Aug 16, 2012 05:19 AM EDT
Born in the chaos after Japan's 2011 disasters, the smartphone application "Line" has attracted 50 million users faster than Facebook with a made-in-Japan blend of cute and the promise of free communication.
Now, the company behind the application is readying an online media campaign to promote the app in China and the United States to sustain its meteoric growth rate and hit the 100 million-user mark by December.
"In the smartphone business, you can't win unless you're No.1 in the world in terms of membership," Akira Morikawa, the president of NHN Japan, told Reuters.
The company, a unit of South Korea's NHN Corp and which also runs the Naver search engine in Japan, created the Line app after the massive earthquake, tsunami and nuclear crisis that struck northeast Japan in March 2011 disrupted phone lines across the country.
NHN Japan employees, forced to turn to the Internet to reach each other, decided to develop Line, which launched in June 2011.
While it took Facebook more than three years to reach 58 million users from its launch in 2004 to 2007, Line reached 50 million users in just over a year.
The online campaign is set to begin in the second half and will target U.S. and Chinese users via various websites, although the company declined to elaborate. NHN Japan used television commercials to promote the app in Japan, South Korea and Taiwan, but said it has not decided whether to use the same approach in the new markets.
Line allows users to text and call from their smartphones using the existing data plan so users can communicate via the Internet and not be charged for a cell call. It has topped Apple Inc's App Store rankings for downloads in 24 countries from Kuwait to Kazakhstan.
To distinguish itself from other communication apps, Line offers its own games, a camera app, and a social platform complete with a timeline and homepage, similar to Facebook.
SURVIVAL OF THE CUTEST?
Line is best known for its "stamps," elaborate emoticons, like cartoon characters of a happy-go-lucky rabbit, that users can send each other in a text message when words fail. Exhaustion is conveyed by the image of a sleepwalking bunny for example.
Many stamps are free, but users can pay an extra $2 for premium stamps for characters like Tweety Bird and Snoopy.
Japanese pop culture's fascination with the concept of cute, or "kawaii," plays well in other Asian countries and some characters like Hello Kitty have gained popularity in the United States and Europe. Still, some analysts wonder if Line's characters will travel.
"The characters and stamps are popular in Asia, but I am not sure if it will translate in the United States," said Yuki Nakayasu, a research analyst at Credit Suisse in Tokyo.
Line also faces tough competition in both China and the United States from the likes of WeChat, run by Chinese internet giant Tencent Holdings, and Silicon Valley's WhatsApp.
The application may also face government-imposed restrictions in China. Facebook and Twitter, as well as prominent websites like YouTube, are blocked in China.
"Line is cute and such an unconventional application that it's probably going to be more successful in markets that are culturally closer to Japan, said Serkan Toto, a Tokyo-based technology consultant.
"But WeChat is too dominant and the Chinese system of government restriction will not let a social application from Japan become a dominant player."
In Japan, Line poses a threat to established social gaming heavyweights DeNA Co Ltd and Gree Inc, while it has already surpassed Mixi Inc, a domestic social networking platform that has lost ground to Facebook.
Some revenue comes from advertising. Line charges companies like Coca-Cola and Japanese cup-noodle maker Nissin Foods to sponsor stamps. Some recent Coke mascots involved an Olympic theme.
From this April to mid-July, revenue from stamps sold to individuals totaled 500 million yen ($6.4 million). That excludes sponsorships, a figure the company does not disclose.
Line has yet to turn a profit, but Morikawa said its owners are patient. The hope is that the service can become a marketing tool for the rest of NHN Japan's divisions by tying users into its search and gaming platforms.
"We're still in an investment phase," Morikawa said.
($1 = 78.19 Japanese yen)
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