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Chat app Line injects $182M into its mobile payment business
Japanese messaging app company Line is pumping 20 billion JPY ($182 million) into its mobile payment business as it tries to turn things around following a challenging year in 2018.
The company announced the infusion into Line Pay, a subsidiary that it fully owns, in a filing that stated the new capital is “necessary funds for its future business operation.” No further details were provided.
The investment comes on the heels of Line’s latest financial report which saw it post a 5.79 billion JPY loss as revenue grew by 24 percent to reach 207.18 billion JPY in 2018. Line has long been a top money maker in the App Store, but its efforts to build out content around its messaging platform and games division have turned out to be expensive, with a job service, manga platform and e-commerce business among its ventures.
In addition to more content, payments are also seen as “glue” that can increase engagement within the Line ecosystem and its main messaging app.
The company is going after the cashless opportunity in Japan, where it is the dominant chat app with an estimated 50 million registered users. The country is notable for its continued use of cash, but the government is using the upcoming 2020 Olympic Games as an opportunity to move toward a digital future. Aside from its core Line Pay service, which sits inside the Line chat app, Line is introducing its own credit card with Visa and has gone after Chinese tourists through a tie-in with Tencent, the internet giant behind China’s top messaging app WeChat.
Outside of Japan, Line Pay is also available in Thailand (where it works with the Bangkok metro provider), Taiwan (where it counts two banks as partners) and Indonesia, which Line says are its next three largest markets in terms of user numbers. Together, across those four countries, Line claims it has 165 million monthly active users and 40 million registered Line Pay users. Line said GMV reached 55 billion JPY ($482 million) per month back in November 2017; there’s been no update since.
The service was launched more widely but it has shuttered in other markets, including Singapore where it was ended in February 2018.
Beyond payment, Line is also moving into banking and financial services. It is working to launch a digital bank in Japan and last year it announced plans to investigate the potential to roll out loans, insurance and other services backed by its own cryptocurrency. While it didn’t hold an ICO — its “Link” token is earned or can be bought on exchanges — Line did dive into crypto in a major way, opening its own exchange and starting a crypto investment fund, too. With the bear market in full effect, and token valuations dropping by 90 percent across the board, we haven’t heard too much more from Line regarding its crypto plans.
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Enterprise messaging startup Eko Communications raises $20M for its European expansion
After focusing on Asian markets, particularly in Southeast Asia, Bangkok-based Eko Communications is getting ready to take on Slack, Microsoft Teams, and other enterprise messaging apps in Europe. The startup announced today that it has raised a Series B of $20 million and opened offices in London (which will serve as its new commercial headquarters), Amsterdam, and Berlin.
The funding, led by SMD Ventures, with participation from AirAsia’s digital investment arm Redbeat Ventures, Gobi Partners, East Ventures, and returning investors, brings Eko Communication’s total raised to $28.7 million. The company’s Series A was announced in 2015, followed by $2 million in strategic funding from Japanese conglomerate Itochu last year. Eko Communications (not to be confused with Eko, an interactive video startup) has already served clients like Thai mobile operator True, Radisson, and 7-Eleven.
Eko Communications’ Series B is earmarked for its ambitious global expansion plans in the first quarter of 2019. Korawad Chearavanont, the company’s CEO and co-founder, told TechCrunch in an email that it has already localized products for target markets including the UK, Ireland, Benelux, and the DACH region (Germany, Austria, and Switzerland).
Eko Communications wants to expand in the European Union and the United States because their economies are both significantly larger than Southeast Asia’s, said Chearavanont. This, plus the fact that both have larger enterprise IT markets thanks to higher spending on software by companies, means that “for Eko to achieve the necessary scale to become a global player in the mobile enterprise market, continued growth in these markets is critical,” he added.
The company claims that its revenues have more than tripled in the past year and that it now has more than 500,000 recurring paid users. Of course, any enterprise messaging startup has to contend with the specter of Slack and Microsoft Teams. Positioning Eko Communications as a rival to those services, however, isn’t totally accurate because they are aimed at different customers.
Slack and Microsoft Teams are “primarily utilized by ‘knowledge workers’ and these systems are priced for these types of users,” Chearavanont said. “Being a mobile-first company, we target companies that have a large presence of mobile-first staff traditionally in industries like retail and hospitality (the services sector in general).” Many employees in those sectors still rely on messaging apps like WhatsApp or email to communicate, so Eko Communications seeks to make it easy for companies to transition from their ad hoc communication methods to a more secure and efficient system with tools like APIs to help them integrate legacy systems.
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Chat app Line’s games business raises $110M for growth opportunities
Messaging app firm Line has given up majority control of its Line Games business after it raised outside financing to expand its collection of titles and go after global opportunities.
