A Japanese Social App Contacts New Shores By ERIC PFANNER Published: September 5, 2013 TOKYO — Traditionally, Japanese bow when greeting others. They do not tend to shake hands. But millions of them have starting shaking their smartphones. They do it to activate Line, a two-year-old messaging application that lets people exchange information, send silly stickers and play games with their friends. It already has 230 million monthly users — a milestone that Facebook did not reach until it was five years old. And it has not even penetrated the United States yet. Most Americans have never heard of its parent company, NHN Corporation, of South Korea. But hundreds of millions of smartphone users in Asia and patches of Europe and Latin America are spurning Facebook or Twitter, preferring instead to use Line to tell their friends about a new job, boyfriend or breakfast cereal. Now Line, not content with being the latest “big in Japan” craze, wants to transform itself into something bigger — the first global Internet company from Asia. “We would like to turn Line into a common language for the world,” said Akira Morikawa, chief executive of Line. “Our plan is to become the No. 1 online service.” Bigger than Facebook? Bigger than Google? Yes, Mr. Morikawa said, in an interview at the company’s headquarters on the 27th floor of an office tower overlooking the chaos of Shibuya Crossing, reputedly the busiest pedestrian intersection in the world. Mr. Morikawa’s claims might sound like boastfulness, the pipe dream of any upstart hoping to be the industry’s next big thing. But the company’s growth is impressive, even if it still has only a small fraction of Facebook’s billion-member network of users. American Internet giants may dominate social media, but Line has a critical advantage, Mr. Morikawa said. Unlike Facebook, Twitter, Zynga and even Google Plus, Line was originally conceived and created for smartphones, which already account for most of growth in Internet users. So the company does not have to wrestle with designing software that can leap from desktop computers to mobile devices. Mark Zuckerberg, the chief executive of Facebook, need only ask his sister Randi about it. She wrote in a blog post after visiting Tokyo this year that “all the cool kids are using Line.” Noriko Suzuki, a 22-year-old office worker in Tokyo, said she feels that way. She said she sent about 50 messages a day via Line — including reports on her summer vacation, plans for an evening out and pictures of her lunch. Like other Line users, Ms. Suzuki often adds a digital “sticker,” a cartoon image that could be anything from an exuberant teddy bear to a grimacing rabbit. It communicates feelings hard to convey in a text message. “If I’m angry, happy or crying, there’s always a sticker,” she said. Some of the stickers feature Line’s own characters, including a bear named Brown and a rabbit named Cony, who engage in activities as varied as hugs and flatulence. Others show well-known cartoon figures like Hello Kitty or Marvel Comics heroes. Line says its users send more than 1 billion stickers per day. Facebook has taken notice; recently it added a sticker function to its messaging application. So has the rest of Silicon Valley. A number of messaging start-ups, including Path, MessageMe and GroupMe, have added stickers in recent months. “If any app can make a giant like Facebook rethink their strategy, then that is the surest sign of the potential power of these services,” said Neha Dharia, an analyst at Ovum, a telecommunications research firm. Ovum estimates that messaging apps will cost telecommunications companies more than $32 billion in lost revenue worldwide this year. The stickers may seem silly, but they were the first step in Line’s plan to expand beyond cheap communications and turn itself into a broader media and entertainment platform. Many other companies’ mobile applications, messaging and beyond, have yet to generate any revenue in the United States. Line gives some stickers away; others cost 170 yen (about $1.70) for a pack of 40. Sticker sales alone make about $10 million a month in revenue, Line says. Games are Line’s biggest moneymaker, accounting for about $25 million a month in sales, or slightly more than half the company’s revenue. Though games were added only about a year ago, offerings like Line Pop and Line Bubble quickly moved into the Top 10 lists on Google Play and the Apple App Store. Like other popular online game providers in Asia, Line lets users download its games free, making money through in-app purchases, which provide players with special powers, for example. In the United States and Europe, paid-for apps, including games, have been more popular. The risk for Line is that what appeals to Japanese and Koreans could be lost in translation in the United States. The service appeals to the Japanese love of all things “kawaii,” or cute. Even emoji, the cute little faces and other images that are a staple of cellphone communication in Asia, are just beginning to catch on in the United States. “It feels foreign, but it feels fun,” said Catherine Boyle, an analyst at eMarketer, a research firm. “It’s definitely not American, but people can get over that.” Line is installed on 71 percent of iPhones in Japan, according to Onavo, a mobile measurement firm, but is on only 1 percent in the United States. By contrast, Facebook Messenger has been installed on 12 percent of American iPhones and WhatsApp, a Silicon Valley-based chat application, on 9 percent. Line executives say there is significant opportunity for growth, given that no single messaging app has gained dominance in the United States. They say they are negotiating with American pop stars, though they declined to provide names, who will be paid to use it and presumably spur others to follow suit. Last year, Line hired Jeanie Han, a former executive at Paramount Pictures, to oversee its American introduction, and to run its European and Latin American operations. Ms. Han pointed to Line’s growth in Spain as a model. There, more than 40 percent of iPhone users have installed Line, according to Onavo. Now, the company is using its foothold in Spain to try to expand in Latin America and other European countries. Last week, Line announced a deal with the soccer team FC Barcelona to sell stickers featuring star players. “Our success in Spain is a very good sign, telling us that what we do can transfer over to Western cultures,” Ms. Han said. Line executives say they hope to capitalize on growing concerns about privacy among Internet users. Line does not ask users for full names; a pseudonym suffices. Line communications take place in private, in contrast to the more open postings that characterize social networking services. While American Internet companies like Google and Facebook comb through user data and communications to tailor advertising, Line executives said they had no plans to do so. Line has restricted ads to opt-in campaigns by companies like SoftBank, a Japanese mobile network, and McDonald’s, which have used Line to offer coupons and other promotions. “We don’t want services that make users feel uncomfortable,” Mr. Morikawa, Line’s chief, said. “We want to focus on giving them a meaningful experience.” Especially if it arrives with a flatulent bunny named Cony. Joshua Hunt contributed reporting.
Posted on: Fri, 06 Sep 2013 05:47:09 +0000