Kakao

Kakao Corporation
Native name
 주식회사 카카오
Jusikhoesa Kakao
Public
Traded as KRX: 035720
Industry Internet
Founded October 1, 2014 (2014-10-01)
Headquarters Jeju City, South Korea
Key people
 Kim Beom-soo (Chairman)
Rim Ji-hoon (CEO)
Products KakaoTalk, Daum, Path
Owner As of January 2016:[1]
Brian Beom-soo Kim (18.80%)
KCUBE Holdings (14.90%)
Tencent Holdings Ltd. (13.54%)[2][3]
Star Invest Holdings Ltd. (8.30%)
WeMade Entertainment Co., Ltd. (3.50%)
SK Planet Co., Ltd. (2.00%)
Subsidiaries Kakao M (76.40%)
Kakao Games
Kakao Friends
Kakao Mobility
Path, Inc.
Website www.kakaocorp.com
Kakao
Hangul 카카오
Revised Romanization Kakao
McCune–Reischauer K'ak'ao

Kakao (Korean: 카카오) is a South Korean internet company that was established in 2014. It formed as a result of a merger between Daum Communications and Kakao. In 2014, the company was renamed to Daum Kakao.[4] The company rebranded once more, reverting to just Kakao from Daum Kakao in 2015.[5]

In May 2015, the company acquired Path, an American social media company that had become successful in Asia.[6] In January, the following year, Kakao acquired a 76.4% stake in LOEN Entertainment, a large South Korean entertainment company for $1.5 billion.[7] It was later rebranded as Kakao M. In May 2017, the company gained further prominence from KakaoTalk, a free mobile instant messaging application for smartphones with free text and free call features, with 220 million registered users and 47 million active monthly users.[8]

History

2010–2014: Founding of Kakao Corp.

Kakao Corp is the company behind KakaoTalk, which serves as its main platform and flagship application. It was founded in 2010 by Kim Bum-soo, the former CEO of NHN Corporation (the organization that emerged from the Hangame and Naver.com merger).[9] Kakao Corp. is based in Seoul, South Korea. Manson Yeo and Sean Joh serve as the current Co-CEOs.[10]

Within the first three years after their entrance into the mobile market, Kakao Corp. introduced ten related services. The first of these releases took place in 2010 with a "gifting" feature that enabled users to buy gifts and coupons virtually through KakaoTalk and send it to their friends via the application.

In 2011, Plus Friend was introduced in which users receive messages, announcements, coupons from celebrities and brand name stores. This is a feature which acts as a source of advertisement and marketing for companies and celebrities since KakaoTalk does not have banner ads. KakaoTalk further features emoticons designed by webcartoonists which can be purchased in the "Item Store".

In 2012, Kakao Corp. introduced their gaming system "Playing Game" in which gaming items can be purchased. Kakao also expanded their social networking system by introducing Kakao Story, a mobile photo sharing application. Kakao Style, a fashion trend and retail application, was introduced along with Choco, Kakao's cyber money. In the same year, KakaoTalk's $42 million revenue is broken down to 67.5 percent ($31.1M) gaming, 26.2 percent ($12.1M) advertising, and 6.3 percent ($2.8M) emoticon sales. In a struggle to beat its deficit from 2011, the free mobile messenger application launched gaming, retail, advertising services without banner ads. It is expected that the largest portion of revenue can be generated through games due to KakaoTalk's massive social network presence in the host country. KakaoTalk's method of brand advertisement is demonstrated through advertising channels called Plus Friends, in which users can add the brand as their friend on the mobile messenger. Users will receive content from brands or celebrities as a personal message instead of banner ads. Companies pay KakaoTalk to create an account (starting prices $20K).[11] Third main source of revenue comes from emoticons that can be purchased within KakaoTalk for $2–3.

