How does the free LINE app make money from 100 million users?

Recently, when I open LINE, I notice that things are changing little by little.

The positions of the tabs change.

New buttons are added.

I find myself looking for features that were there before,

and thinking, "Wait, where did that go?"

Sometimes that happens.

Honestly, if it were just for contacting family and friends, the old version would have been fine.

It is enough to be able to send messages, share photos, and make calls.

However, before I knew it, LINE had added news, videos, stickers, gifts, mini-apps, shopping, points, and even AI.

Each one is becoming more convenient.

On the other hand, I also feel that "places where money moves" are gradually increasing around the app.

As a user, it is an app that has become more convenient.

When viewed as an investor, it is an app that has begun placing multiple revenue streams along the path of the 100 million users gathered for free.

Conclusion: LINE does not need to charge for chats.

What LY Corporation is aiming for is not to collect usage fees from all 100 million people.

They will keep free messaging and calls.

They are placing monthly subscriptions, shopping, payments, advertisements, AI, and services for businesses around that.

It is a structure where they get some people to spend a little bit of money from among those options.

LINE's monthly domestic user count has exceeded 100 million.

Once you reach this point, the next stage of growth cannot be created solely by increasing the number of users further.

What becomes important is how much we can increase revenue and profit per user without causing those 100 million people to leave.

UI changes that happen little by little are like rearranging shelves within the app.

When you go to a supermarket, you find that a product you usually buy has been moved to a different shelf.

While you are looking for it, a new product placed next to it catches your eye.

LINE's UI changes are somewhat similar.

Which tab opens first?

Where are the buttons placed?

What is displayed as a recommendation?

If the layout changes, the number of times ads are displayed and the opportunities to encounter products and services also change.

For users, these are updates to make things easier to use.

For the company, these are also measures to change how 100 million people move within the app.

The UI is not just a redecoration.

It is a design of the sales floor that adjusts where people gather and where money moves.

Keeping the core of LINE free while increasing toll booths around it

This time, LINE as a whole is not becoming a paid service.

Basic functions like messaging and calls will remain free to use as before.

What is being added are features that become a little more convenient if you pay.

The 290 yen per month Light Plan offers unlimited use of eligible stickers, video storage in albums, and changes to app icons and ringtones.

Furthermore, features such as editing messages after sending, scheduled sending, and call recording and transcription are also planned as features for paid members.

They are not so essential that you would be in trouble if you couldn't use them for free.

But it is convenient to have.

This is the line we are aiming for.

Instead of suddenly charging a large fee, we are gradually increasing the number of people who feel that 290 yen per month is a price they are willing to pay.

It is a model that allows us to build up paid users without driving away free users.

290 yen a month is a small amount. But there are 100 million people on the other side.

Just 290 yen a month does not feel like a large amount.

However, the story changes when you multiply it by the number of users.

Suppose 1 million people, which is 1% of the 100 million users, subscribe.

If they pay 290 yen per month for 12 months, the annual revenue is 3.48 billion yen by simple calculation.

If it is 5%, it is 17.4 billion yen.

If it is 10%, it is 34.8 billion yen.

In reality, it does not translate directly into profit due to payment processing fees, free trial periods, cancellations, and overlaps with existing plans.

Even so, for a service that already has 100 million users, even a 1% shift in the conversion rate changes the scale of the business.

There is no need to acquire tens of millions of new users.

We just need to get a few more of our existing users to pay a little bit more.

This is the strength of a mature platform.

The first toll gate is monthly billing.

The most straightforward revenue source is LYP Premium.

It makes the LINE you use every day a little more convenient with features like stickers, albums, message editing, and scheduled sending.

Furthermore, it combines benefits with services both inside and outside the group, such as Yahoo! Shopping and Netflix.

Monthly subscriptions have the advantage of being easier to build revenue with than advertising.

Advertising revenue fluctuates depending on the economy and corporate advertising policies.

Monthly subscribers provide revenue every month as long as they do not cancel.

However, having a large total number of members is not enough.

Are there an increasing number of direct members who pay the fees themselves, rather than through carrier contract benefits?

Are people who join continuing to use the service without canceling after a few months?

This is what we track as investors.

The second toll gate is PayPay.

The integration of LINE and PayPay is not just a convenient feature.

In the future, you will be able to send PayPay balances from the LINE chat screen and split bills within groups.

Send money right in the middle of a conversation with friends.

Talk about a meal and split the bill on the spot.

Talk about a product and purchase it right there.

Until now, there was the hassle of opening a different app between chatting and making a payment.

That extra step will be eliminated.

It is convenient for users.

For LY Corporation, it allows them to place PayPay near the conversations of 100 million people.

Even if they don't make a lot of money from the transfers themselves, if the number of people using PayPay and the frequency of use increase, it will lead to financial services such as payments, credit cards, and banking.

