Why KaKao Talk is not Venturing into Mobile Casino Games

Kakao Talk, South Korea’s most dominant mobile messenger app has recently declined that they are planning to venture into the mobile casino business. The clarification from the company arose after rumors were rife that the online based company was planning to diversify parts of its operations into mobile casino market.

Kakao Talk is widely believed to be integrating mobile casino business into their operations to boosts their declining profits. According to a credible report from Juniper Research, it is predicted that revenues from free instant messaging apps will rapidly decline, even while messaging traffic is headed towards the opposite direction. However, the revenues generated from these free to use instant message application is forecasted to be less than one percent of income generated by the mobile messaging system. Monetizing such free message services is likely to be a significant challenge for Kakao Talk. This is the same reasons as to why Telco operators are now beginning to realize that revenue diversion towards avenues such as mobile online gambling is playing an increasingly larger role to boost Telkom operator’s revenue base.

Mobile casino games that integrate with web 2.0 technologies such as the collaborative social networking sites have become a trend globally. Kakao’s entertainment platform linked to the messenger app the “Kakao Talk” boasts of around 38 million users who are likely to provide a stable customer base for the company to launch their mobile casino business.

However, the company through the media has dismissed these rumors of venturing into mobile casino business but instead they would be tapping into web games. Parts of the gaming titles that Kakao Talk is planning to deploy with their product provision include traditional games such as “Baduk” and “go-stop.” Baduk is a very popular card game in Asia Pacific region while go-stop is a Korean card game.

South Korea’s casino business has a massive potential for growth. To begin with, South Koreas Casino industry has been under the spotlight recently because the government is seeking to expand the number of casino establishment in the country. There are 17 brick and mortar operated casino business in South Korea with 16 of them being foreign owned.

According to renown Online Gambling Consultant Melissa Blau, physical casino is poised to provide an exciting challenge with social casino makers. However, the main worry is that what if the regulators start to get worried about the dangers of addiction likely to be presented by social casino games, the same way they are also concerned with physical casino gambling.

Mobile Social Casino market games are soaring and today it has emerged as the fastest growing game genres on social networks. Mobile platforms are exploding consumer growth, and courtesy of the projected revenue growth of around $2.9 billion, mobile social casino games have transpired as a staple among casual gamers globally. In the year 2015 it is being estimated that gamers are going to spend an incredible $4.4 billion across technology Platforms.

Social casino games inhabit a unique market segment inside the social games arena, and the games present to the audience an allure for unique game mechanics. However, this rapidly growing gaming niche comes with its sets of challenges and opportunities as well.

According to Price Water House Coopers (PWC) a leading consultancy company, in their comprehensive report “Global Gaming Outlook”. PWC is exploring challenges and opportunities in mature markets. PWC report centers on regulation, legislations, and potential impacts that are likely to affect online casino gaming. According to PWC projections, mobile casino gaming market revenues across the United States, Canada, Europe, Middle East, Asia Pacific, and Africa are poised to increase at an annualized compounded rate of 9.2 percent for the next five years. These revenues are likely to hit the $180 Billion mark by the end of the year 2015.

Even though spending in mature markets such as the United States is set to rise by 5 percent per annum, dramatic growth is going to be witnessed in Asia Pacific region with a projected 18.7 percent annual growth rate compounded annually to hit $$79.8 Billion. This is almost half of the market share from a single region.

As a matter of fact, Asia-Pacific region is considered to be the growth engine for mobile casino games. This growth is attributed to three primary factors:

• Exceptional economic growth that expands the middle class meaning that there is more disposable income for activities such as gambling

• The middle class are usually attached to leisure activities such as a social way of relaxation

• Increase of opportunities presented to consumers through rapid deployment of modern technologies such as fourth-generation Long-term Evolution (LTE) networks

Future of Online Casino Business

PWC report has outlined that four key change drivers will shape mobile casino games over the next four years and these include:

Harnessing cross-border liquidity: It is believed that government regulations over online gambling will continue evolving, and in every jurisdiction the principal question is as to whether the existing players can satisfy the insatiable appetite of potential online gaming customers. Governments are therefore forced to seek long-term solutions by enabling cross-border gaming so that liquidity may flow between different territories.

Realistic Taxation Levels: Even though tax revenues coming from online gaming is mouthwatering. The government must be meaningful and in setting up a much more balanced tax income for both the mobile operators and customers.

Integrating online casino gaming with social networking

It is in light of the above facts that perhaps Kakao Talk regardless of their customer base and despite the dwindling profit margins is still reluctant to venture into mobile casino gambling as a diversification strategy. There is a huge probability that Kakao Talk executives have initiated a wait and see attitude before they could fully commit their resources towards the rumored venture.

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1 Comment

  1. yes i agree, concerning that matter, i myself using a japanese social messenger called “Line Messenger”, million of Asian use it, there’s a various game on it, such as line get rich, etc. And the top of it, “Line messenger” made its own payment method, affiliate with google, it made a payment method called “Linepay”. So if the “kakao” has decide to improve their business into mobile gambling, it should make it own payment method first. So it will more integrated with user, and more simpler.

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