In August 2013, three of App Annie’s Global Top 10 Android games are tied into the KakaoTalk platform - Everybody’s Marble, Cookie Run, and Anipang.[12] With 93 percent of South Korea's users on KakaoTalk, the free downloads of the games Ani Pang and Dragon Flight, which can only be played with a Kakao Talk account, were deemed "national" games. To maintain simplicity of all provided services, Kakao applications can be purchased and logged in with links to KakaoTalk.[13] Kakao Corp. generated revenue of approximately $200M (USD) through gaming, digital content, mobile commerce, and its marketing channels for brands and celebrities.[14] Kakao Corp. was named a "Top Developer" on Google's Android Market. and KakaoTalk was chosen as the No.1 Free SMS App by Cnet.[15]

According to a December 2013 App Annie report, Kakao is the world’s third top publisher by monthly revenue at Google Play. Kakao Corp. is the #1 publisher for iOS and Google Play in South Korea, and KakaoTalk is the #1 app for iOS and Google Play revenue in South Korea.[16] KakaoTalk was nominated for the Most Innovative Mobile App Award at the Global Mobile Awards 2014.[17] Kakao Corp. agreed to buy Daum Communications Corp, to cut costs and save time to jump-start growth and gain a listing in Seoul, South Korea.[18]

Kakao Corp’s full suite of apps includes: KakaoTalk, KakaoStory, KakaoTaxi, KakaoAccount, KakaoMap, KakaoDriver, KakaoBus, KakaoMusic, KakaoMusic, KakaoGroup, KakaoHome, KakaoPlace, KakaoAlbum, KakaoPage, KakaoStyle, and KakaoAgit.[19]

2014–2015: Merger of Daum and Kakao

In May 26, 2014, Kakao Corp. announced that it has decided to merge with Daum Communications - one of Korea's top Internet portal - through a stock swap. Once the two firms were combined, a new tech giant is expected to debut. The emergent company would have 3 trillion won ($2.9 billion) market capitalization, enabling it to lodge a credible threat to Naver, which is South Korea's biggest web portal.[20]

In 2014, Kakao Corp and Daum were merged through an equity swap. Thus, creating a company that achieved the initially projected market capitalization. The new entity Daum Kakao was valued close to 10 trillion won (US $9.45 billion).[21]

In 2015, the company then changed its name to 'Kakao'. Due to gambling and censorship issues within the Kakao ecosystem, the organization's board of directors ejected Kim-beom-soo as CEO and decided to replace him with Rim Ji-hoon.[22][23][24] Kim Beom-soo become the largest shareholder in the new pro forma company with a 22.2 percent stake.[25]

2015–present: New business model

On March 10, 2015, Daum Kakao launched their KakaoTaxi service that allows users to call a taxi around the user using the KakaoTaxi application.[26] Thanks to the many taxi companies cooperating with the KakaoTaxi service,[27] about 600,000 taxi-consumers used the ride-hailing platform every day within eight months of its launch.[28]

Internet bank

Kakao was approved by South Korean regulators to become the nation's first Internet-only bank in 2017. The internet bank engages in the same business as commercial banks, including processing deposits, loans and wiring money. Consumers will no longer need to visit the bank to open new bank accounts or get loans. Their business plan was considered innovative, and the company's business model was expected to secure a sizable customer sign-ups relatively easily, based on the users of KakaoTalk, which is the country's most popular messaging application.[29]

Although K-Bank eventually became South Korea's internet-only bank having been launched several months prior, Kakao Bank immediately attracted more 820,000 customers four days after its launch on July 27, 2017.[30] The dedicated Kakao Bank app itself has also been downloaded 1.5 million times within the same period.[30] The customers ballooned to 3.5 million after a month.[31] These figures trounced the 400,000 users that K-Bank amassed within 100 days of its existence.[31]

By September 26, 2017, Kakao Bank lent ₩1.4 trillion ($1.2 billion), constituting 40 percent of the total loans in all of South Korea for that particular month.[32] The bank's unprecedented expansion is seen as an exception to the closure of banks, particularly foreign-owned institutions. The fledgling performance for these banks is being blamed on the high cost of maintaining brick-and-mortar operations and the popularity of internet finance among Koreans consumers.[32]

Transportation services

In November 2015, Kakao launched the taxi business model Kakao T. The service includes the premium extension 'Kakao Taxi Black,' which allows users to book rides in Seoul via the messenger app that is exclusively carried out in luxury imported cars such as Mercedes Benz, Lexus, and BMW. Fares for the premium service start at ₩8,000. Kakao announced plans to expand the activity field to other Korean cities within the following year.[33]

Services

Korea

Kakao provides a diverse set of services.

