NE Asian messaging apps are the talk of the town with Japanese Line and Korean KakaoTalk reporting promising user acquisition and now Chinese WeChat (known as “Weixin” in China) rapidly expanding outside its native boarders.
Chat app messaging last year overtook SMS texts as the preferred way to send text messages with a staggering 19 billion messages sent in 2012 compared to 17B SMS texts, according to research firm Informa. In the beginning of July 2013 KakaoTalk announced it had passed 100M registered users whilst Line reached a milestone of 200M downloads globally this month with predictions of hitting 300M in 2014, industry sources quoted. WeChat, whose users are predominantly Chinese, is expected to pass 400M registered users within the next few months, adding an impressive 20 million users outside of China in the last two months alone.
Whilst all three apps are predominantly used in their respective country of origin, all three are focusing efforts on Global expansion and are now head-to-head with market leader, WhatsApp, which boasts 250+M active monthly users globally. So far Line seems to be leading the Asian race to go global, posting high international user acquisition. For example recording 5M downloads in India only three weeks after its launch and extending their overseas user base from 50% to 70% during the last year.
"Reaching the 200 million milestone came largely on the back of rapid growth in the South American markets like Brazil, Mexico and Columbia," an NHN official said. The Latin community seems to be highly valued by both Line and WeChat, with Line reporting 12M downloads in Spain and WeChat betting on the broad appeal of soccer superstar Lionel Messi in a new ad campaign targeting a global audience. Line also recently added support for German, Italian and Portuguese, expanding their global efforts in Europe.
So far KakaoTalk seems to be late to the party, having focused on domestic dominance before considering their globalization strategy. They are now making inroads into SE Asia, having aggressively marketed their social gaming platform for users in Indonesia and Vietnam in early 2013. But so far this year Line has dramatically out-paced Kakao, in terms of growth, and some commentators believe that they may have waited too long.
One explanation for the exponential growth of Line and WeChat, compared to that of KakaoTalk is explained by the demographics of their respective domestic markets. Whilst Korea has a population of 50M, Japan boasts 130M and China 1.3B people. Since KakaoTalk claims to have an impressive 90% install rate among domestic users, it is interesting that they didn’t focus more effort on going global earlier, since now the domestic user base is almost fully saturated. A lack of effort in the global market could therefore come back and bite KakaoTalk in the future.
Besides the impressive rate of user acquisition from the three services, how are they doing financially? Despite slower global user growth, KakaoTalk reached break even point in September 2012 and recorded revenue of 45$ million and profits of 7$ million, an impressive count, considering this came from its pool of only 80M users at the time. Most of its profits came from its app’s gaming platform, which was released to immediate and massive success. Line, always quick to follow Kakao into the fray, also reported astounding revenues of 58$ million in Q12013 alone, more than four times the revenue than Kakao although the profits (or lack of profits) from Line is so far undisclosed. WeChat have yet to monetize but with the reported launch of a mobile game platform later this year they will soon aspire to cash in as well.
With all three apps having, or planning to introduce, game platforms, desktop versions and having similar monetization strategies there isn’t much separating the three from each other except for the superior growth of Line and WeChat, the verdict is still out on who will overtake WhatsApp’s lead in the mobile messaging market. It does look like KakaoTalk will have a hard time playing catch up with Line and WeChat globally and they might just have to settle for the Korean and SE Asian market (400M downloads vs 150M downloads for Line) from their game app platform acting as their cash cow. Who do you think will win the fight for the throne of mobile messaging? Leave your comment below.
*Editors note: Line was developed in Tokyo, by a team of Japanese developers who operate out of NHN Japan, a unit of the Korean NHN Corporation. Debate rages on weather Line is Korean or Japanese, but for the purposes of this article I have assumed Line as being Japanese.