[mobidays]km-report mar, 2015

KM REPORT 2015/03The Love Triangle of the Games Market, and their Inside Story

Mobidays [ KM report ]

Mobidays is a specialized mobile marketing company,making every effort to have proper understanding of mobile market and to activate mobile eco-system.

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[Mobile Advertisement Research Institute: MARI] collects and studies domestic and overseas mobile related information and issues ‘VEUM’ (Very easy understanding of mobile) a main column, and ‘KM report’ a monthly trend report.

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2014/08 2014/09 2014/10 2014/11 2014/12 2015/01

2015/02

초연결 시대

단 하나의 플랫폼!

2015/02

1

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1. Spotlight on Fintech!: Domestic Market’s interest on Fintech - Restructuring of the regulations ignites Fintech - ‘Cooperation’, a key word in Fintech - Telecommunications companies prepare for entry into the Fintech Market - Foreign Companies Expanding their Business in Korea - Biometrics, Fintech’s partner

2. A well-made Content Overpowers Ten Companies

3. ‘A Work of God’ in the Games Market

4. Mobile Market Key Point

- Massive Traffic Move to Mobiles - Smartphone, a Must-Have-Item - Mobile Shopping Era!

Domestic Issues

Spotlight on Fintech!: Domestic Market’s interest on Fintech1 Restructuring of the regulations ignites Fintech

The Financial Services Commission push for ‘IT • Finances Fusion Support Plan’

- In order to stimulate various financial transaction methods and products that utilize IT, the obligation for using existing certificates and CC certified products was terminated. - In order to guarantee no harms are inflicted to financial consumers, non-financial companies such as IT firms will be allowed to legally become in charge. Moreover, the current minimum amount for application of liability insurance, 1~ 2 hundred million won, needed for consumer compensation will be highly raised. - The current offline oriented system will be reestablished to aid on • offline fusion and mobile services

- The current electronic financial business with 7 business sectors was reduced to 3~4 categories - The limit on minimum capital for electronic financial businesses will be lowered more than 50% from the current 5 hundred million ~ 2 billion won. - Registration conditions for prepayment • PG (Payment Gateway) will be eased and small scale electronic financial business units will be newly established.

- Limits on the issuing of denomination bounds for registered electronic payment means, currently at 2 million won, will be terminated and will be converted to a regulation system of 2 million won per day and 5 million won per month. - The daily credit line for electronic debit payment means such as Yelopay and PayPal are increased to 2 million won and thus payments through mobiles are expected to increase as well.- Solo issuing of mobile cards are now allowed and credit cards in the form of app cards can be issued.- Loan of funds of 200 billion won or direct investment through Industrial Banks • Corporation Banks, Installs of Fintech support centers, and improvements of the integrity standards system for combined management licensees will be made as well

Obligation for using certificates and CC certified products terminated!

Reorganization of the Electronic Financial Business Market for Fintech Start-up

Increase of Charge Limits and Usage Limits of Electronic Payment Means

Source 2015.01.27 etnews Fintech Promotion…. Vast changes to electronic finances 3

Spotlight on Fintech!: Domestic Market’s interest on Fintech1 ‘Cooperation’, a key word in Fintech

LINE strengthens mobile payment technology by taking over ‘WebPay’,

X

- LINE Corporation, a Japanese subsidiary company of Naver, took over ‘WebPay Holdings’ in order to strengthen their ‘LINE Pay’- WebPay Holdings is a company established in October 2013 and runs a credit card service, WebPay, that is available on PC and mobiles- LINE plans to increase and strengthen LINE Pay’s functions through WePay’s payment system technologies and know-how’s. Moreover, LINE plans to solidify life platform infrastructure by increasing the size of their business.

Samsung Electronics takes over ‘Loop Pay’ to go against Apple Pay!

