Line's $10b IPO heralds next level of chat wars

Neha Dharia/Ovum
17 Jul 2014
00:00

It has been an eventful year for the messaging industry, the consolidation in the market (Facebook’s WhatsApp acquisition and Rakuten’s Viber acquisition) allowed both WhatsApp and Viber to concentrate on building the product and user base rather than worry about funding.

Along with this, chat app Tango has just got a Series D $285 million round of funding led by China’s Alibaba; this leaves them with a lot more resources to spend on growing their footprint and product. This signals the next level in chat app war that is taking place, one that goes beyond geographical expansion to one focused on monetization, quality of service and product features.

The messaging space is may not be as crowded as before, but there will now be a greater emphasis on quality of service, product offerings and of course monetization. Product innovation will be a strong differentiating factor at this level of chat app competition.

Line seems to have understood this change in the market and its IPO move makes perfect sense given the recent activities in the industry. The IPO application is said to be valued at 10 trillion yen, ($9.85 billion) and would provide Line with the resources and recognition it needs to compete in the next level of chat wars.

An IPO will not only raise its profile further in the market, but it will also provide them with adequate funds to strengthen their product offering and grow their multiple healthy revenue streams which include games, stickers, e-commerce, content and so on.

Unlike most other players Line is already a revenue generating chat app focused on innovation, the IPO will not only help them get further visibility in markets outside Asia, but the resources can also be put to further marketing efforts and product innovation to grow their user base internationally.

Neha Dharia is a senior analyst at Ovum. For more information, visit www.ovum.com/

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