KakaoTalk, Line have a message for IndonesiaKorea’s pioneering mobile messaging apps have taken their oversized emoticons to Indonesia, intent on breaking the dominance of BlackBerry’s BBM messaging service in one of the world’s most active social media markets.
Kakao has hired pop stars and Naver unit Line has partnered with Samsung Electronics in a country whose capital, Jakarta, boasts more Twitter users than any other city, according to researcher McKinsey & Company.
BBM has long been Indonesia’s most popular messaging app, with Facebook’s $19 billion buyout target WhatsApp in pursuit. But KakaoTalk and Line have connected with younger users by also offering voice calls, games, shopping, merchandise and stickers, or message-conveying cartoons.
Indonesians younger than 30 make up more than half of the country’s 240 million population. Only one in five Indonesians use smartphones, making the country a prime growth market for app makers. Estimates put smartphone use at 50 percent by the end of the decade, by which time messaging apps’ global revenue could exceed $24 billion.
“Indonesia is probably the most competitive mobile messenger market right now. And it’s a key market we want to win,” said Kate Sohn, vice president of Kakao’s global business development division.
KakaoTalk has gained 16 million users in just one year in Indonesia after Kakao signed an advertising deal with Big Bang and started offering unlimited KakaoTalk data through carrier Telkomsel.
KakaoTalk, whose maker plans to list in Korea next year, was Indonesia’s 37th-most downloaded free app on Apple’s App Store as of March 7 and 14th on Google’s Google Play, according to researcher App Annie.
BBM was first on both since becoming available through those stores in October. Broadening compatibility freed BBM users from BlackBerry handsets, and left BlackBerry with just 5 percent of Indonesia’s smartphone market in fourth quarter last year, down 34 percent year-on-year.
“BlackBerry’s falling domination has made Indonesia more dynamic and created a big opportunity for new entrants,” said Kakao’s Sohn. “Indonesia has the right mix of big scale, a growing number of smartphone users and a market in flux.”
Line entered Indonesia in early 2012 and has 20 million users, thanks partly to it being pre-installed on some smartphones running Microsoft’s Windows Phone and Google’s Android operating systems, including models from Samsung.
Samsung accounts for about one in three smartphones sold in Indonesia, and from this month its entire Galaxy range will have Line pre-installed.
Line also is likely to be pre-installed on Nokia’s first Android smartphones targeting the low-end segment popular in emerging markets, and which researcher IDC expects to lead global smartphone growth.
As for global revenue growth, Macquarie said in a March 5 report that income from advertising, games and stickers could push messaging apps’ revenue to $24 billion within three years, rather than the $10 billion the finance house forecast in September.
The proliferation of messaging apps has spawned features such as stickers and in-app shopping as makers seek to be different. It has also resulted in users downloading multiple apps to accommodate contacts’ preferences.
KakaoTalk’s journey up the ranks will also see it contend with WeChat from Tencent Holdings. Tencent established a joint venture last year with Indonesia’s biggest media group, Global Mediacom, and is advertising heavily on television.
“It is interesting to see the battle of messenger apps in Indonesia because it’s an open field,” said Enda Nasution, social media analyst and founder of social media platform Sebangsa Bersama.
Leader BBM looks far from willing to surrender. The market appears so important to BlackBerry that the company has code-named its low-end smartphone Z3 “Jakarta” which it plans to launch first in Indonesia next month.
“Indonesians still have a strong emotional attachment to BBM. Though its growth rate appears to be slowing, many think it won’t completely go away any time soon,” said Line Plus’ Cho.