iOS)

Family uses Facebook Messenger which on the desktop is stuck in a small frame on their website and in general just feels impractical and feature-anemic.

Some tech-inclined friends use Hangouts, and I don't communicate with them much because opening up Chrome decimates my battery life. That client was also very slow to adopt basic UI features such as copy/paste of images and drag and drop.

I don't know anyone who uses WhatsApp or Telegram.

FYI, messenger.com is a standalone site for FB Messenger.

Is there a hangouts app for iphone? Can you only use hangouts through Chrome on an iphone?

I'm on Android and I've been very happy with hangouts. Works great moving seamlessly between my phone, tablet and PC. Saying that in the past they were slow to adopt those features is irrelevant now as the features you mentioned are currently supported.

I would rather use an end-to-end encrypted chat app, but haven't been able to change over yet. I tried Chatsecure with a tech-savvy friend but could never get it to work. It would never handshake successfully. You could see the handshaking messages in Hangouts, so I know it was able to send messages and trying to handshake (both the ones I sent and the ones my friend sent), but it would never connect.

I am working on a Line Bot and their api documentation is one of the worst I have ever seen. Hope is that with the IPO they hire some resources to do this.

Have they opened it up? When I tried looking into it last year the application made it seem like it was only open to fairly large companies.

I got one. Maybe they thought tenqyu is a large company. hahahahaha

How does a chat app need 2500 employees? Then again the same question applies to Twitter.

They also have an Uber-like taxi service and others. I don't know how Line Taxi is doing, but in Korea, the equivalent KakaoTaxi is quickly becoming the default way to get a taxi.

Line isn't an app, it's a business. You think companies that don't make apps at all need zero employees?

LINE isn't just chat. In addition to developing stickers and games, their integrated apps include making payments, purchasing music and comics, hailing taxis, searching for jobs, gifting, making reservations, shopping, finding flash sales, and a lot more. They also provide services such as a chatbot platform and hosted blogs.

They are constantly expanding and adding new services, and I'm sure they also have a large sales team trying to get companies on board with everything they add, and they have to do that in multiple countries.

I've been a big Line user ever since I moved to Taiwan two years ago (and subsequently moved back to Hong Kong)

Taiwan has embedded Line into their social norms in the same way as most countries have done with Facebook.

It's safe to assume that anyone you encounter, regardless of age or social status, is available on Line.

The branding is also very pervasive, doing promotions with convenience stores, clothing, toilet paper, and anything else you can think of.

It's won over Japan, Taiwan, Thailand and Indonesia.

It's gradually winning over Korea. (there were at least 5 merchandise stores in Seoul a few months ago)

However, growing out of those core markets hasn't worked so well.

Hong Kong has been targeted for a few years (opening a flagship store, and a few pop-up shops), and it gets reasonable use over here.

But it's not managing to kick WhatsApp or wechat. (I saw a recent stat of 35% of users)

So if they can't win over Hong Kong, I'm not sure how it'd work on Europe or North America where their "asian cute style" branding doesn't win them so many bonus points.

It's interesting you bring up the contrast between Line/WeChat usage between Taiwan and Hong Kong. Perhaps people in Hong Kong are more likely to have frequent contact with acquaintances in mainland China, than are people in Taiwan. I'm not sure it's about cultural differences or branding. Just path dependence.

Anecdotally: it isn't just proximity to mainland China. It's proximity to China and the West. Depending on what social groups you run in, you're more likely to use both facebook/tumblr/etc and/or Chinese social networks.

A lot of people I know had Line, but most of them didn't really use it for messaging-- just the games, especially TsumTsum.

Yes, the point I made about HK/mainland and WeChat applies equally to HK/Western and WhatsApp/FB.

'Ecosystem' apps like this remind me of stuff like Neopets [1], where you spend time (and money) within a social gaming portal. Of course, these gaming portals of old started with gaming and later expanded into chat and social, whereas LINE (and Facebook) went the other way.

They're also vaguely similar to MMOs like Runescape, MapleStory, Second Life. The point is, these services all hinge on user participation, user-to-user interaction, and virtual economies, which sets them apart from your run-of-the-mill chat app that just mines your external link clicks for ads, or shows some display ads.

[1] https://en.wikipedia.org/wiki/Neopets

Am in Thailand and everyone has Line. I have all the relevant messengers and really not much pain switching between them. What I can't understand is how WhatsApp squandered its early lead. This IPO represents their failure capturing the market. Had they really executed, they could have owned mobile chat.

Too many chat apps ....

