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[Exclusive] OTT streaming

Kakao joins OTT race with INISOFT acquisition

INISOFT is a video streaming technology firm established in 2001

By May 27, 2021 (Gmt+09:00)

Kakao joins OTT race with INISOFT acquisition

Kakao Corp. is entering the over-the-top (OTT) streaming market.

According to investment banking sources on May 27, Kakao’s entertainment and media unit Kakao Entertainment Corp. has acquired a 100% stake in INISOFT Co. at 25 billion won ($22.3 million).

Established in 2001, INISOFT is a video streaming technology company that in 2009 developed the Dice Player, a media player for Android devices. The company specializes in developing video streaming platforms, boasting long track records with overseas telecom companies and OTT service providers.

Its global and domestic clients include HBO and Microsoft of the US, NTT Docomo and Tsutaya TV of Japan, as well as CJ ENM of South Korea, according to INISOFT’s website.

Industry analysts say that Kakao Entertainment’s acquisition will mark the first step in developing its own OTT platform. Sources are reporting that the company is preparing the launch of its own service by 2022. The entertainment company is targeting an IPO by next year as well.

Previously, Kakao Entertainment’s content business model was largely limited to uploading simple clips on Kakao TV, a service linked to  KakaoTalk messenger, or selling clips to existing OTT service providers such as Netflix Korea and Wavve.

“Kakao has a truly wide range of original IP (intellectual property) content, yet its current business model has limitations in profitability. The acquisition can be interpreted as Kakao’s attempt to diversify its profit model,” said Shinyoung Securities analyst Yoon Eul-jeong.  

Kakao Entertainment has been acquiring a number of film and drama production companies including Kross Pictures Inc. and Sanai Pictures Co.

The company also has seven celebrity management agencies and four music labels under its umbrella.

Its library of webtoons and web novels is also competitive. The movie Space Sweepers, based on the Kakao webtoon of the same name, in February topped Netflix’s global list as the most-watched film of the month.

Space Sweepers is a Netflix original film based on Kakao's webtoon IP
Space Sweepers is a Netflix original film based on Kakao's webtoon IP


South Korea’s OTT market has been growing fast at an average annual rate of 26.3% from 2012 to 2020 when it reached 780.1 billion won ($698.4 million). Netflix Korea is the market leader with just over 10 million subscribers, followed by SK Telecom Co.’s Wavve with almost 4 million, CJ ENM Co.’s TVing with 2.65 million and KT Corp.’s Seezen with 1.68 million.

But Netflix Korea is facing a slump, according to the audience measurement firm Nielsen Koreanclick. The number of its monthly active users (MAU) was down from 8.99 million in January to 8.08 million in April.

On the other hand, the domestic OTT platforms have been expanding their user base. Wavve’s MAU grew to 3.7 million in April from 3.3 million in February, whereas TVing’s MAU is now more than 3 million versus 2.76 million in February.

Industry analysts are saying Netflix Korea's offerings have been stagnant since the mega-success of Space Sweepers, while domestic services are addressing viewers’ needs with drama series such as Taxi Driver on Wavve, starring Lee Je-hoon.

TVing is also expanding into sports broadcasting by obtaining exclusive rights to cover UEFA Euro 2020 matches from Korea.

With The Walt Disney Company’s OTT service Disney Plus expected to land on Korean turf in the second half of this year, market analysts are paying close attention to how each of the domestic OTT providers will react to remain competitive in the fast-growing market.  

Write to Min-ki Koo and Hee-kyung Kim at

Daniel Cho edited this article.
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