SEOUL/JAKARTA South Korea's pioneering mobile messaging apps have taken their oversized emoticons to Indonesia, intent on breaking the dominance of BlackBerry Ltd's (BB.TO) BBM messaging service in one of the world's most active social media markets.
Kakao Corp has hired pop stars and Naver Corp (035420.KS) unit Line Corp has partnered Samsung Electronics Co (005930.KS) in a country whose capital Jakarta boasts the most users of Twitter Inc's (TWTR.N) microblog by city, according to researcher McKinsey & Company.
BBM has long been Indonesia's most popular messaging app, with Facebook Inc's (FB.O) $19 billion buyout target WhatsApp in pursuit. But KakaoTalk and Line have connected with younger users by also offering voice calls, games, shopping, merchandise and stickers, or message-conveying cartoons.
Under-30s make up over half of the 240 million Indonesians, where just 20 percent use smartphones, making the country a prime growth market for app makers. Estimates put smartphone use at 50 percent before the end of the decade, by which time messaging apps' global revenue could be over $24 billion.
"Indonesia is probably the most competitive mobile messenger market right now... And it's a key market we want to win," said Kate Sohn, vice president of Kakao's global business development division.
KakaoTalk has gained 16 million users in just one year in Indonesia after Kakao signed an advertising deal with Big Bang - a K-Pop boy band popular in Indonesia - and started offering unlimited KakaoTalk data through carrier Telkomsel (TLKM.JK).
KakaoTalk, whose maker plans to list in Korea around May next year, was Indonesia's 37th most downloaded free app on Apple Inc's (AAPL.O) App Store as of March 7, and 14th on Google Inc's (GOOG.O) Google Play, according to researcher App Annie.
BBM was first on both since becoming available through those stores in October. Broadening compatibility freed BBM users from BlackBerry handsets, and left BlackBerry with just 5 percent of Indonesia's smartphone market in October-December from 34 percent a year earlier.
"BlackBerry's falling domination... has made Indonesia more dynamic and created a big opportunity for new entrants," said Kakao's Sohn. "Indonesia has the right mix of big scale, growing number of smartphone users and the market is really in flux."
Line entered Indonesia in early 2012 and has 20 million users thanks partly to it being pre-installed on some smartphones running Microsoft Corp's (MSFT.O) Windows Phone and Google's Android operating systems, including models from Samsung.
Samsung sells about one of every three smartphones sold in Indonesia, and from this month its entire Galaxy range will have Line pre-installed.
"We've done lots of collaboration with Samsung and are benefiting from their growing brand strength and volume shipments," said Simeon Cho, general manager at Line Plus, which handles Line's business outside of its biggest market Japan.
Line is also likely to be pre-installed on Nokia's first Android smartphones targeting the low-end segment popular in emerging markets such as Indonesia, and which researcher IDC expects to lead global smartphone growth.
As for global revenue growth, Macquarie Group said in a March 5 report that income from advertising, games and stickers could push messaging apps' revenue to $24 billion within three years, rather than the $10 billion the finance house forecast in September.
MAKING IT STICK
The proliferation of messaging apps has spawned features such as stickers and in-app shopping as makers seek to be different. It has also resulted in users downloading multiple apps to accommodate contacts' preferences.
"Customers contact me through BBM, WhatsApp and email," said Saskia Tamat, 37, who runs a catering business in Jakarta.
"A lot of my friends also use Line, and we send each other stickers instead of just texting. I downloaded KakaoTalk, because I watch a lot of Korean dramas and movies and saw they use cute stickers."
KakaoTalk's journey up the ranks will also see it contend with WeChat from Tencent Holdings Ltd (0700.HK). Tencent established a joint venture last year with Indonesia's biggest media group, Global Mediacom Tbk PT (BMTR.JK), and is advertising heavily on television.
"It is interesting to see the battle of messenger apps in Indonesia because it's an open field," said Enda Nasution, social media analyst and founder of social media platform Sebangsa Bersama.
Leader BBM looks far from willing to surrender. The market appears so important to BlackBerry that the company has code-named its low-end smartphone Z3 "Jakarta" which it plans to launch first in Indonesia in April.
"Indonesians still have a strong emotional attachment to BBM. Though its growth rate appears to be slowing, many think it won't completely go away any time soon," said Line Plus' Cho.
GRAPHIC: Indonesia's smartphone market, top messaging apps
(Additional reporting by Sophie Knight in TOKYO and Paul Carsten in BEIJING; Editing by Christopher Cushing)