Kakao To Acquire Music Streaming Company Loen Entertainment; Platform Operator Expected To Lead K-Pop Market
Tech giant Kakao is expected to dominate the Korean pop market as it is expected to acquire South Korean music industry company, Loen Entertainment, later this month.
Korea Herald reported Tuesday that the anticipated acquisition, which costs around $1.55 billion (1.87 trillion won), will give Kakao a 76.4 percent stake in the leading music streaming provider in the country.
Loen Entertainment is the operator of music streaming service, MelOn, which is South Korea's number one online music streaming portal. The leading music streaming site reportedly has around 28 million subscribers with 3.6 million of them paid to subscribe to the music site.
"Once MelOn, which has a market share of more than 50 percent, combines with Kakao's platform and capital, its monopoly in the music streaming industry will be stabilized and it would be hard for rival music sites to compete," an employee of a music site said.
With its acquisition of Loen Entertainment, Kakao is poised to top the K-pop market as it also tries to expand offshore.
"Music is one of the most loved content genres in the mobile era," Kakao CEO Jimmy Rim said. "It is also incredibly powerful in that one song can set trends for an entire generation and highly influence global pop culture."
He continued, "By combining Kakao's various platforms and content services and Loen's leading music content, we expect tremendous synergy that could establish a strong foundation for global expansion."
Reuters reported Tuesday that this will be Kakao's biggest deal so far after the company merged with Daum Communications in 2014.
"Kakao is trying to draw a pretty big strategic picture, but it's not clear whether they will be able to successfully monetize," said HDC Asset Management fund manager Park Jung Hoon.
An investment analyst also added that Kakao made the right decision to acquire Loen Entertainment.
"This acquisition is the right move from a long-term perspective, because the company is lagging behind Naver in terms of its content offerings," said Kim Sung Eun.
