KakaoTalk operator trapped by fund shortfall as venture business
November 13, 2013 2 Comments
Kakao, operator of South Korea’s largest mobile messenger KakaoTalk, is facing hard times. KakaoTalk grew exponentially until last year, spurring the mantra “whatever KakaoTalk does becomes success.” But the mobile phone messenger application is not as influential as it used to be. Its competitors Line and WeChat, meanwhile, are gaining edges in the global market. Eyes are on how Kakao, the big player in the mobile start-up industry, will break through the situation. What has been undermining the KakaoTalk’s platform? First, KakaoTalk has lost momentum in the game business. The mobile messenger app offered its own platform-based games Anipang and DragonFlight, which were downloaded 20 million times shortly after release last year. But none of the KakaoTalk-based games launched this year have been downloaded 20 million times so far.
Another tragedy for KakaoTalk is that rivals like Line and WeChat have secured dominant presence in the overseas market, just like KakaoTalk gained a leading share in the domestic market earlier. The messenger app needs to enter foreign markets as the domestic market has become saturated, but the overseas mobile messenger market is already controlled by Line and WeChat.
Kakao’s another urgent task is to diversify its business portfolio, which now heavily relies on KakaoTalks’ games.
More fundamental reason behind the poor performance is that Kakao lacks funding like other venture firms. If the company does not gain a strong foothold in the market in the early phase, instead it needs to aggressively undertake marketing activities. But the fund shortage puts Kakao behind its rivals in the competition.