Infighting
Naver and Daum Kakao, which have been leading the Korean Internet industry, are waging an all-out mobile war with each other. The war started when Daum Kakao decided to focus on mobile-oriented Kakao, de-emphasizing the name of Internet-based Daum.
Moreover, as the number of mobile searches, which is directly connected with profits from mobile ads, has overtaken that of online searches, competition between the two companies to lead the mobile market is likely to intensify.
According to industry sources on Sept. 2, Naver and Daum Kakao are going head to head with each other in the fields of not only mobile messenger apps, mobile SNS services, but also financial technology (fintech) and Online to Offline (O2O) services, including simple payment services.
The nation's biggest online search engine, Naver, is dominating the mobile search area, but it is unable to assail KakaoTalk's stronghold in the mobile messenger service market. KakaoTalk is growing as a social platform in numerous realms like games, music, and e-commerce, and has embedded itself into everyday life, including mobile payments, money transfers, and taxi-hailing services. In the mobile SNS service area, Daum Kakao's KakaoStory and Naver's Band are competing with each other to nab the top position. Both of them are devoting themselves to making profits from mobile SNS services, as seen by Naver's launch of Pholar, a photo-sharing social media app, and Daum Kakao's release of Zap, a photo messaging app. However, it won't be easy for the top portal operator to overtake Daum Kakao in the SNS area, since KakaoTalk still has a big networking influence in the field.
Observers say that fintech and O2O services will become the highlight of the mobile war between the two companies. In particular, mobile payment services NaverPay and KakaoPay are related to the commercialization of O2O platform Shop Window and KakaoTaxi, which are ambitious works of each company.
Naver is cultivating NaverPay as a payment method of Shop Window, which offers shopping information about fashion, everyday items, and foods nationwide. The whole process, from shopping searches to purchases and to payments through NaverPay, is done via the mobile app. In fact, more than 50 percent of stores offered space at Shop Window are using NaverPay.
Daum Kakao is pursuing a strategy that expands user experience by applying its simple payment service to Kakao Taxi and its limousine service. All local credit cards are accepted on Kakao Pay. The payment service is available at 210 affiliated stores nationwide, and it can be used by registering credit card information and a password for payment, regardless of mobile carrier, handset, or mobile operating system. KakaoTaxi is also increasing its brand power, as witnessed by the fact that 1,500,000 taxi drivers nationwide are using the service.
Naver and Daum Kakao are also fiercely competing in the fields of mobile games and content like webtoons, in which success is directly connected to profits. In particular, they are likely to compete to make profits from music and online video services, where they are forced to compete with global companies as well.
Among them, the online video service market dominated by YouTube is directly connected to profits from ads, like the online search market, and thus Naver and Daum Kakao are forging strategic partnerships with terrestrial broadcasting companies.
In the online video area, Naver reportedly made an exceptional offer to three terrestrial broadcast service providers for their content. Daum Kakao has recently introduced Kakao TV as well, providing a service that makes it possible to communicate with friends and watch videos on KakaoTalk or KakaoStory through the Kakao TV player.
An official at an Internet service provider explained, "Naver is highly likely to enter overseas markets for webtoons or games, based on its mobile messaging platform Line, but Line lags far behind KakaoTalk in the nation." The official added, "The 'mobile first' offensive of Daum Kakao is attributable to the fact that a favorable environment has been already created for the company to surpass Naver."