Kakao satisfied about increased usage time despite complaints

Kakao CEO Chung Shin-a speaks during the "If Kakao" conference in Yongin, Gyeonggi Province, Sept. 23. Courtesy of Kakao

Kakao CEO Chung Shin-a said Friday the company’s flagship mobile messenger KakaoTalk showed nearly a 10 percent increase in users’ average app usage time after a Sept. 23 update that sparked nationwide complaints, describing the change as “a positive shift” in the app’s traffic quality.

During the company’s earnings call for the third quarter, Chung said the company confirmed rebounds in major indicators after the update, with the average daily usage time for KakaoTalk increasing from the third-quarter average of 24 minutes to nearly 26 minutes after the update.

“We believe it is meaningful that the usage time has begun to show signs of rebound from its steady downtrend,” Chung said. “Even during the exceptional circumstances of the COVID-19 pandemic, the average daily usage time per user increased by only about 10 seconds, so we believe that increasing the usage time on a messenger platform is a highly challenging task.”

On Sept. 23, the company launched a sweeping update to the interface of the country’s largest messaging app, replacing a list-style format for the app's "Friends" tab with a feed that shows photos from contacts' profiles, similar to Instagram.

Since KakaoTalk automatically saves contacts through user phone numbers, this triggered complaints that the app became “a social media app that follows hundreds or even thousands of unwanted contacts.”

Users scrambled to find ways to roll back the function while criticizing the company for exploiting KakaoTalk’s status as an essential piece of digital infrastructure in Korea. Following the announcement of the update, Kakao’s stock fell 4.67 percent to 63,300 won, then dropped another 6.17 percent to 59,300 won on Sept. 26.

Despite the backlash, the update eventually led to a longer average use time as people began scrolling through the new feed.

“While traffic in the 'Chat' tab remains stable, the usage time in the 'Friends' and 'Now' tabs has increased by more than 10 percent compared to the third-quarter average after the update, as users explore and discover content,” Chung said.

“We see this as a positive change that the platform’s traffic quality has improved, as user activities, which had been concentrated in chat rooms, are now expanding to other tabs across the platform.”

To address user complaints, Chung said the company will refocus on KakaoTalk’s core messenger functions. Kakao said it will continue improving the service by incorporating user feedback and complete the revamp within the fourth quarter.

On the left is an updated feed with photos from contacts, and on the right is the older list-style contacts format for KakaoTalk. Graphics by Cho Sang-won

Kakao posted 2.09 trillion won in sales and 208 billion won in operating profit in the third quarter of this year, up 9 percent and 59 percent year-on-year respectively, a new quarterly earnings high for the company.

Kakao attributed the improvements to solid sales growth in KakaoTalk’s business messaging, which showed a 22 percent year-on-year increase in revenue.

Platform businesses, such as KakaoPay and Kakao Mobility, posted 24 percent year-on-year growth in sales to reach 452.7 billion won. KakaoPay saw solid revenue growth in its securities and insurance units, while other data-based platform services logged stable results, the company said.

“This year, Kakao has focused on improving the efficiency of its governance while strengthening its existing business portfolio,” Chung said. “From next year, we will demonstrate how AI will evolve into the most important new revenue source that ensures sustainable growth.”