泥中蟠龍's Game愛歌
[A love song for games of the dragon waiting for an opportunity]
If Kakao market is opened
December.12.2013
Recent news about KakaoTalk's acquisition of T store has become a hot issue in the gaming industry. KaTalk and SK Communications both stated that there was no foundation for the report, however, where there's smoke, there is fire. I carefully guess that there should have been general ideas about it. I don't want to discuss whether it is true or not here. As the old saying goes, "You hold the memorial service at a chance to see the rice cake", I just pictured what it would be like if Kakao market is actually opened.
In fact, people have already talked about the possibility since summer that KaTalk would manage the store itself. But it's not easy choice. The reason why it's hard to directly operate it is very simple. Because there is a possibility of failure of the market like T store or Olleh Market with poor market share. And it also needs to learn knowhow required to run it and accept initial cost by trial and error. Therefore, the buyout of T store can be a suitable alternative if KakaoTalk manages it firsthand, regardless of whether it's true or not.
Then, What does it mean for KaTalk to directly run the market? To begin with, it can boost sales. The IT company forecasts to earn sales of 100-200 billion won this year. Over half of the income is expected from video game division. It means that video game companies have paid commission, about 100-200 billion won a year, to the other stores where charge 1.5 times higher the fee than KaTalk does. Since T store's current annual sales is predicted to reach 20-30 billion won, the tech company partnered with KakaoTalk can expect an additional revenue from the new market.
In addition, it will generate more revenue with lower commission than now. KakaoTalk get a 21% commission on game sales at present, while the other markets charge 30% for the transaction fee. As a result, game companies consequentially have 49% of revenue. But if KakaoTalk runs the market itself, it can expects 1.5 times the current sales with just commission. Furthermore, if it charges 40% of market commission and platform fee in total, it can anticipate generating 2 times the present figures. Either is acceptable for game developers and there is no reason for them to object to the lower service charge. Of course it won't be easy for KaTalk to persuade customers to use its service.
Lastly the competitive factors in the domestic market will benefit the developers. There must be new attempts in the area where competition is fierce. KaTalk has attracted so many users and its proven ability will reasonably force the other competitors not to create revenue as they get now once it opens its market. When they get to that point, the rivals will inevitably try to change this difficult reality in many different ways and any attempts can have positive influences on the game developers.
'Dinosaur', 'Mobile giant', or 'Unstoppable force' became to call the mobile messenger application company of late. These epithets indicate that it is considered as big business and people think its commission is too expensive. But KakaoTalk is only a startup company with 100-200 billion won of sales a year. I give the startup a big hand which has helped to expand to local mobile game market and I hope that it will be a flagship of the Korean IT industry to win recognition overseas based on consistent growth.
※ This is from Kyunghyang Games column by 泥中蟠龍 since September 2013.
(http://www.khgames.co.kr)
Translation by Kim Ki-hui
