Kakao's Risky Challenge

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It has been three months since Kakao, a service company of Kakao Talk, presented Kakao Page, a marketplace of mobile contents.

Kakao that possesses a huge user base in Kakao Talk promoted Kakao Page as a contents platform where creators of the contents can directly sell their products. Recently, more than 100 millions of people use Kakao Talk.

Even though Kakao Page highly received credit for potential abilities as a platform of charging contents when launched, its outcome is below expectations now. Kakao stressed several times that it's hardly accomplished in short term to complete building up an ecosystem of charging contents, but recently, Kakao itself admits trial and error of the system.

Admitting the trial and error, Lee Seok-woo, the co-CEO of Kakao, promised the second half year's massive reorganization in public when he attended CP meeting of Kakao Page.

According to Digital Daily, one company that entered in Kakao Page told on July 2 that the expectation for the market in early stage of launching was changed into disappointment.

Digital Daily also reported there will be no company which reaches the break-point by selling the contents in Kakao Page. That is, it is hard to earn 10,000 won as profit of investment 1000,000 won.

One CEO entering in Kakao Page said "You should not expect sales in Kakao Page and can earn only centesimal investment.". Another CEO also told "If you invest 50 in Kakao Page, only 1~2 will be earned. There will be no company to reach the break-point."

There are several reasons why Kakao Page cannot satisfy the expectation.

First, Kakao excessively entrusted production of the contents to CPs without market activation plan. Kakao shoud have enlarged marketing and investment in oder for CPs to make sales.

Second, there are many holes in the platform itself, which means Kakao Page is not that attractive service for users. It was pointed out that even the creators of the contents had difficulties to make the contents for Kakao Page.

Recently, Kakao admitted its errors at the meeting with related companies and stated that it aims at completing the renewal of Kakao Page until this September.

Kakao Page is about to have massive renewal as early as this September. Kakao officially stressed that it plans the renewal of user interface of Kakao Page, payment options, fee based policy and so on.

The main issues of the renewal of Kakao Page are introduction of new payment service, opening of Apple iOS service, and strengthening the marketing.

Finally, it is also one of problems that the users are reluctant to pay money to use the contents. It is very rare for Korean users to buy digital contents other than game, music and cartoon. The big trend is using the free contents so this tendency of the users cannot be changed all at once by the establishment of Kakao Page.

Is Kakao able to change the current situation? The second challenge of Kakao are attracting national wide attraction.