Pragmatic Rivalry and Acquisitions: Trends In The Korean Tech Ecosystem
2월 21, 2013

We have talked a lot recently about the mounting rivalry between Korea’s two major messaging services, Line and Kakao talk. But recent developments demonstrate that this rivalry still allows for pragmatism when it comes to strategic business decisions. This is demonstrated in NHN’s Hangame release of its game, Wooparoo Mountain, on Kakao’s game platform, rather than its own.

Naver (Korea’s biggest online search company) rival Daum Communications also has also entered into a strategic alliance with rival Daum, launching its social game ‘Ramen Story’ on the recently formed Daum games platform, Daum Mobage. The game has already seen success in Japan, where it was released last year.

Daum is one of the ‘old’ internet companies in Korea, but arrived late in the gaming space and is now seeking top talent and resources to bolster its offering.

In the Korean IT industry, the recent trend has been towards adopting a strategic and pragmatic approach for services created by subsidiary companies. No longer are services only open to their parent company, with the best go-to-market strategies winning over the basic instincts of corporate rivalry between top competitors.

This pragmatism has a long history in Asian thought, demonstrated by the words of Chinese leader Deng Xiaoping: “It doesn’t matter if a cat is black or white, as long as it catches mice.”

Why are internet companies sharing the same bed?

A fickle market which adopts, loves and dumps at a fast pace is certainly an influence and has resulted in intense competition in the mobile market, where share-price fluctuations are great and frequent.

Game company, Wemade Entertainment, has also demonstrated “black cat-white cat” strategy in its acquisition of a 5.8% stake in Kakao through a $4.6M investment in 2011 and $19M last year. Wemade has also introduced its games Candy Pang and WindRunner on Kakao Talk, and both enjoyed large success.

Wemade Entertainment has also started doing business with Kakao Talk’s rival, Line, signing a strategic partnership alliance with NHN Japan, to gain access to the Japanese gaming market. It made good on this alliance with the release of its own title, Chaos & Defense, on Line in the Japanese market.

Another example of large Korean corporations partnering is demonstrated in NHN’s partnership with SK Telecom in November 2012 (NHN is Korea’s biggest web search site with a 70% market share and SK Telecom is Korea’s biggest mobile carrier). They aim to combine their accumulated big data (online and telecoms) to introduce new services, and have formed a joint project group to exchange employees and technologies.
IT M&As in Korea have also become commonplace, as reported in other articles (Dialoid, Sunny Loft).

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