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Mobile Messaging Apps: KakaoTalk

Posted on Friday, Apr 4th 2014

As I mentioned earlier, the preferred mobile messaging app varies across geographies. Facebook and WhatsApp are universal leaders in the Western markets, but the Orient is still dominated by home grown players. Here is a quick review of KakaoTalk, another Asian company making it big in the market. After capturing the South Korean market, KakaoTalk is working on expanding their market presence and is said to be preparing for an IPO.

KakaoTalk’s Offerings
KakaoTalk was founded in 2010 and is now the leading mobile messaging app in the country. According to an eMarketer research report, South Korea has more than 73% smartphone penetration of which nearly 95% people use KakaoTalk. Considering that South Korea has a population of nearly 50 million people, that translates to a user base of nearly 35 million people.

Like others in the space, Kakao does not count itself as a pure mobile messaging app. Their mission, instead, is to create a mobile ecosystem where smartphone users, app developers, and content providers can grow together to help people stay connected with the rest of the world.

Kakao has a wide range of service offerings for their consumers. Kakao offers the traditional free messaging service that lets users exchange texts, multi-media content, voice notes, and contact information. But, additionally, they have several more lines of businesses including KakaoGames – the gaming platform, KakaoLink – the open API, and other lifestyle portals including KakaoStyle and KakaoPage that let users shop for gifts or discounts.

As part of their ad monetization strategy, they tied up last year with digital marketing company IGAWorks to include the mobile ad product adPOPcorn to their app. The agreement enabled IGAWorks to provide adPOPcorn to game developers whose games are published on KakaoTalk for the in-app purchases. Last year, they also tied up with Evernote to let users share images, links and messages from their Evernote account. More recently, Kakao is said to be working on a news content service..

Today, Kakao has more than 130 million registered users. With nearly 35 million people in South Korea, the app has managed to build a strong international following as well. In Japan, Kakao is said to have 15 million users and Kakao is also a popular app among Koreans based outside their homeland. Kakao addresses growth in the international market through customization. They hire local artists who are able to understand and integrate the culture into their products such as stickers and into the website design for the country.

KakaoTalk’s Financials
Like others, Kakao earns revenues from the additional features it sells such as stickers, emoticons, and other in-app purchases on games and other portals. Their gaming platform is the biggest revenue generator as most Korean developers use Kakao to launch their games. Their revenues have grown rapidly from $42 million in 2012 to an estimated $200 million in 2013. They had recorded $6.5 million in profits in 2012.

They are venture funded and have received nearly $73 million in funding from investors including CyberAgent, Maverick Capital, DCM, Tencent, and Berjaya. Their latest round of funding was held earlier this year when they raised $10 million from Berjaya. Interestingly, their biggest investor is Tencent, who is also the owner of Chinese mobile messaging giant WeChat.

Kakao is now said to be preparing for an IPO priced at $2 billion on the Korean exchange. Kakao wants to expand their market reach and the IPO could help fund this growth.

Now you can see from our analysis over the last few posts, why I said WhatsApp is eminently monetizable!

This segment is a part in the series : Mobile Messaging Apps

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