Online Posturing

 

Naver and Daum Kakao are actively seeking to take back the local Internet service market of online video services, taxi services, and SNS from foreign companies. In particular, they have appeared to strengthen their position in the online video market by narrowing the gap with their rival YouTube.

According to industry sources on Aug. 10, Korean portal operators are targeting the local market by releasing services to curb the dominance of foreign Internet giants like Google. As a result, the dominance of foreign companies in the local Internet service market is weakening.

The field of online video services is most noticeable. The combined number of people who use Naver and Daum Kakao's online video services via PCs each month (13.6 million) recently surpassed YouTube's monthly users (11.8 million) in the country, according to market research firm Nielsen-KoreanClick. Last July, YouTube had 12.48 million Korean users, more than the 4.54 million of Naver and the 5.62 million people of Daum Kakao combined.

YouTube is experiencing a decline in the number of PC users in Korea this year. The number of YouTube users in Korea reached 12.48 million in July 2014, but the figure was only 11.8 million in June 2015, a decrease of 6 million Koreans. The number of people who accessed YouTube via mobile devices also decreased from 5.92 million to 4.32 million during the same period, down 1.7 million.

This phenomenon seems to be somewhat affected by YouTube's decision late last year to discontinue a service that shows short videos made by local terrestrial broadcasting companies. During the period, Naver and Daum Kakao heightened their position in the local online video service market by adding video clips of terrestrial broadcasters and content specialized for online videos like web dramas or real-time broadcasts.

The online video advertising industry is noticing this kind of change. An official at an online video advertising company said, "In the past, when it came to online video advertising, YouTube was thought to be the only ad platform." The official added, "As far as I know, the price of ads on Naver and Daum Kakao is increasing due to a growing amount of traffic in their video platforms, like YouTube."

In addition to online video services, the local industry seems to be taking the lead in the call taxi app market as well, after being outperformed by Uber last year. Kakao Taxi, which was launched by Daum Kakao in the first half of this year, recorded more than 200,000 taxi calls, becoming the number one taxi app in the market. Naver is also targeting the mobile SNS market by showcasing an interest-based mobile SNS called Polar last month to counter Instagram, famous for sharing photos.

Industry analysts predict that Naver and Daum Kakao will introduce new services to the mobile market or strengthen existing services, and local companies will keep their stronghold in the market as a result. An associate at a portal operator noted, "The idea of local companies beating YouTube in the local online video market was unimaginable last year," adding, "As Never and Daum Kakao are both targeting the market in various ways, the local industry is no longer afraid of foreign companies."

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