Park Ji-won is a writer for The Korea Times who has been covering a wide range of topics from Korea’s culture to its politics. An avid journalism enthusiast to the core, Ji-won brings a thoughtful and unique perspective to every topic she covers. On weekends, you'll often find her contemplating life’s purpose on a yoga mat — with a cup of quality tea in hand. A native Korean speaker by birth and fluent in English through her work, she went to college in Japan and is learning Chinese and French — hoping to add Polish, Russian and Thai to the mix.
NHN's expansion forces out small players
By Park Ji-won
By Park Ji-won
NHN is facing growing criticism for monopolizing not only the Web portal market but also the app business for mobile phones and tablets, using its dominant status as the country’s largest search engine.
The operator of Korea’s dominant online portal Naver has expanded its business areas to online information services markets, including shopping, real estate, web fiction and music, marginalizing many small players in the process.
About 89.8 percent of smartphone subscribers visited NHN’s portal, Naver, or used its search app at least once between June 30 and July 6, according to mobile research firm Rankey.com.
Most of the users searched information by visiting Naver’s online site.
“In the mobile search segment, Naver doesn’t have as much influence as it does on the Internet. It struggles to expand its market share in the mobile industry,” said an official at NHN, who declined to be named.
However, Naver requires users to install its apps for various services, including games, cartoons, brokerage and even real estate.
The corresponding figures for visitors during the same period were 57.6 percent for Google, 47.6 percent for Daum and 25.8 percent for Nate.
According to market insiders, some 90 percent of smartphone users in Korea have phones with Google’s Android system, such as Samsung’s Galaxy phones. That makes people believe that Google is in a better position to compete with other search engines because its app is readily available in Android phones.
However, NHN is unrivaled. Researchers say more than 80 percent of smartphone subscribers in Korea are using Naver.
In the instant messenger segment, NHN’s Line attracted 180 million users at the end of June, only one year and seven months after its launch. It easily broke the record of Kakao Talk, the No. 1 instant messenger service in Korea, which reached 100 million users in three years and three months. Market insiders say Line is expected to reach 200 million users by August.
“Naver was able to dominate the mobile search market very easily because its chief competitor, Daum, was slow in reacting to the fast-changing market, especially in the search app segment,” said analyst S.T. Hwang at Hana Daetoo Securities.
“Even though Google’s search engine app is readily installed in Android devices, Korean users feel Naver provide more user-friendly services because they are used to Naver’s integrated search system.”
Commenting on NHN’s future business strategies, Hwang said that the firm will allocate more of its resources to Line to surpass Kakao Talk.
“Even though NHN is drawing media criticism for its aggressive business expansion, it doesn’t listen. It thinks it still has many businesses to do, including the instant messaging one,” he said.
NHN’s growth path
As of June 12, NHN’s 52 affiliates posted some 13.9 trillion won in revenue this year, ranking 14th among Korean firms, according to Korea Exchange. That means it has become as powerful as other conglomerates such as Samsung Electronics, Hyundai Motor and POSCO.
Lee Hae-jin, 46, who founded NHN, is now serving as chairman of NHN’s board. He is now working as CSO in the firm after introducing a professional management system.
He first named the firm ‘Navercom’, then changed it into NHN after merging with Hangame.com, then leading online game portal in Korea.
After the firm was listed on Kosdaq, it continued to keep its status as the biggest Kosdaq firm in terms of market capitalization. It shifted the stock to KOSPI in 2008.
The leading search engine Naver.com was born in Samsung SDS, which have venture start-ups inside the company. It started its service in 1999 four years after Daum.net launched its portal in 1995.
In the late 1990s, foreign-based portals were getting popular after entering the Korean market, such as lycos.co.kr, yahoo.co.kr., until Korean portals became mainstream with customer-friendly functions.
While Daum gained popularity by promoting its free e-mail service, hanmail.net, in 2002, Naver promoted its answering-focused search page, “jisik-in,” which is similar to Yahoo! Answers or ask.com.
NHN has since greatly expanded its online business.
The Internet giant had 2,110 employees as of March 31, 2013, with an average work period of 4.7 years, according to Dart. The firm paid some 613 million won each to directors in the firm on average.
NHN plans to separate Hangame from Naver on Aug.t 1. The operator of naver.com will be renamed as “Naver Limited Corporation,” while the operator of Hangame.com will be renamed as “NHN entertainment,” according to the company.