In the a great deal-hyped marketplace for messaging merchandise like WhatsApp and facebook Messenger, startups and analysts frequently look to Asia as the example to comply with for building large software program structures to host hundreds of million of users.

Cony the bunny, one of LINE's sticker characters, on display at its flagship store in Seoul, South Korea. Despite their popularity in some parts of Asia the characters are virtually unknown in the West and other countries, as LINE has struggled to pick up users outside of its strongholds of Japan, Taiwan and Thailand. (AP Photo/Lee Jin-man)

but even a successful app like LINE, which boasts a rich set of services like on-call for meals transport or taxis, has struggled to compete towards fb in sincerely getting extra humans to apply its app inside the last few years.

LINE, one of the world’s largest messaging offerings, is planning an IPO in July in which it’s expected to elevate $2-three billion at a $5 billion valuation, consistent with a document in the Wall street magazine citing humans familiar with the problem.

That’s 1/2 of what it became worth two years ago, while LINE first submitted an utility to waft on the Tokyo inventory trade at a valuation of $10 billion, an imparting which LINE later postponed because it desired to “building up the commercial enterprise.”

Why the large drop? LINE has been including a bunch of new and thrilling features, to make it appearance extra just like the Swiss military Knife of offerings that WeChat has pioneered and which facebook Messenger is trying to emulate. however it has struggled to grow its consumer base. LINE delivered simply thirteen million customers during the last yr, consistent with the magazine.

examine that to fb Messenger, which added an extremely good 300 million new customers among March 2015 and April 2016, according to Statista.

LINE is a high example of ways lots traders care about massive consumer numbers to help them wager at the destiny boom, even extra than they do about sales. LINE’s quarterly revenues, as an instance, have more than doubled to 30 billion yen ($247 million) among the primary region of 2014 inside the closing quarter of 2015, yet its valuation seems to have halved because of that stagnant consumer increase.

The app basically dominates in Japan, Taiwan and Thailand however has didn’t topple WhatsApp or Messenger in different countries. in part that is due to the fact there are plenty of popular messaging offerings in Asia all competing for people’s attention: together with China’s WeChat or South Korea’s KakaoTalk, there’s BBM, Hike in India and Zalo in Vietnam, says Jason Mander, senior analyst at market research firm GlobalWebIndex.

but LINE’s largest problem is facebook. some ninety one% of humans aged among sixteen and 24 who are online have an account on fb, facebook Messenger, Instagram or WhatsApp, and in a few emerging markets it’s near the a hundred% mark.

“With the majority firmly inner this atmosphere, the probability of them the use of WhatsApp or facebook Messenger in particular is actually going to be very sturdy,” says Mander. “LINE doesn’t have a comparable battery of offerings which it may rely on.”

In other words, whilst LINE has the taxis and the meals delivery, the video games, stickers and cell bills, it simply doesn’t have enough users to address the effective community effect that propelled fb Messenger and WhatsApp to tons bigger person numbers.

“We realize that ‘lots of my buddies the usage of them’ is a primary motivation for the usage of social networks and apps,” says Mander. “without this crucial mass, not sufficient people are enticing within the first location and, consequently, not enough are attractive with the best variety of features which they may then preserve coming again to.”