n March last year, Japan’s No. 1 mobile messenger operator (Line) and No. 1 portal operator (Yahu Japan) became one family. On March 1, 2021, Naver and Softbank launched ‘A Holdings’ as part of management integration. Z Holdings is located under A Holdings, and Line and Yahoo Japan operate as subsidiaries.
Yahoo Japan has 67 million monthly active users (MAU) and Line has 167 million MAU. Accordingly, the merger of Line and Z Holdings drew attention from the industry in that it was the birth of platform dinosaurs throughout Asia.
The two companies have steadily improved sales since the merger and are consolidating their status as Japan’s leading platform companies. According to Z Holdings’ performance in the third quarter of 2021 (October-December 2021 based on Z Holdings fiscal year), the company’s quarterly sales increased 29.2% year-on-year to 409.1 billion yen (about 4.2643 trillion won). This is the first quarterly sales of 400 billion yen.
The biggest platform in Japan…Naver’s overseas business seems to have also risen
As synergy arose between the two companies’ businesses, Naver’s overseas business began to expand in earnest. Naver has started to verify its success in the global market by sharing its own technologies and service know-how accumulated so far with Line and Softbank.
First, Naver’s smart store technology know-how was applied to the Japanese line. Line launched ‘My Smart Store’ that localized Naver Smart Store (Japan) in October last year. My Smart Store is expected to be officially released within the first half of this year after receiving positive feedback.Naver’s technology and service know-how such as search and place are also creating synergy with Line Messenger. “Line Place,” which reflects the know-how of “Naver Place,” was operated as a separate service after its launch in 2019, but was integrated into the line last year to increase user usability.Organic cooperation between Naver and Softbank is also noticeable. Naver Labs, a subsidiary of Naver’s technology development, is working with Softbank on a project to produce high-precision maps (HD maps) for cities using its ALIKE solution.ALIKE is a solution that can produce 3D, HD (high precision map), and RD (road layout map) at once, and the two companies are planning to actively target business opportunities in the digital twin field that are growing worldwide through cooperation.Naver Financial is also accelerating its cross-border payment system with Softbank.
In August last year, both companies made a joint investment (Series B) in TBCA Soft, a U.S. blockchain developer. TBCA Soft provides a QR-based crosscarrier mobile payment system called ‘HIVEX Network’. Naver and Line are using this to establish a cross-border payment system that connects Korea (Naver Pay), Japan (Pay Pay), and Taiwan (Line Pay).As such, Naver has a strategy to seek long-term growth while expanding its business beyond Japan to Asia. “Naver seems to be preparing for long-term growth by applying Naver’s strengths one by one to global markets such as Japan through collaboration with Z Holdings, as well as diversifying cooperation with Softbank,” an industry source said.He added, “As Naver has secured future technologies and platform know-how in various areas such as artificial intelligence (AI), robots, metaverse, cloud, and content, the synergy impact with Z Holdings and Softbank will increase over time.”Stock market expectations are also high. “As Japan’s Z Holdings generates a net profit of about 1 trillion won every year, Naver’s 50% subsidiary A Holdings, which holds a 64.8% stake in Z Holdings, is expected to generate about 300 billion won to 400 billion won in 2022, following 2021,” said a researcher at Yuanta Securities.
MIKE CHOI
ASIA JOURNAL
