KakaoTalk operator trapped by fund shortfall as venture business

KakaoTalk operator trapped by fund shortfall as venture business

Won Yo-hwan

2013.11.13 15:21:12

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.

About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer and not representative of 8I Holdings Ltd.

2 Responses to KakaoTalk operator trapped by fund shortfall as venture business

  1. Pingback: The next Asian messaging app exit may be worth more than $19b | EN.SamacharYug.com

  2. Pingback: The next Asian messaging app exit may be worth more than $19b / Bubbly Blog

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