Digital communications giant Line, which first scaled up in Japan and has since expanded in Indonesia, Taiwan and Thailand, is investing in sibling photo and video app Snow, often touted as an Asian version of Snapchat.
Camp Mobile, a subsidiary of Korean internet market leader Naver, which also owns a majority of Line, launched Snow in September 2015.
Line will buy a 25% stake for US$45 million.
Most of Snow’s users are in Japan, Korea, China and Taiwan, although its base is also growing in markets such as Vietnam. The app has been downloaded over 70 million times and averages around 41 million monthly active users.
The deal comes with intent to ramp up Snow’s reach in Asia, where Line remains strong, as well as its engagement time as a media and chat app. The average user spent less than 40 minutes per month on Snow over the past five months.
Both Line and Snow appear to be complementary. Snow leads in terms of video engagement, capitalizing on its recent moves to offer video content from celebrities, but suffers from limited chat activity. Line’s biggest strength is chat.
Both companies are also keen to work together on new products and to scale up rapidly, especially in the context of Snapchat’s global ascent.
Part of the strategy is likely to include partnerships with content providers across key Asian markets, with a view towards better monetization.
Naver investors will now effectively own 93% of Snow through their 73% aggregate ownership of Line and 75% of Snow (including Line’s 25% stake).
Most shareholders are keen to see Snow add users and more significantly, monetization, which should lead to a higher valuation.
Snapchat was valued at almost US$18 billion last year on a base of more than 200 million monthly active users worldwide. The company expects revenues to come in at more than US$300 million this year.
Significantly, Snapchat offers a ‘Discover’ section for media companies (e.g. CNN, National Geographic, ESPN) to curate, create and own content on the app, monetized through advertising.