Line Builds $15 Billion Value With Teddy Bears

How do you create a $15 billion company in an industry that gives its primary product away? Line Corp. did it by getting smartphone users to pay for teddy bear icons and games with cute cookies.

The Tokyo-based messaging application has grown to more than 370 million subscribers since its creation in 2011, when South Korean parent Naver Corp. saw a need for Internet-based communications after an earthquake crippled Japan’s phone networks. Now after Facebook Inc. agreed to buy rival WhatsApp Inc., Line is drawing interest, too. The Japanese mobile-phone carrier SoftBank Corp. is seeking to take a stake in the company, people familiar with the matter said this week.

Line last year signed up 50 million in less than three months and said it may have 500 million customers globally by year’s end. On Feb. 24, Line said it added 2 million users in a 24-hour period.

About 85 percent of Line’s users are outside Japan, it said Feb. 26. It’s the No. 1 mobile messenger service in Japan, Taiwan and Thailand, according to a Feb. 20 report from Samsung Securities Co. citing data from researcher App Annie Ltd. Line also ranks highly in Chile, Mexico and South Korea, where it competes with KakaoTalk. The company may be valued at as much as $15 Billion.