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Chat Application Kakao Talk Is Dipping Its Toes In South Korea’s Music Industry

by Ji Hyun Joo / Jan 11, 2016 11:46 AM EST
Line App

The Korean chat application Kakao Talk is no longer limiting its services to international communication.

Korea’s top messenger service is now delving into the music industry by acquiring LEON, the country’s top music streaming service provider, according to The Korea Herald.

The move may be a good one for Korean pop as the recent transaction could make room for K-pop to expand overseas.

“One song can set trends for an entire generation and significantly influence the global pop culture,” stated company CEO Jimmy Rim.

The recent deal is reportedly the biggest for Kakao Corp since its merger with web search operator Daum in 2014. The firm said it would buy a 76.4 percent stake in Leon Entertainment Inc. for $1.6 billion, according to Reuters.

Leon is not only the service operator for MelOn, a popular music streaming service in South Korea, but also the representing label for big artists including IU.

Kakao Talk has been under pressure to diversify its services after the release of messenger applications including Line. There has also been a decline in advertisement resources, causing messenger services to expand their revenue streams, according to industry analysts.

Due to these problems, companies like Kakao Talk are finding it difficult to increase revenue despite the consistent increase in subscribers.

Despite KaKao Corp’s recent deal, there needs to be a trial period before the expansion can be determined a good one.

“Kakao is trying to draw a pretty big strategic picture, but it's not clear whether they will be able to successfully monetize," HDC Asset Management fund manager Park Jung-hoon said.

It is suspected that more time may be needed for Kakao Corp to go global.

“It may take more than teaming up with yet another domestic firm, no matter how influential it is, to really take the global market by the reins,” explained one analyst who requested to remain anonymous.

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