- Samsung Electronics took over ‘Loop Pay’, known to be a startup of American mobile payment solution. - Loop Pay is a company with the patent technology of MST, Magnetic Secure Transmission, and according to Nielsen, a market research institution, there are over ten million stores in North America in which mobile payments through Loop Pay is possible.- Loop Pay’s MST technology confirms payments by placing instruments with credit card information near magnetic payment readers and thus allows stores to use their existing card readers without replacing or increasing the number. - The business sector expects Samsung Electronics to go against Apple’s Apple Pay by taking over Loop Pay.

Source 2015.02.10 YonHapNews Naver LINE takes over Japanese WebPay Holdings…. Strengthens LINE Pay 2015.02.19 DongA News. “Stop Apple Pay” 3 reasons behind Samsung Electronics’ takeover of Loop Pay

Image : techdissected.com

4

Spotlight on Fintech!: Domestic Market’s interest on Fintech1 ‘Cooperation’, a key word in Fintech

NHN Entertainment launches easy payment service for e-commerce over borders- Woo-Jin Jung, the CEO of NHN Entertainment, revealed that the 150 billion won increase in capital from issuing new stocks will be used for easy payments and e-commerce over borders. - NHN Entertainment plans to release their easy payment services within the first half of this year and to finish connecting bases in China, Korea, Japan and the United States within the year. - They have taken over shopping e-commerce companies such as Bee 3 Stars (US), Accommate (China), Sava Way (Japan), and Godo Soft (Korea) in 2014 and will focus on gaining affiliate stores, to make use of their easy payment services, and users.

+ + +Terminal Infrastructure Expansion

Payment Processing, Affiliate Stores Regulation PG(Payment Gateway),

VAN(Value Added Network)Calculations Responsibilities

New Contents Expansion

Take Over of a Share of Mobile T-Money Operation Company ‘T-Monet’

Contracts business cooperation with KB Card to collaborate in Fintech Business

- NHN Entertainment took over 24.2% share of T-Monet (Hundred thousand stocks, 5 billion won in total) - T-Monet is a electronic payment system development company and runs businesses such as mobile T-Money, online cash charges, payments, car sharing, and online certificates. - Through investments in T-Monet shares and businesses cooperation contracts, NHN Entertainment was able to achieve technological skills and know-hows in the electronic payment category

- Through this contract, NHN Entertainment and KB Kookmin Card are planning to strengthen their cooperation in various areas such as the release of easy payment services, supply of offline easy payment solutions, establishment of NFC infrastructure for vitalizing mobile payments, release of smart cards with O2O services, and planning of foreign business based on Fintech

Korea Cyber Payment

Source 2015.02.04 etnews NHN Entertainment “New Business will start with simplified payments and end with cross borders”2015.02.12 zdnet NHN Entertainment – KB Kookmin Card, Fintech Cooperation 5

5

Spotlight on Fintech!: Domestic Market’s interest on Fintech1

Source 2015.02.02 etnews etnews KG Inicis signs a capital partnership with NC Soft2015.02.05 etnews Hana Bank and Daum Kakao launch a Fintech joint business

‘Cooperation’, a key word in Fintech

KG Inicis and NC Soft sign a capital partnership

- KG Inicis, an electronic payment company, signed a capital partnership of 45 billion won with NC Soft, a games development and publishing company. - Both companies plan to start Fintech TFT and to develop various business models such as online payment markets, O2O (Online to Offline), and internet banks specializing in the commerce area.

- KG Inisis has transacted over one trillion won with hundred thousand affiliate stores yearly.- Investments in certification terminals needed for offline expansion.- Acquisition of security deliberation using NFC(Near Field Communication) card contacts.- Establishment of the technology and infrastructure needed for the easy pay service K Pay’s O2O market entry.- A global network to places such as North America, Europe, Japan, and Taiwan secured through NC Soft.

KG Inicis and NC Soft sign a capital partnership

Woori Bank and KT sign a business cooperation contract of Internet of Things - Fintech

Hana Bank and Daum Kakao launch a joint Fintech business - Fin Tech Vitalization

- Discovery of united and complex services

- Construction of business models and platforms

- Development of asset management secured loan managing system using IoT technology- Development of location based finance products and customer services using beacons- Joint cooperation for food truck related businesses, a base for a creative economy- Joint development of business models that incorporates financial communications fusion

2015.02.10 KT-Woori Bank signs a business agreement contract of Internet of Things – Fintech 6

+

Spotlight on Fintech!: Domestic Market’s interest on Fintech 1 Telecommunications Companies Prepare for Entry into the Fintech Market!

