Web 2.0 Asia

One of the best mergers happened in the history of Korean web industry was between Naver, a Korean portal, and Hangame, a popular online gaming site. Naver acquired Hangame to form NHN Corporation in 2000. Until this time, Naver had been considered a fledgling, promising web portal at best. Naver was fairly popular, but was a #4 or #5 player - with the solid leader being Yahoo Korea which looked nearly impossible to be dethroned.

But it turned out Naver was very smart, as the company kept investing the cash earned from its Hangame service into Naver search to make the search service better and better, until it became somewhat of a monopolizing web search among the Koreans. Someone at Naver, most likely its founder and Chief Strategy Officer Haejin Lee, had a piercing eye through to the future and saw that search was going to be the biggest killer app of all time on the web. Buying Hangame was a well calculated tactic as improving search required funding and Naver was yet a publicly traded company, though the company just finished $10mm funding. Hangame wasn't cheap at the time either (valued at some $60mm, with Naver worth about $250mm at the time), but Naver decided to make a big bet on Hangame - and the combined company took off from there.

I recently read a story on EST soft, a Korean software company that recently went through IPO (getting itself on the rare list of tech IPOs lately). EST Soft is best known for its Altools suite of free software. EST charges corporate customers, but still the revenue wasn't enough for them to go public. So they started an online game service, including Cabal Online. Gaming service made up about 2/3 of EST's total revenue last year, and without the revenue contribution of game service, EST Soft wouldn't have been able to go public successfully this year.


So, from the cases of Naver and EST Soft, one is faced with a question: Is gaming service the proven cashcow for web and software companies? At least in the Korean market, the above statement has seemingly held true. Game services has been to web/software companies what Jonathan Papelbon has been to Boston Redsox - namely, a trustworthy reliever who could help them win.

It's no secret that web services are very difficult to monetize, and I assume this is not the case for only the Korean market. When faced with a right business model, folks have resorted to things like Google Adsense, freemium, and mobile service. Well, how about adding to the list a gaming service, as a sideways cashcow business that can assist the main business by injecting cash? What do you think? Is this a good strategy, or a less desired strategy that only diverges the company's business model? Will this work in other markets like China or the US?

EDaily of Korea (note: link in Korean) announced that Mr. Brian Kim, the ex-CEO of NHN, has started a new company that seems to have its eyes on "the next generation of blog service".

NHN is the company behind Naver, Korea's #1 portal and the world's #5 search service (according to Newsweek). Brian was one of the two CEOs of NHN, and his departure isn't such a small deal for Korean web industry - Think Sergey Brin spinning out of Google for a new venture.

The new company, called IWILab, is apparently based in Mountain View and Bundang, Korea. According to EDaily, Brian thinks that blog service is one of the (rare) weak spots of Google, and therefore thinks he has a chance in the global market if he can build the next-gen blog service. For this, Brian is said to have cashed out some of his NHN stocks, worth about US$ 35 million - I'm not quite sure if a blog service startup would require that much of money, at least initially.

Brian's ShouldDo page says he should "forget about Naver and lead the internet world through Iwilab."

As a person who's already in the blog business, I welcome a new competition. Though it remains to be seen if Brian's new venture will make a huge splash in the blogging service market, I wish Brian the best with his new comany.