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LINE announced in its Q3 2016 earnings last Friday a 13% YoY increase in revenue to ¥36 billion ($344 million).
Revenue growth was drivenprimarily by increases in advertising revenue. On the other hand, revenue from user-paid stickers and games declined. These results further highlight that advertising represents a promising monetization strategy, whereas paid stickers do not.
Here are the main highlights from the release:
- Advertising, which increased 52% YoY to ¥14.5 billion, was a strong growth driver.LINE has proven that advertising, if done well, can serve as a meaningful source of income. This runs counter to the conventional wisdom on chat apps that ads are far too disruptive to be used effectively on messaging platforms.
- Revenue from user-paid stickers and games continues to decline. The Communication segment, which primarily includes user-paid sticker revenue, declined 7% YoY. This highlights that users don't want to pay for stickers. Meanwhile, revenue from the Content segment declined 18% YoY, indicating that the segment is also struggling to get users to pay for products.
- LINE is focusing on expanding its core Asian user base. Monthly active users in LINE's four key markets - Japan, Taiwan, Thailand, and Indonesia - grew 18% YoY. LINE previously highlighted plans to grow its base in Asia, as it becomes increasingly difficult for chat apps to break into new markets.Â
LINE's earnings reinforce that user-paid stickers - and sticker use, in general - will likely become a less important business strategy for messaging apps. While it still presents a substantial revenue opportunity right now, sticker usage is beginning to stagnate. In turn, advertising in all of its forms will continue to grow robustly. New innovative and engaging advertising technologies, such as chatbots, and more accurate cross-platform marketing strategies are helping the advertising segment along the way.
Messaging apps have evolved beyond simple text communication tools to include commerce, file sharing, artificial intelligence, and more. And that evolution is ongoing.
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:
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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.