Focus on developing innovative technology

- Low-powered Bluetooth (BLE) will be used to create services such as ‘BLE Payment’ and ‘BLE electronic cards.- Popular services with large number of users such as SK Planet’s Syrup and OK Cashbacks will be .combined with new technologies then used to expand the power in the mobile payment area.

Launch of various electronic payment settlement businesses

- KT has released electronic payment services ‘Pay On Plus’ and ‘Tap Sign’ at the end of 2014.- They are aiming for the mobile shopping payment platform market using ‘Tap Sign’, which they launched together with BC Card (Tap Sign is a service that allows payment right away with self confirmation by placing credit cards near smartphones)

Focus on securing affiliate stores for electronic payment services

- ‘Pay Now’, a smartphone payment service, is commercialized and preparations for market attack are well under way (Pay Now is a service that uses registered payment information to allow payment through internal certification without the need of Active X or a certificate verification)

- A hundred thousand affiliate stores were secured including large scale book stores, cosmetics stores,

clothing stores, and duty free stores. Efforts are being made for securing more affiliate stores.

- LG U Plus plans to make coupons and complex payments possible along with simple payment functions.

Source 2015.02.06 Digital Times. Mobile Carriers’ focus on ‘Fintech’…. Ideas beyond imagination….

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Spotlight on Fintech!: Domestic Market’s interest on Fintech 1 Foreign Companies Expanding their Business in Korea

Source 2015.02.16 zdnet Amongst the spread of foreign consumers buying domestic products directly, AliPay and EPass have landed in Korea 2015.02.01 etnews Amazon increases department of marketing in Korea….. are they preparing for entry into electronic transactions

2015.02.05 ChungAng Ilbo. PayPal will initiate Korean services starting from the 12th

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Alibaba’s AliPay

- Alibaba has been targeting Chinese tourists in Korea and have secured Ali Pay payment systems in duty free stores, airlines, and shopping malls. As well, they have signed a contract with Lotte.com, an online complex shopping mall, in order to target the domestic market.- Ali Pay will be officially launched in Korea during March through the E Pass service. E Pass is a service that offers distribution and payment infrastructures for domestic shopping malls so that they could sell their products to consumers in China- Until now, Ali Pay has done their business focusing on online payments in Korea but has recently began to provide offline payment aids using mobile apps to make use of bar code recognitions.PayPal initiates Korean services

- The American electronic payment company PayPal initiated Korean services from February 12th. Korean services will be offered in steps starting with contents of the entire site then service centers. - If you create a Pay Pal account to create an international credit card number and save a bank account number, you can easily make payments by selecting Pay Pal as your payment method then logging into Pay Pal when making electronic transactions. Recently, through Pay Pal Here that uses smartphones for credit card payments, entry into the offline payment market was made.- Currently, Pay Pal can only be used for foreign direct purchases since the domestic finance authorities have not yet allowed for expansion

Amazon Prepares for Electronic Transactions Business

- Amazon is understood to be increasing their Korean marketing department as they began hiring workers to be in charge of marketing and business development in Korea- It is expected that Amazon is preparing to enter the Korean electronic transactions market with the recent increase in hiring as opposed to only the cloud services they used to provide domestically. It is expected that they will first begin with electronic transaction businesses with companies then will expand to consumers later on

Spotlight on Fintech!: Domestic Market’s interest on 1 Biometrics, Fintech’s partner

By the year 2020, all smart mobile instruments such as smartphones, tablet PC, and wearable instruments,

are expected to have biometric modules added

It is expected to grow to an yearly yield of 3.33 billion dollars (about 36 trillion won)

Source:Acuity Market Intelligence

- Crucial Tech possesses both the air-reader technology which recognizes finger prints with just one touch and the swipe typed technology. - Together with Danal, a payment service company, they established a multi-solution business company called BioPay and are preparing for various biological information recognition solutions such as iris recognition and vein recognition.

