LINE – Talking Radio

LINE expands its offering to keep revenues growing.

• LINE has agreed to buy Microsoft’s free personal music streaming business, MixRadio in an attempt to expand its offering and keep growth going.
• LINE is very far from being the biggest instant messaging with around 250m monthly active users but historically, it has been one of the best at monetising those users.
• This has been achieved through the sale of stickers and games to Japanese users where monthly ARPUs have been as high as $0.30.
• However, Japan is pretty much saturated and RFM research indicates that the users that LINE has outside of Japan spend less than one sixth of those in Japan.
• With all of the future growth in users likely to come from outside Japan, this paints a bleak picture for the outlook of revenue growth.
• MixRadio claims to have millions of users in 31 countries and this should help provide LINE with something to encourage ARPU’s to rise outside of Japan.
• Inside Japan, LINE already has a music offering powered by its relationship with Avex Digital and Sony Music Entertainment.
• This is yet another sign of how the instant messaging platforms are attempting to become ecosystems in their own right.
• They have the advantage of being available across all major platforms meaning that developers that want to sell their content on these services only have to write their software once.
• The disadvantage is that these are ecosystems within ecosystems meaning that all of the software is written in interpreted code.
• The functionality of these services will be limited to the publically available APIs and performance will be severely impacted.
• This is because the code has to be translated into machine code, executed and then translated back into the code that LINE uses before being rendered on the screen.
• This makes it useless for any game that is heavy on graphics or is fast moving.
• The acquisition of MixRadio will help LINE broaden its offering and encourage users to spend more time within its gated community but a lot more is needed before LINE can be classified as fully fledged ecosystem.
• There is no immediate threat to the leaders but LINE’s ambitions are clear.