Messaging app user numbers continue to grow rapidly, with many smartphone users having accounts with more than one provider. But, perhaps surprisingly, many companies operating in this space are not yet generating a huge amount of revenue.
To that end, there is evidence that the companies behind messaging apps are now looking to step up revenue generation.
Initial efforts have taken the form of selling stickers that can be added to messages, or chargeable voice services. The real challenge now is to generate significant levels of revenue and to differentiate in an increasingly crowded market.
Japan-based LINE, which has 170 million monthly active users, generated headlines in October when it announced a range of new services to be made available through its messaging app.
These included payment, a taxi hailing service, food ordering and a new company to develop a music streaming service.
Mobile World Live spoke to Sunny Kim (pictured), CEO of LINE Europe, to find out more about the company’s plans to expand its services.
Big in business
Referring to the new services announced in October, Kim said the company has “a strong plan in both the business-to-business and lifestyle sectors”.
She explained that the company will look to reinforce its B2B efforts through services such as LINE Pay and LINE Connect.
“LINE is always eager to extend its brand and services to other enterprise opportunities. LINE Connect is a great example of this in the business-to-business sphere,” she said.
Connect supports different functionality through a range of APIs, including a service that automatically replies to users, based on the content of a message.
This gives businesses a new way to connect, Kim noted.
Making messaging pay
LINE Pay will also be an important element in the company’s near-term growth, Kim suggested: “LINE Pay will also soon enter the business-to-business model and integrate into other commercial services.”
The introduction of LINE Pay will be “a very important step” for the company as well as for mobile service providers, the executive added.
In order for LINE Pay to succeed, Kim said it needs to be closely aligned to the LINE brand by supporting “a very strong internal retail option and operational capability”.
The initial launch for LINE Pay was for the internal LINE brand shop and affiliated services, but Kim said this will expand to “external and third party options” over time.
“Our plan is to expand LINE Pay into other apps and services providers through strategic partnerships, positing LINE Pay as a crucial function and service. Line Pay could be the primary business model of LINE from 2016 onwards,” she added.
LINE plans to grow the business-to-business area, with LINE Pay and LINE Connect expanding into new markets, including Latin America and Europe.
Operators and lifestyle services
Kim said collaboration with mobile operators in each region in which the company has a presence is “a top priority”, with its plans for growth including the formation of new partnerships.
“Mobile network operators are always looking for new revenue opportunities through partnerships and LINE has a strong and effective business model,” the executive said.
She explained that the messaging element, but also developments in games, entertainment and lifestyle services, make LINE an attractive partner, as “these partnerships can be mutually beneficial to both businesses”.
Kim noted that the company plans to expand LINE Game and its music offerings after successful growth in Japan.
Form factors and casual downloads
The executive said the biggest challenge in the mobile app industry currently is “its diversity and competitive nature”.
“More and more apps are being released each day – each trying to satisfy the public demand instantly,” she noted.
The availability of apps has led to an increase in casual downloads, in which apps are downloaded before being discarded after a short period of time. “This is a user trend for which the whole app industry must take notice,” Kim warned.
She also noted the importance of addressing different form factors: “In the modern climate, every day we see new mobile devices and platforms introduced. New platforms mean more software and opportunities for app and service development.”
“So a fast response is absolutely crucial. Apps need to be able to quickly respond to any developments in both hardware and software,” the executive added.
LINE introduced a slimmed-down version of its messaging app for the iPad in October last year.
“We believe the faster we react and the faster our services are up to date with the latest technology – the more successful LINE will be,” Kim noted.