- Samsung Electronics has applied for a patent related to iris recognition in 2012 but it has not been confirmed whether this was applied to any products yet- Companies specializing in camera modules such as Power Logics and Haesung Optics are developing cameras with iris recognition technology but more time is needed for these cameras to be commercialized.

- Trais has recently developed ‘T-SEC’, a smart payment certification technology that makes payment possible with just fingerprint recognition.- This technology recognizes finger prints through the display itself without a need for modules such as the home button

Source 2015.02.05 etnews.. Every smart mobile instruments by the year 2020 will include a Biometrics module…. Yearly average growth expectancy at 90% 9

2014 2015 2016 2017 2018 2019 2020

$707$2,573

$5,077

$9,078

$15,616

$24,642

$33,329Mobile biometrics Forecast

yearly

grow

th rat

e: 90%

(measure: million)

A well-made Content Overpowers Ten Companies 2Korea Creative Content Agency and Naver sign a MOU in order to vitalize the web drama market

- Web dramas are gaining popularity as a ‘snack culture’ content, a consumer trend content in growth that can be enjoyed easily while travelling, thanks to increases in the number of smartphones

- Both companies aim to present a successful example in the domestic web drama market within the year by excavating

outstanding project proposals, supporting the productions, and developing cooperation businesses related to web dramas

Source

Naver runs ‘Webtoons & Webnovels’ as its independent company

- Naver incorporated the CIC: Company in Company system and chose ‘Webtoons and Webnovels’ as its first CIC.

- Ever since the launch in 2004, the webtoon service has grown to have 6.2million domestic users daily and the

webnovel service is steadily growing as well.

- Naver revealed that they have implanted CIC in order to support their service with a vision to grow independently

and to aid the growth of a manager with a business mind. If it is decided that the CIC can succeed independently,

it can be branched into a separate firm.

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Support for discovery and production of outstanding

Web-Drama Project Proposal

Web-Dramas online services and promotion

2015.02.01 etnews KOCCA (Korea Creative Content Agency) has offered 3.3 billion won aid for web drama productions….. distributed to Naver2015.02.04 etnews Naver runs an in-company independent company….. first trial is webtoons & webnovels

‘A Move of God’ in the Games Market3

Source 2015.01.30 Money Today. ‘Nexon – NC’, failed cooperation, a clean break-up needed for the next sequence 2015.01. 28 Kyung Hyang. Naver., Nexon Jung-Joo Kim and NC Soft Taek-Jin Kim turn their backs on each other…. What could have happened? 11

Major Works: Land of Wind, Mabinogi, Cart Rider, Maple Story

Major Works: Lineage, Lineage 2, Blade & Soul

Jung-Joo, Kim(Current NXC CEO) Founded Nexon

Taek-Jin Kim(Current NC Soft CEO) Founded NC Soft

Nexon becomes highest stockholder of NC Soft Takes over 14.68% of NC Soft’s stocks (804.5 billion won)- Simple investment purposes on share take-over- Stated that the take-over of management rights is not intended

EA joint take-over decision

Nexon purchases an additional 0.38% share of NC SoftNexon explains it was only for simple investment purposes

Failure of attempt at EA joint take-over

Taek-Jin Kim’s share percentage 9.9% (fall to second highest stockholder)

Nexon requests for a directorship within the company to NC Soft

Tentative suspension of Mabinogi 2 joint development

Public announcement of Nexon and NC Soft’s management participation

Public announcement of Nexon and NC Soft’s management participation

NC Soft signs a strategic alliance contract with Net Marble

NC Soft declines Nexon’s requests

Rumor about an attempt for NC Soft and NHN Entertainment’s merge

Announcement of Mabinogi 2 joint development

1994

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2012 MAR

2012 JUN

2012 AUG

2012 NOV

2014 JAN

2014 OCT

2015 JAN

2014 DEC

‘A Move of God’ in the Games Market3NC Soft and Net Marble Games sign a strategic and joint business contract

in order to enter the global games market

Net Marble Games 4th highest stockholder.

