Agreed to Exchange 600 Billion KRW Shares with Naver CJ
Producing Various Contents like Webtoons into Dramas and Movies
Kakao Goes All In on Independent Survival
Accelerating Kakao TV Content Production
[Asia Economy Reporter Buaeri] As domestic portal giants Naver and Kakao enter the OTT (online video service) market, the battle for the 'Korean Netflix' has heated up. What is notable is that Naver and Kakao have completely different strategies. Han Seong-sook, CEO of Naver, chose 'collaboration' by partnering with industry leaders, while Yeo Min-soo, co-CEO of Kakao, opted for a 'direct approach' by entering the business themselves.
Naver's 'Blood Alliance' with CJ
According to the industry on the 27th, Naver plans to team up with CJ to produce K-content with global influence to compete against Netflix. To this end, the two companies agreed on a stock swap worth 600 billion KRW. Naver will exchange stocks worth 150 billion KRW each with CJ ENM and Studio Dragon, and 300 billion KRW with CJ Logistics.
The most powerful aspect of this alliance is the 'content' collaboration. Naver and CJ will jointly invest 300 billion KRW over three years by co-establishing a fund to produce content and nurture creators. Naver stated, "We plan to combine intellectual property (IP), platform, and production capabilities to introduce globally competitive content to the market." Naver Webtoon and web novels, which have 67 million monthly users, are expected to be released as various content such as movies, dramas, and animations in the global market. CJ ENM owns broadcasting channels like tvN, and Studio Dragon produced Hallyu dramas such as "Goblin" and "Crash Landing on You."
Synergy between Naver and the OTT platform 'TVING' is also expected to be significant. A Naver official said, "Naver plans to participate in TVING's equity investment" and "Naver and TVING will also launch combined membership products." The industry anticipates that 'original content' produced by Naver and CJ ENM may be exclusively distributed on TVING.
Kakao's 'Direct Breakthrough'
While Naver entered the market through partnerships like this, Kakao went all-in on independent survival. Last month, Kakao added 'KakaoTV' inside the national messenger KakaoTalk and released 'original content' featuring Lee Kyung-kyu and Lee Hyori. This was a formal declaration of entry into the OTT market.
Earlier, Kakao launched its content subsidiary KakaoM in 2018 and aggressively recruited talent. In January last year, it surprised the industry by recruiting Kim Sung-soo, CEO of CJ ENM. Kim is a key figure who grew CJ ENM with dramas like the "Reply" series and "Grandpas Over Flowers." Afterward, star PDs were aggressively recruited. Star PDs such as Oh Yoon-hwan, executive producer of MBC's "Golden Fishery," Kim Min-jong of "Real Men," and Park Jin-kyung and Kwon Hae-bom of "My Little Television" joined KakaoM in large numbers.
Management companies and production companies were also acquired one after another. KakaoM acquired four major music labels including Starship Entertainment, seven actor management companies including BH Entertainment, three drama production companies including Glen & Grim Media, two film production companies including Sanai Pictures, and the performance production company Show Note.
KakaoTV is accelerating the production of original content centered on digital short-form content. KakaoM plans to invest a total of 300 billion KRW by 2023 to produce more than 240 works. An industry insider said, "While Naver pursues expansion through collaboration, Kakao emphasizes an independent path. However, the common point is that both companies are betting their lives on video."
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