Kakao Launches Global Expansion with Content Assets

[NeKao, Becoming a Global Tech Company③]

2011, Started Targeting Overseas Markets
Promoted KakaoTalk but Faced Setbacks
2022 Declared 'Beyond Korea'
Pursuing Overseas Expansion Through Content and Messenger Businesses

"The reason for declaring global expansion is that in this market, if you do not have global competitiveness, you will inevitably be left behind."

In 2011, Kim Beom-su, the founder of Kakao, made a commitment to grow Kakao into a global company. However, even after 12 years, Kakao still carries the label of a 'domestic company.' Kakao is launching an all-out global expansion campaign to shed this label. The goal is to increase overseas sales to over 30% by 2025 and make the Kakao name known worldwide.

A decade of efforts, a challenging overseas market

Kakao began targeting overseas markets in 2011. It first established its initial overseas subsidiary in Japan. Subsequently, it set up subsidiaries in Thailand, Indonesia, Singapore, and the United States. The goal was to make the national messenger 'KakaoTalk' a leading global messenger.

However, the results were bitter. It failed to secure a foothold against established local messengers like WhatsApp and WeChat. Worse, Naver’s messenger Line, which entered the market later than Kakao, successfully established itself in Japan and Southeast Asia, causing some embarrassment. Ultimately, many overseas subsidiaries suffered losses for years after their establishment, and some had to withdraw.

Afterward, Kakao turned its attention to the content sector. The acquisition of Loen Entertainment in 2016 is a representative example. This reflected founder Kim Beom-su’s determination to enter the global market. At the time, Loen operated Melon, the top domestic music streaming service. Additionally, with artists like IU, SISTAR, and Apink under management, there was significant potential for K-pop content to target overseas markets.

Having glimpsed success potential through the content business, Kakao adopted an aggressive mergers and acquisitions (M&A) strategy. In 2018, it raised funds by issuing approximately 1 trillion KRW worth of Global Depositary Receipts (GDR). Using these funds, it pursued M&As centered on content platform companies in gaming, webtoons, and music, laying the foundation for today’s Kakao Piccoma and Kakao Games.

Pushing content, re-challenging messenger with Open Chat

After experiencing several failures overseas, Kakao succeeded in expanding its business by enhancing competitiveness centered on content. Kakao’s overseas sales last year reached 1.3987 trillion KRW, about double the 632.4 billion KRW in 2021. This growth was thanks to content businesses such as webtoons, games, and music. Currently, overseas sales account for about 20% of Kakao’s annual revenue, with plans to increase this to 30% by 2025.

To achieve this, founder Kim Beom-su made the decisive move last year to step down as chairman of the board. He had served as chairman for 14 years since founding iWilab, Kakao’s predecessor, in 2007. This was to focus on the top priority: overseas business. He unveiled a blueprint to reorganize the existing domestic-focused business toward overseas markets, using Japan as a forward base.

Kakao plans to continue expanding its currently successful content division. To this end, it acquired SM Entertainment this year. The webtoon and web novel businesses are also steadily expanding. Through the acquisition of the North American webtoon platform Tapas and web novel platform Radish, Kakao is preparing to target the North American and European markets. Kakao Games has restructured its global management system.

KakaoTalk, which experienced failure in overseas markets, is making a renewed global push with Open Chat. Until now, Open Chat was accessible only via KakaoTalk accounts, which posed an entry barrier for global users. To attract a broader user base, Open Chat will be launched as a separate independent application called ‘Open Link.’

Open Link is a service where users with common interests such as hobbies or locations can gather, communicate, and enjoy themselves. For example, a foreigner who likes Korean webtoons can enter Open Link within Kakao Webtoon to chat with domestic fans about webtoons, or users who searched for a specific place on KakaoMap can exchange information and reviews about that place in its Open Link.

The super-large artificial intelligence model ‘Ko-GPT 2.0,’ scheduled for release in the second half of the year, is also expected to play various roles in targeting overseas markets.