NC Soft 3rd highest stockholder

Net Marble Games’ online games development using global IP

NC Soft’s mobile games development using global IP

Netmarble Games new stocks 9.8% taken over at 380 billion won

NC Soft treasury stock 8.9% Taken over at 390 billion won

Cross marketing

Mutal publishing business cooperation

Establishment of joint company and joint investments

Joint entry into global mobile games market

Taek-Jin Kim CEO of NC Soft

The strategic alliance of the top domestic online games and the top domestic mobile games will become an important starting point for a joint growth. This alliance is believed to become a stepping stone for domestic games markets to make greater advances.

Net Marble will strive to gain competitive edge in the global market by combining mobile publishing know-how’s with NC Soft’s online IP. This alliance will allow for both companies to grow into global games companies.

Source 2015.02.17 zdnet zdnet NC – Net Marble alliance…. Joint entry into global market

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Jun-Hyuk BangChairman of

Netmarble Games

Mobile Market Key Point4 Massive Traffic Move to Mobiles

3G Smartphone usersAverage data use (Traffic) per person

4G Smartphone usersAverage data use (Traffic) per person

General Fee Users 243MB

Unlimited Data Fee Users 3748MB

General Fee Users 1969MB

Unlimited Data Fee Users 12949MB

Top 10% of all 3G Smartphone users Top 10% of all 4G Smartphone users

5423TB Used 6985TB Used(88.2% of total used amount) (53.2% of total used amount)

55.5% : Videos such as Video On Demand (VOD) 14.5% : Social Networking Service (SNS)13.9% : Web Portals7.7% : Multimedia3.6% : Market downloads

Percentage of traffic based on contents types

Source

15.4 times 6.6 times

132015.02.15 Asia Economy. ‘Unlimited Data Fee’ users’ data usage…. Over 15 times more than that of General Fee users

Videos 55.5%

SNS14.5%

Web Portals13.9%

Mobile Market Key Point4 Smartphone, a Must-Have-Item

Indication of smartphones as a necessary daily media is increasing!

PC/Laptop

Yearly necessary instruments (Unit: %)

Smartphones

TV

Others

Necessary daily instruments depending on age group (Unit: %)

Percentage of Use for more than 5 days a week per media (Unit: %)

Percentage of watching TV programs for more than a day using smartphones

14

PC/Laptop

Smartphones

TV

2013 2014Place of use

(multi response)Usually at home

47.8%While travelling

35.3%2013

79.4

33

65.8

2014

78.4

30.6

70.8

Data: Korea Communications Commission ‘2014 Research of Broadcasting Media Usage Behavior’

2013 2014

9.4

44.343.9

46.337.3

12.9

14.7

69.048.6

38.6

59.1

24.4

69.0

13.7 92.869.3

23.9 3.9

Teens 20s 30s 40s 50s 60s

23.7% 25.8%

2015.02.05 ChungAng Ilbo. PayPal will initiate Korean services starting from the 12th

Mobile Market Key Point4 Mobile Shopping Era!

Online shopping transaction fees

(Including PC & mobile internet environments)

4.0544 trillion won(year over year increase of 17.5%)

Mobile shopping transaction fees

1.4809 trillion won(year over year increase of 125.8%)

Growing Social Commerce!

Increase in mobile transactions in 2014 has contributed to the growth of Social Commerce

Data: Korea National Statistical Office

Domestic Social Commerce Transaction Size Development(Sum of 3 companies,

Coupang, Wemakeprice, Ticket Monster)Out of Entire Transactions in 2014Mobile Transactions 65%

Size of the Social Commerce Market in 2015Expected to be 7~8 trillion won

Source 15

2011 2012 2013 2014(e) 2015(e)

7~8 trillion won

5.5 trillion won

3.4 trillion won

1.9 trillion won

7.9 hundred billion won

Data:Business Sector Estimation (Sum of 3 companies, Coupang, Wemakeprice, Ticket Monster

