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. The Moat Report Asia’s paid-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 investor who are lifelong learners in the art of value investing. KB has presented his thought leadership as a keynote speaker in global investing conferences. 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 the head of research and fund manager at a Singapore-based value investment firm since 2002. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. KB was formerly the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB had also taught accounting courses at the Singapore Management University, where he launched the pioneered the module of Accounting Fraud in Asia. KB is currently the Chief Investment Officer at 8I Investments, a wholly-owned subsidiary of ASX-listed 8I Holdings Ltd (ASX: 8IH).

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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