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THE INVESTOR
December 15, 2018
Big Reunion

The Boardroom

Kakao CEO hints at strategic shift in O2O business

  • PUBLISHED :November 10, 2016 - 13:47
  • UPDATED :May 02, 2017 - 13:45
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[THE INVESTOR] South Korean internet giant Kakao is reshaping its money-losing online-to-offline business by focusing on mobile services only while creating a new platform that connects all service providers with customers.

Speaking on a conference call on Nov. 10 following the company’s third-quarter earnings report, CEO Rim Ji-hoon hinted that Kakao will focus on what it can do best rather than doing everything from A to Z by itself.

“Our O2O business will be split into mobile and platform sectors,” he said. “We have concluded that doing everything on our own is inefficient.”


Kakao CEO Rim Ji-hoon



He added the company plans to run a new platform for other O2O service providers like the For Kakao game platform, through which its partners can publish their mobile games.

He didn’t give further details such as the launch schedule of the platform.

In line with the strategic shift, the company said it has canceled the planned launch of KakaoHomeClean that connects housekeepers with users.

Kakao has rolled out a series of its own O2O services such as KakaoTaxi and KakaoHairshop over the past year, but they have not yet been contributing to the company’s profits overall.

In the July-September period, Kakao’s operating profit soared 87 percent to 30.2 billion won (US$27 million) from a year ago, but excluding the profits from its music streaming service Melon, the company’s own profit was 10.4 billion won, a 60 percent plunge on-year.

The company said the number of subscribers of KakaoTaxi, its taxi-hailing service, has exceeded 11.5 million since its launch in March last year. The cumulative incoming calls have also reached 210 million.

Despite the impressive numbers, Kakao is struggling to build a profit model with the services, with almost all of them being offered free of charge.

In a bid to beef up the taxi-hailing service, the company plans to release a new version for corporate clients in the coming months.

By Kim Young-won (wone0102@heraldcorp.com)

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