32.7%

Percentage of mobile shopping out of entire online shopping

2015.01.27 etnews Social Commerce transactions exceed 5 trillion won 2015.01.29 etnews Mobile Shopping Era has come…. Online shopping and mobile transactions exceed over 30%

Source Domestic Issue

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1. Spotlight on Fintech!: Domestic Market’s interest on Fintech

2015.01.27 etnews Fintech Promotion…. Vast changes to electronic finances

http://www.etnews.com/20150127000232

Restructuring of the regulations ignites Fintech

‘Cooperation’, a key word in Fintech

2015.02.02 YonHapNews Naver LINE takes over Japanese WebPay Holdings…. Strengthens LINE Pay http://www.etnews.com/20150202000107

2015.02.04 etnews NHN Entertainment “New Business will start with simplified payments and end with cross borders”

http://www.etnews.com/20150204000150

2015.02.05 etnews etnews Hana Bank and Daum Kakao launch a Fintech joint businesshttp://www.etnews.com/20150205000101

2015.02.12 zdnet NHN Entertainment – KB Kookmin Card, Fintech Cooperationhttp://www.zdnet.co.kr/news/news_view.asp?artice_id=20150212105502

2015.02.10 YonHapNews Naver LINE takes over Japanese WebPay Holdings…. Strengthens LINE Payhttp://news.einfomax.co.kr/news/articleView.html?idxno=138962

2015.02.19 DongA News. “Stop Apple Pay” 3 reasons behind Samsung Electronics’ takeover of Loop Payhttp://news.donga.com/3/01/20150219/69717880/1


17

1. Spotlight on Fintech!: Domestic Market’s interest on Fintech

2015.02.06 Digital Times. Mobile Carriers’ focus on ‘Fintech’…. Ideas beyond imagination….http://www.dt.co.kr/contents.html?article_no=2015020902100351747001

Telecommunications Companies Prepare for Entry into the Fintech Market!

Foreign Companies Expanding their Business in Korea

2015.02.01 etnews Amazon increases department of marketing in Korea….. are they preparing for entry into

e-commercehttp://www.etnews.com/20150130000189

2015.02.05 ChungAng Ilbo. PayPal will initiate Korean services starting from the 12thhttp://joongang.joins.com/article/aid/2015/02/05/16669950.html?cloc=olink%7Carticle%7Cdefault

2015.02.16 zdnet Amongst the spread of foreign consumers buying domestic products directly,

AliPay and EPass have landed in Korea http://www.zdnet.co.kr/news/news_view.asp?artice_id=20150216140327

Biometrics, Fintech’s partner

2015.02.05 etnews very smart mobile instruments by the year 2020 will include a Biometrics module….

Yearly average growth expectancy at 90%http://www.etnews.com/20150204000255


18

2. A well-made Content Overpowers Ten Companies2015.02.01 etnews KOCCA (Korea Creative Content Agency) has offered 3.3 billion won aid for web drama

productions….. distributed to Naverhttp://www.etnews.com/20150130000106

2015.02.04 etnews Naver runs an in-company independent company….. first trial is webtoons & webnovels http://www.etnews.com/20150204000178

2015.02.17 zdnet NC – Net Marble alliance…. Joint entry into global market http://www.zdnet.co.kr/news/news_view.asp?artice_id=20150217110402

2015.01.27 etnews Social Commerce transactions exceed 5 trillion won http://www.etnews.com/20150127000068

2015.01.29 etnews Mobile Shopping Era has come…. Online shopping and mobile transactions exceed over 30% http://www.etnews.com/20150129000081

2015.02.15 Asia Economy. ‘Unlimited Data Fee’ users’ data usage…. Over 15 times more than that of

General Fee usershttp://topic.kakao.com/article/18353065086994218307

3. ‘A Move of God’ in the Games Market

4. Mobile Market Key Point

Thank You

Contact us Webpage www.mobidays.comBlog http://blog.naver.com/mobidays01Editor Shim, Sang Yong ([email protected])Design Lim, Won ([email protected]) Kim, Min Kyu ([email protected])

KM Report