The nation’s number one chat app operator Kakao Corp. announced on Jan. 11 that it will buy a 76.4 percent stake in Loen Entertainment Inc., which operates the nation’s top music streaming service MelOn, at 1.87 trillion won (US$1.55 billion).
Based on Kakao Talk, the company has already expanded its business into mobile content distribution industry, including game, music and emoticon. With the latest 2 trillion won (US$1.66 billion) M&A with a music streaming service provider, Kakao will bring big changes in the nation’s mobile content platform market, according to industry sources.
Kakao has decided to take over Loen Entertainment due to the fact that the music streaming service has potential in the mobile content market and it has the strong will to tap into the global mobile content market based on K-pop music.
Previously, Kakao has been running its own paid music streaming-download service, Kakao Music, in partnership with the fourth largest player, Bugs, since September 2013. However, it was not successful.
This is why Kakao’s takeover of Loen Entertainment can be interpreted as its will to diversify mobile contents in earnest and expand its content distribution business through Kakao Talk by acquiring the nation’s largest music streaming service provider. In addition, Kakao is seeking to go global through Loen, which has an entertainment agency that manages a handful of hallyu singers and actors including IU and Lee Kwang-soo.
Earlier, Kakao beefed up its video streaming services through Kakao TV and Daum tvPot apps. Also, the company is recently accelerating the investment in the mobile content platform by taking over Podotree, which had previously managed Kakao’s paid mobile content platform KakaoPage.
Accordingly, the company will actively improve its functions as the content distribution platform by connecting MelOn’s customized music streaming services with Kakao Talk and web portal Daum.