Line, Kakao ignite Korea’s character market boom

Published : Jul 14, 2016 - 16:22 Updated : Jul 14, 2016 - 16:39

South Koreans have recently been in a frenzy over characters created by two rival mobile messenger apps -- whether it is Line’s blank-faced bear named Brown or Kakao’s Muzi, who looks like a rabbit but is actually a radish in a costume.

Eyeing new market potential, Line Corp. and Kakao Corp. have brought their signature characters -- initially introduced as virtual stickers used on the messengers apps -- into the physical world where they have been reborn as character merchandise.

Though Line, a subsidiary of Korea’s top Internet portal Naver, entered the character merchandising business ahead of its competitor, Kakao is following in Line’s footsteps.

The entrance to the Line Friends shop in Myeong-dong, central Seoul (Naver)

Both firms have been expanding flagship stores that sell stationery, toys, household goods, and food featuring their characters. They are imprinting their characters onto cosmetics, clothing and food in partnership with local and global consumer goods companies as well.

Line’s character business unit Line Friends Corp. currently operates 22 official character merchandising shops, 12 of which are in Korea and the rest across Japan, China, Hong Kong and Taiwan, according to the mobile messenger operator. It also runs its own online store.

The biggest Line Friends shop is in Itaewon, Seoul. Like other Line Friends stores in Seoul, many of its customers are tourists from Japan, Taiwan, Thailand and Indonesia where Line is the dominant mobile messenger.

Earlier this month, the company even opened its first outlet store, selling its character goods at the Shinsegae outlet mall in Paju, Gyeonggi Province in Korea, where it offers discounts of up to 70 percent.

Line has also collaborated with other companies across diverse sectors. To name a few, it has featured its characters on cosmetics made by Missha, introduced character jewelry through J.Estina and printed its beloved bear Brown onto CJ CheilJedang’s salmon cans.

Diverse household goods featuring Line characters are on sale at Homeplus, a local discout supermarket chain (Yonhap)

“Over the past few years, we have discovered the commercial power of characters and we plan to continually expand our business in the future,” Line Friends’ spokesperson Kim Hyun-ji said.

As a fore-runner in the character merchandising business, Line does not perceive Kakao as a rival in the segment, as its performance so far is better than that of Kakao, Kim said.

Line Friends Inc., established in March 2015, racked up 22.5 billlion won ($19.74 million) in sales during the first quarter of this year, more than double the 10.3 billion won in sales that Kakao Friends Corp. posted during the same period.

Nonetheless, Kakao is quickly catching up. Its character business unit Kakao Friends Inc. runs 17 character stores across Korea as well as an online shop.

Customers look around the newly opened Kakao Friends Flagship Store in Gangnam, southern Seoul (Kakao)

Like Line, it has also been working with numerous partners such as local cosmetics maker The Face Shop, U.S. beverage giant Coca-Cola, local toy manufacturers, stationery brands and others to bring its characters to the wider public.

Last Sunday, Kakao Friends Corp. opened a three-story flagship store in Gangnam, southern Seoul, featuring some 1,500 character items and a cafe that sells drinks and pastries featuring the mobile messenger’s latest character Ryan, a lion who has no mane and is frustrated by his bear-like looks.

It has been more than a week since its opening, but the shop still has a long queue for those looking to get in -- it reportedly takes around an hour to enter the store. More than 10,000 people are estimated to visit the store daily.

Coca-Cola`s Glaceau Vitamin Water imprinted with Kakao Friends characters (Coca-Cola Korea)

Kakao Friends said it plans to continue expanding its character businesses. “We will continue building more flagship stores and partner with diverse consumer goods companies in the future to reach more local consumers,” said Kakao Friends’ spokesperson Lee Soo-kyung.

As for its perception of Line, Kakao sees its competitor as not a rival but rather a partner in expanding the country’s character merchandising business as a whole, Lee said, adding that Line’s target users are global while Kakao mainly focuses on Korea.

Led by companies like Line and Kakao, Korea’s character market has grown by 36 percent since 2011 to stand at 9.8 trillion won as of last year, the fourth-largest in the world, according to the Korea Creative Content Agency. The local character market is expected to reach more than 11 trillion won this year, the agency said.

By Sohn Ji-young (jys@heraldcorp.com)