Game on for Kakao, LG U+

Mark Ranson/Ovum
31 Jul 2012

Mobile messaging service KakaoTalk, which has acquired a user base of 55 million since its launch in March 2010, is about to move into gaming.

Its creator, Kakao, plans to launch the tentatively titled Game Center service on July 30, 2012 (subject to change), and the move is likely to be a profitable one. The company recently launched its virtual currency, “Choco”, and Ovum expects it to pursue a free-to-play (F2P) business model in which digital item sales will be the main revenue stream.

Kakao is pursuing partnerships with industry-expert companies to help ensure the success of its gaming service. It is working closely with major Korean game company WeMade Entertainment to develop the Game Center; WeMade is also among Kakao’s largest investors. The initial group of approximately eight games is expected to come from developers WeMade, Barunson Creative, and CrzyFish.

The Game Center will compete with mobile carriers’ services, iOS and Android application stores, and existing game portals in the rapidly developing Korean game market. Korean MNOs have been largely dis-intermediated from the Korean mobile game market in the post-smartphone gaming market. Carriers are now looking to exploit new 4G mobile networks as they seek to re-establish themselves in the mobile gaming space. LG U+ is taking an especially innovative approach, having recently launched the C-games cloud gaming service.

Gaming should prove the key to profitability

Kakao’s most obvious strength is the scale and nature of its loyal and wholly mobile user base: on average, 24 million users now exchange a total of up to 3 billion messages per day over mobile devices. When the Game Center launches it will be easy for Kakao to bring it to users’ attention and to tempt them to try the new service.

Companies such as China’s Tencent have had success with this strategy of gaining scale and loyalty through a core messaging service, and then using that messaging service to promote new services that generate higher revenues.

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