Kakao to strengthen overseas operations amid growing criticism

Kakao Corp. will accelerate its overseas expansion as part of its recently announced reform plan to strengthen fair business practices.

Kakao said on Sept. 14 that in order to ensure co-existence and share growth proceeds with its business partners, the company will significantly level up its global operations. The tech giant will foremost focus on expanding its fast-growing webtoon and web novel businesses.

Industry watchers note that Kakao’s shift of business focus toward the global market was foreseen when the Korean government and the ruling party began to clamp down on regulations to protect smaller businesses in the country. Amid growing criticism from political circles, Kakao Group has pledged to withdraw from small-market segments such as flower and snack delivery services that compete with mom-and-pop stores.

The digital content business will be Kakao's main focus on the global scene. The group in March recruited Michele Wells as chief content officer for its US webtoon and web novel affiliate Tapas Media. Wells has more than 20 years' experience in the US content market, with former leadership roles as vice president of DC Entertainment and executive editor of interactive storytelling at The Walt Disney Company.

Former DC Comics editor Jamie Rich also joined Tapas Media in June as its editor-in-chief. Other members of Tapas Media’s top management also have extensive experience at big media companies including Warner Bros., Sony Pictures and Paramount Pictures.

Another key talent leading Kakao’s global expansion is Sue Johnson, chief content officer at the US fiction app Radish Fiction. Kakao acquired Radish Fiction in of May of this year as a move to diversify the company's content business in the US. Johnson worked 19 years at ABC Television, leading the production of drama series and mobile content.

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Kakao’s rapid expansion of content business in the global market means head-on competition with its archrival Naver Corp. The two companies have not only continued their rivalry for the market leader position in Japan’s webtoon market but also recently competed for the IP rights of the DC Comics series.

Naver is the market leader in France's digital comics market, while Kakao became the largest market player in Thailand within three months of entering the country’s webtoon market.

Following the South Korean government’s move to protect smaller businesses, Kakao will likely pull out from more business sectors in the country. Experts note that Kakao may minimize its presence in the mobile networks sector currently spearheaded by its affiliate Stage Five, as well as in the education sector led by its subsidiary Yanadoo Corp.

“Now it’s become difficult for Kakao to enter new businesses where the regulatory landscape is complex or where there is a diverse group of existing players. Kakao will naturally have to find its next growth engine in the overseas market,” said an IT official.

Write to Joo-wan Kim at kjwan@hankyung.com
Daniel Cho edited this article.