The Line Games business was formed earlier this year when Line merged its existing gaming division from NextFloor, the Korea-based game publisher that it acquired in 2017. Now the business has taken on capital from Anchor Equity Partners, which has provided 125 billion KRW ($110 million) in financing via its Lungo Entertainment entity, according to a disclosure from Line.
A Line spokesperson clarified that the deal will see Anchor acquire 144,743 newly created shares to take a 27.55 percent stake in Line Games. That increase means Line Corp’s own shareholding is diluted from 57.6 percent to a minority 41.73 percent stake.
Korea-based Anchor is best known for a number of deals in its homeland, including investments in e-commerce giant Ticket Monster, Korean chat giant Kakao’s Podotree content business and fashion retail group E-Land.
Line operates its eponymous chat app, which is the most popular messaging platform in Japan, Thailand and Taiwan, and also significantly used in Indonesia, but gaming is a major source of income. This year to date, Line has made 28.5 billion JPY ($250 million) from its content division, which is primarily virtual goods and in-app purchases from its social games. That division accounts for 19 percent of Line’s total revenue, and it is a figure that is only better by its advertising unit, which has grossed 79.3 billion JPY, or $700 million, in 2018 to date.
The games business is currently focused on Japan, Korea, Thailand and Taiwan, but it said that the new capital will go toward finding new IP for future titles and identifying games with global potential. It is also open to more strategic deals to broaden its focus.
While Line has always been big on games, Line Games isn’t just building for its own service. The company said earlier this year that it plans to focus on non-mobile platforms, which will include the Nintendo Switch among others consoles.
That comes from the addition of NextFloor, which is best known for titles like Dragon Flight and Destiny Child. Dragon Flight has racked up 14 million users since its 2012 launch; at its peak it saw $1 million in daily revenue. Destiny Child, a newer release in 2016, topped the charts in Korea and has been popular in Japan, North America and beyond.
Line went public in 2016 via a dual U.S.-Japan IPO that raised more than $1 billion.
Note: The original version of this article was updated to clarify that Lungo Entertainment is buying newly issued shares.
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Chat app Line gets serious about gaming with its latest acquisition
Line, the company best-known for its popular Asian messaging app, is doubling down on games after it acquired a controlling stake in Korean studio NextFloor for an undisclosed amount.
NextFloor, which has produced titles like Dragon Flight and Destiny Child, will be merged with Line’s games division to form the Line Games subsidiary. Dragon Flight has racked up 14 million users since its 2012 launch — it clocked $1 million in daily revenue at peak. Destiny Child, a newer release in 2016, topped the charts in Korea and has been popular in Japan, North America and beyond.
Line’s own games are focused on its messaging app, which gives them access to social features such as friend graphs, and they have helped the company become a revenue generation machine. Alongside income from its booming sticker business, in-app purchases within games made Line Japan’s highest-earning non-game app publisher last year, according to App Annie, and the fourth highest worldwide. For some insight into how prolific it has been over the years, Line is ranked as the sixth highest earning iPhone app of all time.
But, despite revenue success, Line has struggled to become a global messaging giant. The big guns WhatsApp and Facebook Messenger have in excess of one billion monthly users each, while Line has been stuck around the 200 million mark for some time. Most of its numbers are from just four countries: Japan, Taiwan, Thailand and Indonesia. While it has been able to tap those markets with additional services like ride-hailing and payments, it is certainly under pressure from those more internationally successful competitors.
With that in mind, doubling down on games makes sense and Line said it plans to focus on non-mobile platforms, which will include the Nintendo Switch among others consoles, from the second half of this year.
Line went public in 2016 via a dual U.S.-Japan IPO that raised over $1 billion.
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Why Southeast Asia Is Leading The World’s Most Disruptive Mobile Business Models
Earlier this summer, more than 35,000 industry leaders gathered at Mobile World Congress Shanghai 2015 to discuss the future of mobile, making it the largest-ever mobile-focused event in Asia. I was joined by peers from Netflix, Line, Ola Cabs, Flipkart and Twitter to discuss future business models for the mobile Internet. Most of this discussion steered towards China and India, but I was there… Read More
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Playbasis Lands $1.8M To Fuel Its Gamification For Enterprise Push
Playbasis, a company that offers gamification solutions for business and enterprises, has closed a $1.85 million Series A round as it bids to broaden its services and develop new technology such as virtual reality for companies. Thai Fashion Site WearYouWant Scoops Up $1.5M Series A
WearYouWant, a fashion retail site, has raised $1.5 million in Series A funding. The round was lead by Digital Media Partners (DMP), a venture firm that specializes in emerging markets, as well as Japanese e-marketing firm OPT SEA. Other investors include IMG Investment Partners and WearYouWant co-founder Julien Chalte. Read More
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