Kakao acquires leading Korean music streaming service for $1.5b

K-pop group Girls’ Generation. Photo credit: Wikimedia Commons.

Korean web giant Kakao, maker of KakaoTalk, today said it has acquired a music streaming service for KRW 1.87 trillion (US$1.55 billion) in order to boost its mobile chat app, which is Korea’s most popular.

The deal sees Kakao snap up MelOn, which is said to be Korea’s top music streaming service with 28 million registered users (Hat tip to Yonhap for spotting the news).

KakaoTalk boasts 39 million monthly active users in the country, which has a population of roughly 50 million. That puts it ahead of rival messaging apps like Line, WhatsApp, and Facebook Messenger.

The acquisition may help solidify KakaoTalk as the uncontested domestic chat leader, but it’s unlikely to spur an increase in users outside of Korea. MelOn is only available in Korean and appears to cater entirely to domestic artists, with (obviously) heavy K-pop leanings.

KakaoTalk has 39 million monthly active users in South Korea.

“As a platform provider, Kakao has always focused on delivering high quality content to our users,” a company spokesperson tells Tech in Asia. “Acquiring [MelOn parent company] Loen gives Kakao a massive music content library as well as a pipeline for future content. [The app’s] current businesses are built around K-pop and domestic artists, and they will continue to build on their success.”

The acquisition will allow Kakao and MelOn to “experiment with and venture into more new type of music services,” the spokesperson added, but didn’t specify what those may be.

Japanese chat app Line, KakaoTalk’s nearest rival with 16 million registered users in Korea as of September 2015, unveiled its own music-streaming joint venture Line Music in October 2014. The company reported 4 million monthly active users for Line Music (Japan only) as of September 2015.

Line is a wholly-owned subsidiary of Korea’s Naver, Kakao’s most direct rival in Korea. Many view Kakao’s expansion into services outside of its core messenger – including taxi hailing and mobile payments – as means to stay competitive with Naver and international rivals like Facebook Messenger.