Kakao Knocks on Subscription Economy: "Rental and Regular Delivery via KakaoTalk"

Soyoung Cho (left), Yeo Minsu, Co-CEOs of Kakao

[Asia Economy Reporter Buaeri] Kakao has kicked off its subscription economy business by launching a subscription service in partnership with home appliance and furniture companies. Naver introduced a membership and adopted a subscription economy model in June. With the two major domestic portals rushing into the market, the 'popularization of the subscription economy' is expected to accelerate.

Kakao Starts 'Subscription Economy'

On the morning of the 18th, Kakao held a press conference for 'If Kakao 2020' and announced, "Starting tomorrow, we will launch the KakaoTalk product subscription service in line with the subscription economy era." Kakao will also launch a 'Wallet' service within the year, allowing users to store and manage IDs and certificates on KakaoTalk. The subscription economy refers to users paying a fixed amount monthly or annually to receive services regularly. As the content subscription model succeeded in online video services (OTT) like Netflix and expanded to other industries such as automobiles and home appliances, Kakao has taken its first step into this market.

Accordingly, users can subscribe to products via rental or regular delivery methods on KakaoTalk. Starting on the 19th, Kakao will begin renting Winia Aid's 'Dimchae' kimchi refrigerators and plans to expand partnerships within the year to include Bodyfriend, Winix, Hanssem, and others. Kakao stated, "In the future, we will support various services such as regular delivery of food and cosmetics and cleaning services, not only home appliances and furniture." They added, "Users can handle the entire process on KakaoTalk, from membership registration to credit checks, electronic signatures and contracts, and payment."

Kakao's subscription service is based on 'KakaoTalk.' KakaoTalk is the national messenger with 45 million monthly users in Korea. Co-CEO Yeo Minsu said, "Kakao aims to be a reliable partner for our collaborators," adding, "We will strive to provide an evolved digital experience by closely connecting users and business partners."

Kakao will also introduce a 'subscription model' for content. They plan to launch a new content subscription platform in the first half of next year. Previously, users received news or content curated by Kakao, but in the future, they will directly subscribe to news, music, posts, videos, and more. Users will be able to create a 'personalized screen' by selecting subscription channels. The market expects Kakao to apply the subscription economy model to digital content such as webtoons as well.

Growing to 40 Trillion Won This Year

Naver has already adopted the subscription economy model. In June, it launched 'Naver Plus Membership.' Naver users pay 4,900 won per month to receive up to 5% Naver Pay points based on purchase amounts in Naver Shopping and reservations. They also get content such as 20 Naver Webtoon Cookies (currency) and 300 plays on the music platform 'Vibe.'

Kakao's entry into the subscription economy market following Naver is due to growth potential. Global investment bank Credit Suisse projected the global subscription economy market to grow from $420 billion in 2015 to $530 billion in 2020. According to KT Economic Management Research Institute, the domestic market including rentals is expected to grow from 31.9 trillion won in 2018 to 40.1 trillion won in 2020.

The biggest advantage of the subscription economy model is the generation of regular income. For portals like Naver and Kakao, it means securing a cash cow and creating a 'lock-in effect' by binding platform users through subscription services. The service also fits the millennial generation (born early 1980s to early 2000s), who value 'experience' over ownership, which is why the two major portals focus on the subscription economy.

Professor Choi Kyung-jin of Gachon University said, "The fact that major portals have started means there is market potential, so the acceleration of the subscription economy will be faster," adding, "As the subscription economy expands, competition between platforms will also arise."

This content was produced with the assistance of AI translation services.