Kakao's 'Beyond Korea' Completed with SM Acquisition, Will It Shed Its Domestic-Only Label?

Beom-su Kim, Head of Kakao Future Initiative Center

Kakao has completed the blueprint of its ‘Beyond Korea’ vision by acquiring management rights of SM Entertainment (hereinafter SM). Kakao is expected to accelerate its overseas market expansion based on SM’s powerful K-POP intellectual property (IP).

"30% Share of Overseas Sales by 2025"

In February last year, Kim Beom-su, founder and head of the Future Initiative Center, announced a new vision for Kakao called ‘Beyond Korea.’ This strategy was introduced to shed the label of a ‘domestic-only company’ amid various neighborhood business infringement controversies.

Namkoong Hoon, former CEO of Kakao, said, “I think the message that we must earn money overseas is close to a mandate from the public,” adding, “We consider global business a very important stage and are formulating strategies accordingly.”

The core of ‘Beyond Korea’ is global market expansion. Kakao also set a goal to increase the share of overseas sales to over 30% by 2025. Last year, Kakao raised its overseas sales share to over 20% for the first time.

The expansion of overseas sales was thanks to the strong performance of content companies such as Kakao Entertainment, Kakao Games, and Piccoma. In particular, Kakao Entertainment is expected to play a leading role in realizing ‘Beyond Korea’ by creating strong synergy with SM’s IP.

Synergies Expected in Webtoons, Performances, and Fandom Platforms

First, the areas where synergy between SM and Kakao is anticipated are webtoons and web novels.

Kakao Entertainment entered the North American market by absorbing and merging webtoon platform ‘Tapas Media’ and web novel platform ‘Radish.’ Piccoma holds the number one position in the Japanese manga platform market and expanded into the European market starting with France last year. This serves as a foundation to produce webtoons and web novels utilizing SM’s universe and distribute them on global platforms.

The fandom platform supports the global growth of ‘KakaoTalk,’ which currently relies on the domestic market. A fandom platform is a platform where fans and artists can communicate. SM operates the fandom platform ‘Bubble,’ and by adding a fandom platform-related tab to KakaoTalk’s content subscription service ‘View,’ global user inflow becomes possible. Additionally, various business expansions such as merchandise (MD), concert ticketing, live streaming, and IP licensing are possible.

Moreover, Kakao Entertainment has overcome its weakness of lacking strong music IP and artists through the acquisition of SM, thereby gaining diverse content competitiveness. There is also talk of Kakao Entertainment’s listing on the U.S. Nasdaq.

Meanwhile, Kakao plans to guarantee SM’s autonomous and independent operation and promote the SM 3.0 strategy. The SM 3.0 strategy centers on transitioning to a multi-production center and multi-label system, IP monetization strategies, global expansion strategies, and investment strategies, embodying the vision of ‘leaping forward as a fan- and shareholder-centered global entertainment company.’

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