Community

  • KakaoTalk: instant messaging and VoIP service
  • KakaoStory: image, video, and music sharing service
  • KakaoPage: web-based cartoon and novel service
  • KakaoGroup: group chat service with picture, video, and music sharing
  • Plain: mobile blog service
  • Brunch: mobile contents publishing service

Entertainment

  • KakaoMusic: music app with sharing features
  • Melon: music streaming service acquired through Kakao M
  • PotPlayer: media player for Windows

Fashion

Finance

  • KakaoPay: mobile e-wallet, integrated with KakaoTalk
  • KakaoBank: mobile bank in Korea.

Transportation

  • Kakao T: transportation service app, providing taxi hailing, chauffeur service and navigation services.
  • KakaoBus: real-time location and traffic information on buses.

Video Games

Others

  • KakaoFriends: diverse products including finance, distribution, foods, and so on
  • KakaoHello: Call app service based on Kakao account
  • KakaoTV: interlocks Kakao TV Live broadcasting and KakaoTalk's open chatting
  • KakaoHome: service, managing Smartphone home display
  • KakaoPlace: service, sharing famous places
  • KakaoAlbum: sharing pictures with Kakao friends
  • Path: US social network service

Japan

Kakao Japan Corporation is the Japanese subsidiary of Kakao. It currently offers some of Kakao's Korean services as well as specific ones for the Japanese market. Kakao Japan has announced plans to launch a music service as a second attempt to penetrate the Japanese market.[34] In April 2018, Kakao Japan announced plans to launch a video streaming service to compete against Netflix and Amazon with a similar pay model to their Piccoma service.[35] The streaming service will be called Piccoma TV.[36]

Controversy

KakaoTalk censorship

When the announcement by the Korean government that it would tighten its real-time monitoring to prevent people from spreading false information, for which the company cooperated fully by providing reams of conversation data. KakaoTalk users expressed their displeasure to the censorship by saying that they would migrate to other messenger services. Because of this, as many as 1.5 million users are reported to have recently signed up for the hitherto obscure mobile messenger service Telegram, which is known for its security.[37]

Daum Kakao has explained the censorship, saying, "It is unthinkable not to follow the rules in a constitutional country." "The move (by Daum Kakao) reflects users' repulsion and fear against cyber censorship," said Yoo Ki-hong, a spokesman of the main opposition New Politics Alliance for Democracy. "The government should understand the sense of resistance of the people on the issue, rather than justifying its execution of warrants."

Kakao Corp chairman accused of gambling

Kakao board chairman, Kim Beom-soo, has been accused of gambling in Las Vegas in the early years of Kakao Corp from 2007-2010. Overseas gambling is illegal under the Korean law. Korean prosecutors have reportedly obtained information from the U.S. Department of Justice and the Department of Treasury that Kakao mobile messenger founder Kim had spent 20 hours and 51 minutes at the Bellagio Hotel in Las Vegas in 2007 when he served as NHN global CEO. He betted an average of $2,440 per session and lost $16,993 within the night, local Hankook Ilbo newspaper reported.[38] The company’s decision to comply with the prosecution’s warrants requesting monitoring of chatting records in criminal cases, a reversal from its earlier stance, with rumors that he succumbed to the investigative powers.[38]

