WeChat, Kakao Talk & Line: What Can Foreign Tech Firms Learn from Asia’s Most Successful Phone Apps?

Each of the Far East’s three major economies is home to a phone app with incredible market share. In China, WeChat boasts an incredible 963 million active monthly users. 93% of South Korean smartphone owners have Kakao Talk installed on their phones. Along with huge followings in Thailand and Taiwan, Japan’s Line has around 100 million active users in its home country.

Like many Western tech companies, each of these firms started as free apps which quickly amassed huge numbers of users. They have since branched out and built on their market penetration in a variety of innovative ways to achieve profitability. WeChat and Kakao Talk, in particular, have organically grown to offer a huge range of profit-generating services that piggyback off the brand name recognition of their core service.

Making Money With a Free Messaging Service

During their initial rapid growth, each of the three biggest Asian messaging apps faced a similar problem as American firms such as Google, Facebook, Twitter and Snapchat: how can you make money by offering a completely free service?

Google and Facebook have answered that question by becoming two of the world’s most important advertising platforms. By leveraging the vast amounts of user data they hold to offer highly-targeted advertising, both Google and Facebook provide advertisers with a far more targeted service than traditional forms of advertising.

Japan’s Line has embraced advertising more wholeheartedly than WeChat or Kakao Talk and has made a decent profit as a result. In the first quarter of 2017, Line generated a profit of 8.9 billion Yen (roughly 80 million USD.) Advertising on its app accounted for 44% of this.

WeChat and Kakao Talk are far less reliant on advertising than Line, with most of their profits coming from a variety of innovative revenue streams. Even in Line’s case, a majority of the company’s profit is being generated by sources other than advertising.


While Line and Kakao Talk’s core messaging app operates in much the same way as WhatsApp or Facebook Messenger, there is a key difference between typical conversations on these platforms and those conducted by most mobile users: emoticons.

Emoticons are a huge part of mobile communication across the world. The emoji keyboard’s collection of characters was recognizable enough to form the basis of a movie. The Emoji Movie may have been panned by critics, but its characters were recognizable enough for the film to turn a $50 million budget into $200 million taken at the box office.

These iconic emojis may be sufficiently recognizable to power a surprising box office success, but both Line and Kakao take character-based branding to a level far beyond this. Instantly recognizable within their home countries, Line Friends and Kakao Friends are a motley assortment of cartoon characters with animated emoticons representing a dizzying array of different situations.

Both Line and Kakao have found incredible success through licensing these characters in the way Disney licenses characters such as Mickey Mouse. The shelves of dedicated Line and Kakao Friends stores in Tokyo and Seoul are full of figurines and stuffed toys depicting the characters behind the emoticons. Supermarkets and other stores stock all kinds of merchandise and ephemera tenuously connected to the characters, from bath towels to toilet paper.

And the emoticons themselves can be a profitable revenue stream. Both Line and Kakao Talk allow users to purchase bundles of emoticons and stickers through their messenger apps. Along with games and music, app-delivered contents count for around 25% of Line’s $80 million operating profit.

The Everything App

WeChat may lag behind Line and Kakao when it comes to making easy money through licensing deals, but it leads the pack in perhaps the most important method of profit-generation: becoming the app that does everything.

American tech firms have struggled to achieve the kind of horizontal integration and total dominance of the mobile sphere WeChat has achieved in China. Google found little success trying to take on Facebook with Google Plus, while mobile payments offered through Apple’s iPhone and Google’s Android platform haven’t achieved anything like the success those companies would have hoped for.

Mobile payments are a key part of WeChat’s success. Until 2014, WeChat was a distant second to AliBaba when it came to acting as a digital wallet for Chinese mobile users. That all changed with an innovative marketing campaign based on the tradition of giving red envelopes containing cash for Chinese New Year. During a state broadcaster’s hugely popular live New Year television show, WeChat’s users were encouraged to shake their phone to receive a free virtual envelope containing cash prizes. This sped up adoption of WeChat’s mobile payment feature and propelled WeChat to an unassailable position in the Chinese tech scene. In 2014, 20 million red envelopes were exchanged using the app. During the 2016 New Year period, this number reached 3.2 billion.

Through WeChat, users can access services that are spread across a dozen apps in other countries. From hailing a cab to booking a doctor’s appointment, WeChat offers an incredible range of functions. It also provides more advanced versions of some Western tech company’s most innovative features. For example, Google’s business listings allow users to see a business’s typical footfall at any given time and see how busy the premises are at this exact moment. WeChat expands this functionality and provides a heat map, letting its users navigate the crowded streets of Chinese cities with ease.

Kakao vs. Naver

An interesting twist to this tale of three Asian tech giants is the fact that Line is owned by a Korean company. Naver has long been South Korea’s most popular web portal and search engine, offering a service comparable to Yahoo! While its Line app quickly came to dominate the Japanese market, it has been completely overshadowed in its home country by Kakao Talk.

Following the example set by WeChat, Kakao has muscled in on all other areas of mobile technology. In 2014, Kakao merged with one of Naver’s main competitors, Daum. Naver and Daum had both competed to be the main Korean provider of services such as mobile apps. With Kakao Talk’s momentum behind it, the newly-formed tech conglomerate quickly eclipsed Naver in all areas except Naver’s still-popular main web portal.

Like WeChat, Kakao now provides a wide range of services, from mobile payments to booking taxis. It hasn’t achieved the full-scale integration of services such as booking doctor’s appointments and paying electricity bills achieved by WeChat, but Kakao is a company with big ambitions.

Kakao recently received approval to launch South Korea’s first fully online bank. Kakao’s mobile payment technology had already it Korea’s most successful provider of online payments. This is another step toward complete dominance of the Korean mobile sphere.

Both Line and Kakao have generated significant revenue through becoming Japan and Korea’s primary providers of mobile gaming. Beyond this, Line is far behind both WeChat and Kakao in leveraging their position into a full assault on their country’s smartphone tech marketplace.

Line is expanding in other areas, with its soon-to-launch Wave device being a Japanese version of Amazon’s Echo. Clova is Wave’s answer to Alexa, providing users with a digital assistant who will respond to a wide range of requests. But the similarities between Clova and Alexa speak of a failure to innovate on the scale seen by WeChat and Kakao Talk.

Could Foreign Tech Firms Imitate This Success?

Companies including Amazon, Apple, Facebook and Google are certainly trying to emulate the successful horizontal expansion of firms such as WeChat and Kakao. However, both WeChat and Kakao were able to achieve a monopoly over tech within their home countries that wouldn’t be possible for terms based out of America’s hyper-competitive Silicon Valley.

Rumors are building that some of the United States’ biggest tech firms are considering moving into banking and other sectors. If these rumors prove to be true, the story of Asia’s big messaging apps suggests they might be very successful.

PerOla Hammar 陈家悦
Father of 2. Marketing, sales & web geek who is open-minded & eager to learn. Experienced a lot in the past years, both good and bad. Lesson learned? LIVE LIFE!