December 26, 2013 12:00 am JST

Beyond chat

YUKI NAGANAWA, Nikkei staff writer

Line CEO Akira Morikawa unvails his plans for adding new services for the app at an event in Urayasu, Chiba prefecture, on Aug. 21.

TOKYO -- Facebook, Twitter, Google ... Line?

     Japanese chat app superstar Line Corp. has taken the domestic market by storm, and now it has big dreams of becoming a global brand that ranks alongside the industry giants. Free services centered on instant messaging, phone calls, news and games have gotten it this far. But the company knows it has to raise its game to reach the next level.

     Its plan is to build itself into a portal that people and companies can visit for everything from music downloads to online shopping to video chats. The broader idea is to bring in more revenue and show potential investors that the company is primed for growth. If Line can do that, it will have an easier time accomplishing another dream: listing its stock at home and abroad.

     Line CEO Akira Morikawa first mentioned the expansion plan at a company event in 2012. The company has been steadily building up its repertoire of services, adding such free features as games, fortune-telling, weather forecasting, manga and news. And with music and shopping coming, what was once a simple chat app will soon become an even more powerful and versatile tool.

Get 'em hooked     

Line's near-monopoly in the domestic chat app market means it is unlikely to attract a significant number of new users in Japan. The next best thing, then, is to get people to fire up the app on their smartphones more often. That is where the new services come in.

     Another reason for branching out is to create new sources of revenue. Currently, Line's income comes almost completely from games and "stamps," or virtual stickers that users can buy and place in their chat messages. Banner ads are not an option because they would clutter up the screen and make the app difficult to use. The company concluded that adding more paid content would not only diversify its revenue sources, but would also impress potential investors.

The Shimotori shopping street in the city of Kumamoto uses the Line@ service to attract shoppers.

     Getting people to use the app more often would make it a more potent promotional tool. Line hopes to leverage this concept to win additional corporate clients and give its revenue a further boost.

     Line already has an "official account" service for large companies and another service, called Line@, for small retailers. When Line users register the account of a company as their "friend," they receive promotional information from the company. Line's expansion strategy could make the corporate-services side of the business more robust.

     The signs are already good. Convenience store chain Lawson has more than 12 million registered Line friends, while drugstore operator Matsumotokiyoshi has over 6 million. To attract business, the Shimotori shopping street in the city of Kumamoto uses Line@, which does not cost as much as the official account service.

     Morikawa says his company will implement the portal strategy outside Japan, tailoring the services to local preferences. The company has reason to be optimistic, given that Line has already made the big time in some foreign markets, including Thailand.

     If all goes according to Morikawa's plan, the IT all-stars of Silicon Valley may soon have to make room for a new member of their elite club.