References

  1. ↑ ""카카오 주주? 로엔 주주?" SK플래닛의 선택은... - 머니투데이 뉴스" [Kakao shares or LOEN shares? SK Planet picks..)]. 머니투데이.
  2. ↑ "Tencent Invests US$63M into KakaoTalk the Korean WeChat". TechNode. 17 May 2012.
  3. ↑ "Tencent expansion in Asia may be bolstered by Kakao connection". South China Morning Post.
  4. ↑ "kakao > About > History". Kakao Corp. Kakao. Archived from the original on 1 October 2015. Retrieved 9 October 2015.
  5. ↑ "Daum Kakao Sets Sail Under New Name". The Chosun Ilbo. Seoul. 24 September 2015. Retrieved 9 October 2015.
  6. ↑ "Path Sells Its Social Networking App To Daum Kakao". TechCrunch. Retrieved 28 June 2015.
  7. ↑ "Kakao acquires Loen". koreatimes. 11 January 2016.
  8. ↑ "Kakaotalk: number of monthly active users 2017 - Statistic". Statista.
  9. ↑ Kim, Nam Kyu (2010-03-18). "아이위랩, 아이폰용 메신저 '카카오톡' 출시". economy today. Archived from the original on 2013-10-03. Retrieved 1 May 2013.
  10. ↑ "Kakao". kakaocorp.com (in Korean). Retrieved 2018-04-19.
  11. ↑ "What is KakaoTalk's Business Model?". Ultra Lab=2013-10-06. Archived from the original on 2014-05-28. Retrieved 2014-05-18.
  12. ↑ ACUÑA, ABEL (2013-10-19). "Why is mobile gaming so popular in South Korea?". VentureBeat. Retrieved 2016-11-13.
  13. ↑ "KakaoTalk, a Mobile Social Platform". KoreaMarketing.co=2013-12-22. Archived from the original on 2013-04-11. Retrieved 2014-05-19.
  14. ↑ "South Korea's Kakao Pushes Boundaries of Social Media". Wall Street Journal. 2014-02-26. Retrieved 2014-04-21.
  15. ↑ "Cnet's No.1 Free SMS app KakaoTalk". Cnet. 2011-09-26. Retrieved 2011-09-26.
  16. ↑ "App Annie Index: Apps – LINE Tops the Revenue Rankings". AppAnnie. 2014-01-30. Retrieved 2014-04-20.
  17. ↑ "Korean Software Recognition". BusinessKorea. 2014-02-03. Retrieved 2014-05-19.
  18. ↑ "Kakao Corp Agrees to Buy Daum to Spur Growth, Gain Seoul Listing". Bloomberg. 2014-05-26. Retrieved 2014-05-19.
  19. ↑ "Kakao Corp Home". Kakao. 2014-04-21.
  20. ↑ "Daum, Kakao announce merger". The Korea Herald. 2014-05-26. Retrieved 2014-06-11.
  21. ↑ "Daum and Kakao merge, massive valuation puts them head-to-head with Naver-Line". techinasia. Retrieved 2014-10-01.
  22. ↑ "Kakao Changes CEO, Name to Highlight Corporate Identity as Leader in Mobile Market". businesskorea. Archived from the original on 2016-01-12. Retrieved 2015-09-24.
  23. ↑ "Daum Kakao to change its name to Kakao". yonhapnews. Retrieved 2015-09-01.
  24. ↑ Russell, Jon. "Korea's Daum Kakao Brings In 34-Year-Old CEO To Grow Its Messaging Business Overseas". TechCrunch. Retrieved 2016-01-01.
  25. ↑ Lee, Min-Jeong (2014-05-26). "South Korean Messaging-App Maker Kakao to Buy Web Portal Daum". Wall Street Journal. ISSN 0099-9660. Retrieved 2018-04-19.
  26. ↑ Shu, Catherine. "Daum Kakao Debuts Uber Rival KakaoTaxi In South Korea". TechCrunch. Retrieved 2017-02-28.
  27. ↑ "Messaging app Kakao's taxi service already has 84% of Seoul's drivers signed up". The Drum. Retrieved 2017-02-28.
  28. ↑ Jin-young, Cho (2015-12-17). "Kakao Taxi Draws 600,000 Requests per Day". BusinessKorea. Retrieved 2017-02-28.
  29. ↑ "Kakao, KT Surge After South Korea Grants Online Banking Permits". bloomberg. Retrieved 2015-11-29.
  30. 1 2 "Kakao Bank attracts 820,000+ clients in four days since launch". FinTech Futures. Retrieved 2018-06-19.
  31. 1 2 Ray, Stephane (2017-10-19). "Kakao Bank: from 0 to 1,5 millions customers in just one week!". Retrieved 2018-06-19.
  32. 1 2 Song, Jung-a (October 5, 2017). "South Korea web-only banks thrive as traditional lenders struggle". Financial Times. Retrieved June 20, 2018.
  33. ↑ "Kakao Launches Luxury Taxi Service". chosun. 2015-11-04.
  34. ↑ "Kakao readies Japan push with music and game content". Nikkei. Retrieved February 20, 2018.
  35. ↑ "Kakao to launch video-streaming app in Japan". Nikkei. Retrieved April 19, 2018.
  36. ↑ "Kakao to launch piccomaTV video streaming service this summer". telecompaper. Retrieved April 19, 2018.
  37. ↑ "Daum Kakao in Serious Danger after "Censorship" Announcement". hankyung. Retrieved 2014-08-08.
  38. 1 2 "Kakao chairman again embroiled in gambling scandal". koreaherald. Retrieved 2015-10-11.
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