More than 75% of South Koreans own a smartphone, and more than 90% of those smartphone users use the KakaoTalk messaging app, which puts Kakao in an excellent position to become a cultural powerhouse in the country. Kakao clearly intends to use this position to its full potential too, because it’s agreed to acquire Loen Entertainment for $1.6 billion, which is the company that owns MelOn, the most-popular music streaming service in South Korea. Pair that with the fact that Kakao also develops some of the most-popular games in the country, and it’s pretty clear that South Korea’s culture and media are becoming dominated by just a handful of companies, one of which is Kakao.
With giant companies such as CJ E&M and Kakao jumping into popular culture businesses, huge changes in the television and music industries are expected to follow. Kakao, the company behind the most popular mobile messenger in Korea, announced that it will be taking over Loen Entertainment for 1.87 trillion won. Loen Entertainment is the owner of MelOn, an online music streaming site that holds the largest share of the market, and represents singers and actors such as IU. By combining Kakao, which is used by most of the population, and content from MeLon, which has 28 million subscribers, Kakao plans to strengthen the competitive edge of its content offerings, and at the same time create a platform suitable for expansion abroad. However, even though Kakao declared that it will be isolating MelOn from Kakao Music, some in the music industry are worried about Kakao’s monopoly power resulting from the acquisition. In the meantime, CJ E&M, which is overwhelming the free networks with its content, is making moves to leverage its capital and take over the broadcasting industry. After standing on the top of the distribution industry for movies, TV and music, CJ E&M is stepping out to secure stakes in small production companies, entertainment companies and music labels.
