Colorverse down, Zepeto survives in Korean metaverse dynamics shift

[Courtesy of Puppy Red]

As the metaverse fervor starts to fade, South Korean metaverse platform company Colorverse Inc. has reportedly initiated the closure of its business, terminating one of its representative metaverse services, “Puppy Red M.”

According to industry sources on Thursday, Colorverse will terminate the service of “Puppy Red M” from December 1 to initiate the closure. In a recent statement, Colorverse Chief Executive Officer Lee Yong-su announced the service termination, stating that the company is “at the verge of closure.” The company made significant efforts for restructuring in June 2023, including a temporary suspension of updates for the “Puppy Red M” service, but this all seems to have fallen short. Colorverse saw its earnings deteriorate, posting 11.53 billion won ($8.9 million) in operating losses in 2022.

Given that Colorverse’s largest shareholder is video game maker Neptune Co., which has a 44.28 percent stake, and Neptune’s largest shareholder is Kakao Corp. subsidiary Kakao Games Corp., Colorverse is classified as Kakao’s “third-tier subsidiary.” But according to a Neptune official, Colorverse’s closure “has not been finalized,” although the official admitted that the company recently underwent another significant restructuring.

Colorverse is responsible for developing the metaverse platform under Kakao’s metaverse vision, or “Kakao Universe,” announced by former Kakao CEO Namgung Hun in June 2022. As Colorverse falters, it can be assumed that Kakao‘s metaverse project will also lose momentum.

The subsided metaverse fervor has led to a series of closures among business-to-consumer (B2C) metaverse platforms that have failed to attract users and achieve profitability. “Cytown,” the metaverse version of social networking service Cyworld, closed its service after a year in July 2023 and videogame maker Com2uS Corp.’s “Com2verse” also underwent restructuring in September.

On the other hand, other services secured a steady stream of users based on global offerings. Naver Z Corp.’s metaverse platform, “Zepeto,” remains strong with around 20 million monthly active users (MAUs) this year. Although the number decreased compared to 2022, it seems to be holding its ground with a strong foothold among overseas users.

LG Uplus Corp. operates a children-specialized metaverse, “Kidstopia,” targeting lower elementary school-aged children. Launched in May this year, it topped 40,000 subscribers in July and secured over 165,000 cumulative subscribers as of October. Particularly, in June, it expanded to North America and Malaysia, as well as other English-speaking countries, including Singapore, the Philippines, and Brunei.

SK Telecom Co.’s metaverse service “ifland” also surpassed 50 million subscribers as of the third quarter of 2023 via its global services. MAUs stand at around 4.2 million as of the third quarter this year, maintaining a similar level to the second quarter. “It is popular in Southeast Asia due to the popularity of K-pop,” an official from the telecom carrier explained.