Videoconferencing app provider Gooroomee struggles despite demand surge

Published : Apr 21, 2020 - 17:03 Updated : Apr 21, 2020 - 17:26

At the beginning of the COVID-19 epidemic in Korea when people suddenly had to embrace remote working and social distancing, they turned to well-known tools provided by international tech companies, such as Google’s Hangouts and Microsoft’s Skype.

The biggest beneficiary of the increased demand was probably Zoom, a Nasdaq-listed startup that develops videoconferencing tools. Downloads of Zoom and other similar tools soared and the sudden popularity more than doubled Zoom’s share price. That was before “Zoom-bombing” and hacking concerns quickly arose.

Although Korea has been reporting fewer and fewer confirmed cases of COVID-19 this month, the country decided to extend social distancing until early May, while kicking off the new school year entirely online in phases from April 9.

SMEs and Startups Minister Park Young-sun joins startup founders and investors for an online investor relations session on April 3. (Ministry of SMEs and Startups)

Domestic alternatives

This sudden change where people are becoming comfortable with spending more time online is creating new opportunities for domestic videoconferencing and business communication tools.

While international big tech companies such as Google, Microsoft and Tencent, which was quick to roll out Tencent Meeting for its domestic and global markets after China went into lockdown, offer videoconferencing and business communication tools, in Korea it’s not mobile giants that are offering domestic alternatives, but smaller companies like Gooroomee and Jandi.

For videoconferencing tools particularly, big tech companies had little interest as Korea’s market had been considered small -- at least until the outbreak of COVID-19 forced so many people to stay at home,

“I don't think Koreans are a big believer of online video communication, preferring face-to-face encounters,” said Kim Hong-il, head of D.Camp, an accelerator backed by the country’s financial institutions. “I hope Korean startups can take advantage of this changing trend.”

And it appears that Korean startups are gaining traction. Gooroomee, a 6-year-old startup focusing on videoconferencing for education, appeared as a domestic alternative when the Ministry of SMEs and Startups had an event online with investors and startups as well as when D.Camp decided to do its signature monthly demo day online for the first time.

Lee Ryang-hyuck, founder and CEO of Gooroomee, said he has recently been receiving 50 phone calls a day from schools and various organizations seeking to prepare for online classes and meetings. The company previously received 50 inquiries in a typical month.

Despite slim market prospects, the company had bet on the country’s uniqueness, particularly Korea’s heavy load of studying. Even after the rigorous college entrance exam, Korean young people spend lengthy periods of time preparing for various exams for jobs. They often form study groups where they gather to put themselves in a strict environment. Gooroome offers online classrooms and online study room services in which users gather in front of their own cameras to sit down and study without much interaction.

“If that (the videoconferencing market) was the market I was aiming for, I would have not been able to continue until now. I just wanted to make a better online education environment,” Lee told The Korea Herald.

An online study group session on Gooroomee (Gooroomee)

Big challenge

With the newfound demand, Lee has received many inquiries, and even offers to sell the company. But the company, which has been running without outside funding, sees that translating the increasing demand into profit may not be that easy.

Lee of Gooroomee said the sudden interest in the company is welcomed, but as a startup the company finds it difficult to compete with big companies like Zoom that offer many services for free.

“Big companies like Zoom are armed with money and they can provide services for free, but for a startup like us, it is hard to keep up with them and we have to charge people to maintain the business,” Lee said.

“While people are embracing remote work and virtual classes, not many are ready to pay for such services,” Lee added.

Meanwhile, South Korea’s tech giants are ramping up efforts to catch up with growing demand for videoconferencing.

Line, a messaging app backed by Naver, has kicked off a marketing push for its videoconferencing function and LineWorks, a business collaboration tool, in earnest as it sees a surge in demand for its group call function, which also offers a videoconferencing function for free for up to 200 callers.

Kakao has no immediate plan to launch videoconferencing under its massively successful messenger. But Kakao’s affiliate Kakao Enterprise is developing a tool to introduce to the public later this year and is considering a videoconferencing function in their app.

“As a messenger app, we want to focus on that. I believe there are other players who devote themselves to developing videoconferencing services,” a Kakao official told The Korea Herald on condition of anonymity.

By Park Ga-young (gypark@heraldcorp.com)