My son is in japan, I have to load line on my phone. I sometimes work in China, I have WeChat. Hangouts for text messages. Work uses Zoom. Another group I hang out with have settled on Slack ....

I want just one

Email. A federated protocol that can send messages regardless of the other person's host.

Meh, I have all those and more, and I don't really feel it's painful switching between them.

> Too many chat apps

Indeed. I only learned about LINE today and it's apparently "2016's largest tech IPO"...

It's too late. Too bad you couldn't invest while they were growing. They've hit a wall and it doesn't seem like they'll be able to expand outside of Taiwan/Japan

I hope that WhatsApp will resist adding all these stickers and games and find it's way to monetize (bring back paid subscription?).

Stickers are great. Stickers let you quickly communicate a reply with two or three taps. They can also lighten things up; I giggle every time my boyfriend uses the "that's great but I am Trying To Work now" sticker I drew for him. What could read as curt and grumpy in text is instead expressed faster by a drawing that is a little bit inherently goofy.

YMMV obviously, maybe you're just too serious to ever want to use a cartoon zebra to express yourself.

Agreed. Stickers are harmless and a popular feature. That said, I find it strange how LINE suggests stickers/emoticons for almost every word possible.

>sticker I drew for him

That's pretty neat, but I haven't seen that; how do you do your own stickers? I don't think anyone would argue against being able to send free-form drawings. The stickers in Skype and Telegram, otoh, seem to be mostly "meme junk". Random clips of TV, or (IMO terrible) cartoony drawings.

My daughters use them sometimes, same with strings of emoji. But I find it expresses far less than words would do. It's like they're just hunting around for a cute image, with little thought beyond that.

Line and Telegram both let users upload their own sticker sets. And I am a professional cartoonist who thinks nothing of spending her spare time drawing a bunch of goofy drawings of one of her characters. Really I kinda had to; all my pro cartoonist friends have them too, and I felt naked talking to them without a set!

http://egypt.urnash.com/blog/tag/stickers/ has an older version of the set I did for myself. Still haven't posted the set I did for my boyfriend.

I'm looking forwards to being able to dump these into Apple's sticker market. Passive income off of something I did for my own use, woohoo!

(There's also a thriving trade in custom stickers: gimme a couple hundred bucks and I'll crank out a set of goofy, expressive drawings of a cartoon character you like to be on the Internet.)

These are awesome / hilarious! Awesome work!

That does seem like a fun hobby

if they charge $1 dollar a year and they have 1 billion users that is $1 billion a year in revenue. Suppose all 1 billion was profit and if you use cost of capital of 10%, you get a valuation of 10 billion.

FB paid 19 billion for it. If they charged for it people might just move to FB messanger or Viber or some free app.

They cancelled subscription just this year when they already had billion users. That means people are willing to pay for it.

I don't remember paying even the $1 to them ever and I've been using WhatsApp for a good few years. Every time the expiration date approaches, it automatically gets pushed away. Either they were just giving away subscriptions intentionally or I'm just one lucky bastard.

So, No, they never had 1 billion dollar paying customers.

They used to claim to charge you after 1 year, but I never got charged due to a combination of changing phone numbers, them not asking for it, etc.

honestly facebooks messaging app is annoying and slow. facebook might have a lot of users but how many of those use messenger? myself i install t and then quickly deinstall it. messenger has more to fear from apps like this than they do from it. whatsapp is good though.

"140,000 sticker sets and 6,830 emoji." They even sell a special emoji keyboard.

This stuff is a fad, like the housing bubble and the .com boom. People who don't really understand technology or the internet or how people use both think they smell gold and they take us on these ridiculous roller coaster rides about "The next big killer app" or whatever. Then that app is dead in 5 years.

I guess if all one is interested in is making money, then good for them, kudos. But in the grander sense.. "the internet shrugged."

Line is a fad like Facebook is a fad then. Pretty much every single person in Japan with a smartphone has the app and it is the standard way to communicate. I didn't need a phone plan when I lived there because I ended up making maybe 5 actual phone calls over the course of 3 years because LINE totally served my needs.

The only people I met with a Facebook were people who liked traveling and were actively looking for English speaking friends.

Almost every person in Taiwan has LINE, too. Something like 75% of the country has an account.

And everyone who communicates with people in Taiwan.

Sticker sets are shockingly popular with the 40+ crowd.

This is also the case in countries down south like Thailand. Everyone who is anyone is on LINE, and businesses display their LINE ID before anything else.

Line ID + FB page and now more often Instagram.

> I didn't need a phone plan when I lived there because I ended up making maybe 5 actual phone calls over the course of 3 years because LINE totally served my needs.

