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Kakao Entertainment Corp., a unit of South Korea’s top mobile messenger app operator, established its own content ecosystem including creation, production and distribution with active mergers and acquisitions.Kakao Entertainment, a merged entity of Kakao Page and Kakao M, logged sales of 1.2 trillion won ($1 billion) last year with help from 47 affiliates, near double the combined revenue of 629.8 billion won of the two units before the merger in 2020, according to filings to South Korea’s financial regulator.The strong performance helped Kakao Entertainment become the third-largest player in the country, following CJ ENM Co. and Hybe Co. The entertainment unit of Kakao Corp. aims to rank No. 2 with the planned completion of the purchase of a controlling stake in SM Entertainment Co soon.Kakao Entertainment was a just small player in 2015 as it had few significant businesses except for Podotree, a webtoon and web novel platform, which generated tens of millions of dollars in sales.AMPLE CASHBut it took just six years for Kakao Entertainment to become an industry giant as it utilized its ample capital to acquire movie and drama productions such as Moonlight Film Co. of Nameless Gangster: Rules of the Time, talent agencies including Management Soop Corp. of Gong Yoo, and music labels such as Starship Entertainment behind a girl group Ive. Ive (Courtesy of Starship Entertainment) Kakao Entertainment secured not only their intellectual property but also star directors and writers with the takeovers.The company is expanding its presence in the content industry. Drama series produced by its affiliates such as Business Proposal, Military Prosecutor Doberman, as well as Forecasting Love and Weather swept local rating charts. Among them, Business Proposal ranked No. 4 on Netflix’s top TV shows as of April 13, according to streaming analytics company FlixPatrol, becoming the company’s super IP, mega-hit content at home and abroad.Business Proposal was an exemplary content produced with the company’s vertically integrated system from story discovery to production. The series is based on a webtoon and a web novel of Kakao Page, while Kakao Entertainment planned to make them a TV drama and its affiliate Kross Pictures Inc. produced it.GOING GLOBAL WITH SM ENTERTAINMENTKakao Entertainment has been in talks to buy an 18.72% stake in SM Entertainment from its founder and top shareholder Lee Soo-man. SM Entertainment, the K-pop pioneer of the legendary Girls’ Generation, reported sales of 701.5 billion won last year.The acquisition is expected not only to raise Kakao Entertainment’s sales to more than 2 trillion won but also enhance its overall content power for the global market.Kakao Entertainment’s other future growth engines include Kakao TV, a streaming service founded in 2020. Kakao TV is an advertising-based video on demand, similar to YouTube, not a subscription video on demand (SVOD) like Netflix.Kakao TV’s accumulated views reached 1.6 billion with about 80 original content. Its users more than doubled to a monthly average of 7 million over the last six months from 3.4 million per month on average in 2021.“We will focus on planning and producing super IPs for overseas markets to become a global studio,” said Jang Sejung, head of content business at Kakao Entertainment.By Hee-Kyung Kimhkkim@hankyung.comJongwoo Cheon edited this article.
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