All in + Japan

This article, brain-stormed and co-written by Mark and me, is also simultaneously published on Mark's website: markbivens.com. The article also appeared in Japanese translation on THE BRIDGE: アジア発メッセージ・アプリ対決談義——LINE vs. WeChat(微信)vs. カカオトーク.

MB:  Well, LINE clearly dominates in its ingenious sticker strategy. I know you’re going to argue that WeChat also offers stickers, which makes sense. Stickers are of tremendous importance in cultures where communication involves layers of honorifics and deep context. I’ve even witnessed passengers on the train in Japan exercise careful deliberation in choosing just the right sticker to convey the proper tone and mood in their chat. But I think LINE wins in the sticker battle. Not only do they generate significant revenues from sales of sticker packs (which seem to have drawn inspiration from the old record album model (i.e. two tracks of ‘killer’ and 8 tracks of ‘filler’), but stickers also create switching costs among users who have invested in sticker sets and would not be able to carry them over to another messenger app. LINE admirably employs sticker campaigns to raise funds for charitable causes. They have also wisely opened up the creation of stickers to outside illustrators in the form of a creators marketplace, which will foster an army of ambassadors for sticker promotion, and hence promotion of LINE.

JY:  Okay, that one I agree. As a heavy LINE sticker user and client — I counted 13 paid stickers in my arsenal — let me just say it’s amazing how a company can generate so much potential from something so simple. And I also see the potential of the LINE bear-rabbit couple to spin off into a standalone franchise. It will be fun to see how a company from a country that gave birth to successful character sans histoire like Hello Kitty plans this one out.

For the overall analysis, it's important to recognize the fact: chat app is a social networking service, not just a messenger replacement. What separates a quintessential social networking service from a mere tool is the network deepens its stickiness once it gets to critical mass. Put it simply, as more of your friends use a certain service, you will be more inclined to use the same. Chat app fits perfectly in this definition, and more. To name just one among the surprisingly numerous factors that add to the chat app stickiness: keeping mulitple chat apps on your smartphones drains the power very quickly. Before long you realize you only want to keep one, at most two of them alive. 

The force of exclusion seems to be confirmed as one inspects the geography column of the table above: despite the acclaimed reliability and efficiency of the network of Whatsapp, in different geographies different chat apps dominate. LINE dominates in eastern Asian countries such as Japan, Taiwan, Thailand and Indonesia. KakaoTalk pratically monopolizes the South Korean market, just like Wechat in China. On the other hand, the supposedly most dominant of all, Whatsapp, chose not to disclose its user number in the United States while disclosing for the other countries. Viber also did not specifically break down its constituency.