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In Line for a redesign

Jul 01. 2018
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By Asina Pornwasin
The Nation
Tokyo/Japan

7,437 Viewed

Asia’s major messenger service turns to AI and blockchain to expand its breadth and depth online 

Japanese tech giant, Line Corporation, has committed to making major investments in key new areas deemed to have much potential, including financial technology (fintech) and artificial intelligence (AI). The company, last week at its annual conference, made an official announcement to “redesign” all of its services, both current and new.

The redesign will focus on the relationships between Line’s services and users, and the concept will be embedded into all Line services from now on. The company sees “redesign” as a concept anchored in a new vision and was the theme of Line Conference 2018, held in Tokyo, Japan last week.

Takeshi Idezawa, Line Corporation president CEO, told the conference that the company would now shift much of its investment and effort to create many new services, including fintech and AI.

Blockchain technology is the next big thing for Line Corp’s investments, with the company making plans to incorporate blockchain technology throughout its business.

“We will use blockchain technology to establish a token-based economy to redesign the relationship between users and services. Users and services will be involved in a co-creation. The ‘Line token economy’ is built on Line’s blockchain platform. Tokens issued by Line will be used not only for Line’s services, but also to enable others to easily take part in the Line token economy concept. Line token economy is the vision and is under development,” said Idezawa.

“We put a lot of investment in new areas, included AI and fintech, especially blockchain. The financial sector is the most important focus sector for us. We aim to tackle the payment services in the Asia region, which mostly depend on cash. We can learn from the China market, where they have had success in smartphone payment, but for our business model we will not follow them. Based on our service, we are getting more data from transactions and we can utilise that data for our users,” said Idezawa.

He said the company is redesigning financial services to enable participation by the huge number of people who do not have bank accounts are unable to access financial services. 

The company will also redesign its commerce services, as it seeks a large increase in growth, and also redesign the AI voice assistant.

“These three are the next huge challenges for us and we will put a lot of effort in these,” said Idazawa.

Idezawa said Line Corp’s revenue in 2017 was 160 billion yen (Bt47 billion), around half derived from advertising with the rest coming from games and stickers. 

Japan, Thailand, Taiwan, and Indonesia are the key markets, with a combined 165 million users and offering Line huge potential for growth. The company uses “hyper-localisation” as the its key strategy to optimise Line’s assets in each potential market. 

He added that Line has teams dedicated to blockchain research and development, and sees a need in continuing to educate the market and recruit more talent expert in blockchain technology. 

“AI, fintech, and blockchain are areas in which we are looking for a lot more talent,” said Idezawa.

Line Blockchain Lab was established in April as a research organisation within the company and tasked with designing and developing dApp services. Then in May the company founded “unblock” as a subsidiary to develop token-economy related technologies, and joined a global blockchain project called “ICON”. Line also announced, “BITBOX”, its cryptocurrency to cryptocurrency global exchange, which supports more than 30 coin types and is available in 15 languages. Bitbox will launch this month.

Smart portal 

In its redesign of the company and its services, Line will move beyond being primarily a messenger service company to instead position itself as a “smart portal”, a vision it first announced in 2016, said Jun Masuda, director and chief strategy marketing officer. “We are not a messenger company and do not rely on messenger services,” Masuda insisted. “In the market, our messenger service is strong and is our fundamental infrastructure. We will continue to add on new features and new services. But in the markets where our messenger is not strong, we will approach with other new services. For example, B612 is quite successful in the Chinese market.”

Idezawa said that as a “smart portal”, Line Corp already offered communication and content services, and now is the time to move to offering financial services including securities, themed investments, insurance, virtual currency, loans, asset management and more. 

For example, Line Corp has joined hands with Folio to provide asset management services starting sometime in 2018 in Japan. It also worked with Nomura to establish Line Securities Corporation to offer asset management services. And, it collaborated with Sompo Japan Nipponkoa to offer non-life insurance services. It also plans to launch Line Kakeibo, a personal financial management service, in the near future. 

As for artificial intelligence, Line continues to work on bringing extensions of its AI assistant Clova to the market. Masuda said that Clova will come in more characters such as Doraemon and Minion and will be more connected to home appliances under the smart home concept. It has also joined hands with Toyota to launch Clova Auto as an AI assistant for cars.

Line Thailand 

Ariya Banomyong, managing director of Line Thailand, said the hyper localisation strategy will be followed here, including the focus on fintech and AI and the launch of content and some services to the Thai market in the second half of 2018. 

“The big differentiator for Line is we are doing technologies to reach people and to smoothly embed them into their daily lives. We are a tech company with humanity,” said Ariya.

The Line Ad Platform is being redesigned for launch in the Thai market soon and AI and other fintech services are tentatively scheduled for a 2019 launch in the local market.

“Thailand is a very important market for Line; we are the second-fastest growing market following Japan in terms of the number of active monthly users. We have 42 million users and dominate with penetration of 95 per cent of Internet users in Thailand,” said Ariya.

Line is also the dominant platform in Thailand, with an average 63 minutes daily spent on Line during the average 216 minutes per day spent on smartphone. 

Line has positioned itself as smart portal, with Thailand offering users six groups of services –games, content, online-to-offline (Line Man), business solutions, payments, and other new services. 

“All services we offer to Line users in Thailand, are done under our hyper-localisation strategy. For example, Line TV and Line Today are successful services. Line TV has already become the number one TV re-run platform, while Line Today has become the number one news portal in terms of the number of publishers (120) and in having 32 million monthly active users. Moreover, Line Man is also the number one brand in terms of awareness compared to competitors,” said Ariya.

For Payment, Rabbit Line Pay, a joint venture company between Line Thailand, Advance Info Services (AIS), and Rabbit, aims to become the number one mobile payment in Thailand.

Redesigning services 

At the Line Conference 2018, the parent company also announced many services now being developed under the redesign concept. For example, Line Music Video and Line Ticket are new services to be launched in the Japanese market after its success with the Line Music service. Line Music is the leader in Japan’s music streaming market. Line Music is also very popular, with over 9.7 million monthly active users. It offers more than 46 million songs and has around 1.3 million monthly ticket users.

In Japan, music streaming in the first quarter of 2018 hit a 49 per cent share of music distribution sales, already surpassing downloads with a share of 44 per cent.

“Line is changing artists’ business model from downloading of their CDs to experiencing streaming and events,” said Masuda. And Line Ad revenue is also healthy, said Masaki Hamura, executive officer and head of advertising business strategy for Line Corporation. Line Ad revenue grew from 6 per cent in 2012 to 40 per cent in 2017.

Meanwhile, the combined total of Line Official Accounts and Line@ Accounts topped 2.5 million in June 2018. Line Ads Platform, Line Sales Promotion, and Line Accounts Connect have been redesigned to both appeal to emotions and provide benefits. In Thailand, there are around 2 million Line@Accounts and 240 Line Official Accounts. Ariya said that local user would soon see the redesign of the Line Ads Platform for the Thai market. 

Finally, Line Pay has also been redesigned under a “payment revolution” concept. It started from its home-based Japanese market, where it redesigned payment infrastructure for small and medium business, which are the majority shops in Japan. It offers zero investment for initial set-up costs and zero transaction fees for three years from August 2018 to July 2021. 

It has also launched a QR Code payment app for SMB, Line Pay for Merchants. In order to attract a greater numbers of users, it offers incentives of 3 to 5 per cent using QR/barcode payment.

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