Korean video, music platforms gradually losing ground to foreign rivals

[Photo provided by Naver]

South Korea’s leading platform companies, such as Naver Corp. and Kakao Entertainment, are facing a significant decline in their presence due to intensifying competition from foreign rivals like Google and YouTube Music.

According to a survey, YouTube Music surpassed Kakao Entertainment’s Melon as the most widely used music streaming app for Android smartphones in April, with 5.21 million monthly users compared with Melon’s 4.59 million.

In response to this situation, Korean platform companies are strategizing with organizational integration and restructuring of their relevant business units. Naver plans to strengthen its position in the video service industry through over-the-top (OTT) business rebranding. Last year, Naver merged its existing Naver TV app with NOW, which was launched in March. Naver is revamping the UI and UX of Naver TV’s web version to integrate it into NOW during the third quarter.

“We are reorganizing Naver’s video service through the rebranding of Naver TV as NOW. After the platform integration, the overall direction of content is being redefined,” said a Naver official.

Market watchers said Naver may even integrate the movie subscription platform Series ON after merging NOW and Naver TV. In May, Naver acquired Series ON from Naver Webtoon. “We are exploring ways to enhance our overall video content capabilities through collaboration with Series ON,” explained the official.

Of particular interest is Naver’s short-form service. Naver recently filed a trademark for its own short-form brand called N Clip. N Clip is expected to be commercialized as a single short-form service within the Naver platform, rather than as a separate app.

“There is a significant sense of crisis that, following the emergence of ChatGPT, even the search sector may lose its dominant position, prompting a comprehensive restructuring of the business,” said a market watcher, adding that “as Naver is a representative super app that covers not only content but also shopping, finance, and payments, if it misses out on any of these areas, there is a sense of urgency that the user base will decline in a chain reaction. Therefore, responses in each area are being pursued with speed.”

Kakao Corp. has been relatively stagnant in its OTT business. When launched in 2020, the business introduced various OTT content such as variety shows featuring celebrities and original web dramas based on popular intellectual properties. However, industry evaluations now overwhelmingly indicate that Kakao has fallen behind after three years.

One decisive factor was the termination of the supply of original content from Kakao Entertainment, which has led to a limited range of content on Kakao TV, focusing mainly on sports and some animations.

“We are currently offering various content such as Kakao’s own IP videos, short-form content, and sports videos for free through Kakao TV. In the future, we are considering various options to introduce a wider range of content,” said a Kakao official.