The free chat screen becomes the gateway to financial services.

The third toll gate is shopping.

Opportunities to shop within LINE will also increase.

Until now, LINE Gift has primarily been used for occasions like birthdays or sending thank-you gifts to others.

Moving forward, it will expand into a format where users can search for, purchase, and arrange delivery for products handled by the LINE Yahoo Group directly on LINE.

It is not just the number of products that is a strength.

Within conversations, there are triggers for shopping.

Asking about a product a friend is using.

Discussing travel plans with family.

Deciding on a birthday present.

Looking for a restaurant to go to for a meal.

If products or restaurants can be suggested immediately after such moments, and reservations or purchases can be completed within LINE, conversations will directly lead to sales.

What LINE is trying to create is not just another shopping site.

It is a mechanism to shorten the distance that existed between daily conversation and shopping.

The fourth toll gate is AI.

AI will not end with just convenient new features.

Plans are underway to allow users to call up AI within LINE chats to handle tasks such as summarizing conversations, registering schedules, organizing tasks, and managing photos.

Let users try it for free.

Have those who want to use it more become paid members.

If AI suggests products and it leads to a purchase, earn a commission.

If AI customer service is added to corporate official accounts, collect fees from those businesses.

What LINE Yahoo is envisioning is not just user billing.

This is a revenue model that includes AI advertising, purchase commissions, and corporate billing.

What is important as an investor is not whether AI features have become a hot topic.

It is about where the use of AI leads: membership fees, advertising, purchases, or corporate contracts.

Why are they increasing the number of ways to make money so much right now?

The background is that it has become difficult to generate significant growth through traditional advertising business alone.

LINE Yahoo's media business revenue has remained almost flat.

On the other hand, strategic businesses, including PayPay, are growing significantly.

Advertising will continue to be important.

LINE Official Accounts are also a powerful revenue source that connects companies with users.

However, relying solely on advertising makes the company susceptible to the economy and the advertising market.

Therefore, they are combining monthly subscriptions, PayPay, shopping, AI, and services for corporations.

They are trying to change into a form where if one area doesn't grow, they can earn money elsewhere.

The fact that features increase before you know it and the UI changes little by little is not just to expand convenience.

It is also to create what comes after advertising.

As a user, I just want to communicate.

This part is a bit complicated.

I personally am not looking for shopping mall-like features in LINE.

If I can contact my family and friends, that is enough.

Every time the UI changes, it is a bit annoying that the places I was used to have moved.

If unused features increase and necessary features get buried, it is hard to say that it has become more convenient.

However, when you stand on the corporate side as an investor, your perspective changes.

Maintaining a free messaging app requires servers, development, security, and personnel.

While having a place where 100 million people gather every day, it would be a waste for a company to stop at just messaging functions.

As a user, there is no need to add anything more.

As an investor, it is necessary to connect those 100 million free users to profit.

The difficulty for LY Corporation lies in moving forward without compromising either of these.

For LY Corporation stock, look beyond the 100 million users

When judging LY Corporation as an investment target, you cannot buy it based on the 100 million figure alone.

It is already known that many people use it.

What drives performance is the profit gained from each individual user.

The figures to track are as follows:

Are the number of direct members who pay for services themselves increasing?

Are subscribers to the light plan continuing their subscriptions?

Is the integration with PayPay leading to increased use of payment and financial services, not just money transfers?

Are shopping and AI leaving behind not just revenue, but also profit and cash flow?

Is the stagnation in advertising being compensated for by subscriptions, PayPay, e-commerce, and AI?

And, even with the addition of new features, has it not reduced the frequency of LINE usage or trust in the platform?

For platform companies, the fact that users do not easily leave is a strength.

However, if they rely too much on that strength and rush to monetize, they risk eroding usability and trust.

It is not about the number of features added, but whether they have managed to retain users while increasing profits.

This is where the investment decision splits.

Summary: LINE is not sending invoices to 100 million people.

LINE will not suddenly start charging a monthly fee to all 100 million users one day.

Free messaging and calls will remain.

Around that, they are placing monthly subscriptions, PayPay, shopping, AI, and services for businesses.

Only those who find it convenient will spend money little by little.

This is the structure that LY Corporation is trying to build.

Features that increase before you know it.

UI that changes little by little.

An app that has become more convenient.

Behind the scenes, the places to earn money are gradually increasing around the traffic flow that 100 million people pass through every day.

What you should grasp as an investor is not the entrance of 100 million people.

It is how many people pass through the toll gates placed beyond that, and how much profit remains for the company.

The value of the free LINE is not just that 100 million people are using it.

It is the ability to turn it into profit without being disliked by 100 million people and without breaking the free relationship.