One store logo
The three mobile telecommunications companies joined hands once again to grow’One Store’, a native app market. This is to stand up against Google, which has been controversial over the’gap’ due to the recent fee increase.
“Let’s become a’digital peasant’” sense of crisis
KT and LG Uplus announced on the 3rd that they will invest 26 billion won in SK Telecom’s largest shareholder, One Store. KT invested 21 billion won to secure 3.1% (about 640,000 shares), while LG U+ invested 5 billion won to secure 0.7% (about 150,000 shares). If SKT’s 50.1% stake is included, the three mobile telephony companies will have 53.9% stake. Naver also holds 26.3%. Earlier in 2016, the three mobile operators integrated their respective app markets (SKT T Store, KT Olleh Market, LG U+ U+ Store) and Naver App Store into one store. However, at the time, KT and LG Uplus did not invest in SKT’s subsidiary (One Store). It is interpreted as being reluctant to invest a stake in a competitor.
In the background of this change, there was a consensus that the domestic information and communication technology (ICT) ecosystem should be strengthened by enhancing the competitiveness of the native app market. In particular, Google, which occupies 71% of the domestic app market share, expanded in-app payments (in-app, using the payment system developed by the App Store), which was applied only to game apps, to all content such as webtoons, music, and videos from October this year. When the policy was announced, the sense of crisis grew.
One store stake structure. Graphic = Reporter Jaemin Shin [email protected]
18.3% share… Google’s quarter level
With in-app payment, 30% of the payment amount is incurred as a fee whenever you pay for paid content in the app. As a kind of’toll fee’, 30% is given to Google, which raises concerns that a domestic ICT company could become a content subcontractor of a foreign company or a’digital peasant’. Increasing consumer burden is also inevitable. As criticism increased, Google Korea said, “We are persuading the headquarters that a policy to cut fees is necessary,” but did not come up with a specific rate or schedule.
On the other hand, the app fee rate of One Store is currently around 20%. It also doesn’t force in-app payments. Rather, from July 2018, if the developer uses its own payment system, it has been conducting unprecedented marketing that lowers the commission rate to 5%. Last year, the commission rate for 16,000 small and medium-sized businesses was reduced to 10%, which is half the level of the existing one.
Currently, OneStore’s domestic app market share is 18.3%, which is a quarter of Google’s, but growth is steep thanks to such a fee-cutting policy. According to IG Works, a market research firm, One Store’s transaction volume growth last year was 34.4%. Last year’s operating revenue is estimated at 180 billion won. The company said, “It was the first time it made a surplus after its establishment.”
Listing in progress… Valuation of KRW 1 trillion in corporate value
As the corporate value rises, the pace of public offerings that SKT is pursuing is also accelerating. In September of last year, KB Securities, NH Investment & Securities, and SK Securities were selected as the organizers of the IPO. At that time, the corporate value of One Store was evaluated at 1 trillion won. About 15.4 million monthly users and 500 million cumulative content downloads were counted.
Lee Jae-hwan, CEO of One Store, said, “As the two telecommunication companies, which have been together as joint operators for the past 5 years, participate as shareholders, a higher level of cooperation is expected,” he said. “We will coexist with the industry and provide greater benefits to users.”
Reporter Kwon Yujin [email protected]
