LINE is on track for biggest tech IPO of 2016
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Popular Japanese chat app LINE announced on Monday that its dual Japan-US public listing could raise more than $1.1 billion, according to TechCrunch.
At the time of writing this article, the price of shares had reached $32 (3,300 Yen). If these prices remain, LINE's IPO will be the biggest tech listing of 2016 thus far.
In 2015, LINE generated roughly $1 billion in revenue, making it one of the most lucrative app developers in the industry. The company generates revenue through four primary segments: stickers, games, advertising, and merchandise/licensing of its cast of characters, which are extremely popular in a number of Asian markets. LINE filed an F1 with the US securities and exchange commission last week ahead of its July IPO. The filing sheds light on the financial viability of the messaging business model:
- Sales of games and stickers have started to slow in line with the number of users who spend money on these services. Still, the company generated a whopping ~$240 million — a quarter of its overall revenue — from sticker sales alone in 2015.
- Advertising is one of the fastest-growing segments of LINE's business, accounting for ~30% of revenue in 2015. LINE is dominant in a number of markets where digital advertising is still nascent, including Indonesia and Thailand. However, the APAC advertising market is projected to increase from $13.5 billion in 2015 to $55.6 billion in 2020, according to the IDC.
- LINE is doing a better job of monetizing its services. Average revenue per user has nearly doubled over the past two years, from $2.57 to $4.98. However, the company experienced slower user growth. Global monthly active users grew less than 1% over the past year. Monthly active paying user growth has also leveled off.
Messaging apps have evolved beyond simple text communication tools to include file sharing, commerce, and more. And their growth will continue in the coming years.
Will McKitterick, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on messaging apps that takes a close look at the size of the messaging app market, how these apps are changing, and the types of opportunities for monetization that have emerged from the growing audience that uses messaging services daily.
Here are some of the key takeaways from the report:
- Mobile messaging apps are massive. The largest services have hundreds of millions of monthly active users (MAU). Falling data prices, cheaper devices, and improved features are helping propel their growth.
- Messaging apps are about more than messaging. The first stage of the chat app revolution was focused on growth. In the next phase, companies will focus on building out services and monetizing chat apps’ massive user base.
- Popular Asian messaging apps like WeChat, KakaoTalk, and LINE have taken the lead in finding innovative ways to keep users engaged. They’ve also built successful strategies for monetizing their services.
- Media companies, and marketers are still investing more time and resources into social networks like Facebook and Twitter than they are into messaging services. That will change as messaging companies build out their services and provide more avenues for connecting brands, publishers, and advertisers with users.
In full, this report:
- Gives a high-level overview of the messaging market in the US by comparing total monthly active users for the top chat apps.
- Examines the user behavior of chat app users, specifically what makes them so attractive to brands, publishers, and advertisers.
- Identifies what distinguishes chat apps in the West from their counterparts in the East.
- Discusses the potentially lucrative avenues companies are pursuing to monetize their services.
- Offers key insights and implications for marketers as they consider interacting with users through these new platforms.
To get your copy of this invaluable guide, choose one of these options:
- Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the future of messaging apps.