And of course LINE has now announced their own MVNO where you get unlimited LINE for 500 yen/mo...

I'm not sure that's the case for Line. I've used Line only sparingly, but I live in South Korea, which has KakaoTalk, the chat app usually described as being to Korea what Line is to Japan (or vice-versa, since Line was patterned after Kakao). Their UX is very similar.

KakaoTalk is huge. It's hard to separate from being Korean. Everybody has it by default. It's the standard way to communicate. It's used for notifications. The merchandising is everywhere, from its own retail stores to branded products on every corner. The characters are beloved. A new sticker pack is a highlight of the day. Using stickers well is a significant element of social eloquence. There's no laptop screen without it; if people are seen typing into a phone it's probably what they are typing into. KakaoTalk is so fundamental to Korean daily life, it's more like ... the water supply. It's a fact of being here and not there. It's culture.

Will KakaoTalk perish one day? Maybe. The open standards and anti-surveillance ideologist in me adds "hopefully". But if it does it will nonetheless have provided the substrate for an entire generation, a vast moment in time. Innovators may shrug, technologists may shrug - but if the whole thing we do is about building civilization and facilitating culture, as I believe it is, KakaoTalk is factually that in action. Some fad that is.

That's interesting - what do you mean by being used for notifications? Sites / services / stores can send you a KakaoTalk notification? I experimented with sending alerts for server health via WhatsApp but the phone number -> ID ties make it difficult.

Many restaurants here offer a bonus point program - you tap your phone number into the touchscreen of their POS system, and then you get a customized message from the restaurant on your Kakao. Kakao accounts are affiliated with a phone number, so similar to WhatsApp, you will get friend suggestions based on your phone number address book and similar.

It's only existed for 5 years. Technology moves very swiftly and with new capabilities comes new apps, something will replace it and so I call them fads, maybe I'm wrong to do so, but let's see if it still exists in 20 years.

Someone else deserves the credit for saying this, but the only things that survive on the internet are protocols. E-mail, FTP, HTTP, and as it relates to messaging, Jabber. These things are not fads and the only reason I've seen them fail is when the technology does not live up to the needs of people. If Jabber didn't have a number of important issues, perhaps all chat apps would still be using Jabber and none of these "SMS Replacements" would exist.

I think I might be biased, because none of the popular chat apps in recent years has been truly open. I hate proprietary messaging apps. I hate when progress takes a back door to profiteering, especially when the profit model is selling stupid, un-exportable .gifs for $1 each. Talk about preying on the weak.

Believe me, I get where you're coming from. I've worked on open source stuff - including chat apps and even a Jabber client - for 12 years, and it's still my day job, and I wouldn't want to miss going to bed knowing my work doesn't screw anybody over.

So KakaoTalk and that I use it is a thorn in my side. Client and servers are closed source, there isn't an API allowing for client replacements, the protocol is undocumented, there is no federation, it's known to be under government surveillance, you get a single login session per SIM so you can't do multi-identity on the same device, there are no clients for open platforms, there is no open governance of any kind. It's so wrong.

At the same time I've learned it's wrong to resent the user and their lack of care and diligence. It's misspent energy and distracts from forward progress. It doesn't ever change minds. Instead you need to try and have empathy and understand why they do what they do, and why their priorities are different. They're not weak.

The truth is, KakaoTalk does what it does very well and friction-free. The UX is great. They improve things regularly and thoughtfully, supporting what people actually do with the app. It's kinda magic. The stupid .gif's aren't stupid at all, they're ~$3 for ~20, and users would readily say they're worth that - and they're right, compared to the value they get out of a hamburger it's a steal. They meaningfully make their days better.

If you want to beat it, you have to be at least better at the things people care about. It's not easy, because it's very good at them.

I hope we figure it out.

I share your optimism, and I am confident we will figure it out, which is why I describe these apps and similar ones as fads. They prey on ignorance and that will not last forever because the users are becoming less ignorant, as recent history (30ish years) has shown us.

Easy to say about any new app. Do you include Facebook and Google in this? They were most certainly a "killer app/site" at launch, but managed to stick around.

Yes, however neither google nor facebook can be pinned down to a single product. They are now holding companies which own dozens of products, some of which are successful, some which are fads.

Ditto the Kakao and Line brands. Which are in turn operated by Daum and Naver - the two Korean internet giants. Google Maps for example is nigh on useless here: People use Naver Maps or Daum Maps. Line's principal visual identity is true to the mothership and uses "Naver green".

Reply on news.ycombinator.com