Korean Messenging Giant Flirts With Social Casino Gaming

But spokesmen say this is "only a little bit" like gambling

South Korea's messenging giant Kakao Talk, which boasts a user base of 140 million smartphone owners and holds an estimated 90 percent of the Korean market, appears to be flirting with social gaming to boost flagging revenues, reports the publication CNet.
The problem is that making money from letting people send texts for free has proved expensive despite advertising opportunities, and the company has been losing net revenues over the past two quarters – 23 percent down in Q1 this year and a further decline of 62 percent to $17.75 million in Q2-2015.
Adding to the company's woes, Juniper Research has forecast that global messenging revenues will decline by $600 million to $112.9 billion over the next four years, driven by competitive activity, despite booming traffic.
To stem the outflow, Kakao has introduced online board games and gambling, CNet reports
Kakao is also mulling the launch of a series of online board games as early as next (October) month, and is looking to partner with local developers to offer head-to-head games like Chess, Baduk, and Go-Stop, a traditional Korean card game.
CNet notes that many of these games will feature elements of online gambling, which has historically been illegal in South Korea. The government recently relaxed regulations, although there are still restrictions, including a 300,000 ($258) won monthly betting limit per person and a 30,000 ($26) won limit per game session.
Kakao is being careful to avoid being perceived as a gambling company, with a spokesman explaining: "Users purchase game money and play each other using that money. It is a little bit like gambling, but there are limitations on how much you can bet on a single game and how much [game money] you can purchase."
Jay Park, a Seoul-based mobile contents analyst, says the next cash cow is mobile games, but the field is more competitive in social networking, and Kakao may be better advised to focus on online-to-offline services – offerings that lend themselves to users spending money offline.
Kakao says it is focusing on moving its business increasingly to mobile channels; mobile-related activity made up 52 percent, or 117.78 billion won of its business in Q2-2015.
"It is still [advertisements] and games that make up 90 percent of our revenues," a spokesman revealed. "Within those two, especially with advertising, we are trying to move our revenue source from PC to mobile." He added that revenues are split 60-30 between advertisements and games with the remainder coming from a variety of other sources.

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