Impact of MelOn Acquisition for Cocoa Business in Indonesia

Kakao today announced its intention to acquire a 76.4% stake in Loen Entertainment for approximately $1.54 billion (over IDR 21 trillion). Loen Entertainment is the owner of the music service platform MelOn which has close cooperation in Indonesia with the Telkom Group. What will happen to the partnership between MelOn and the Telkom Group after this acquisition?

In the past year, there have been two acquisitions high profile what Cocoa does. First to private social media Path founded by Dave Morin and second against this MelOn. An interesting common thread is that both have a significant mass base in Indonesia.

Synergy of music content services and social media or messaging not the first in this area. Previously LINE already acquired MixRadio from Microsoft.

MelOn and Langit Musik, even though they are not as famous as Apple Music or Spotify, are well known by the people of Indonesia because of their solution by collaborating with the two largest telecommunications service providers, Telkom and Telkomsel.

In a survey we did with JakPat, MelOn and Langit Musik occupy the second and third positions in terms of service streaming most popular music in Indonesia after Google Play Music

Although we do not expect the partnership between MelOn and the Telkom Group to change as a result of this acquisition, it is interesting to see how Kakao utilizes MelOn to strengthen its user base in Indonesia.

We have previously reported that Cocoa will focus on Path this year and gradually reduced its support for KakaoTalk which could not compete with similar applications. They will too implementing Internet-based banking brought through Path.

With all Cocoa services in Indonesia centered on supporting Path, one should have guessed the possibility of collaboration between MelOn and Path, for example download links or streaming MelOn content directly inside Path or sharing status of currently playing song on MelOn to Path.

Cocoa, in the article at TechCrunch, confirmed plans to support services in international markets, hinting that synergies will be made for a number of key markets and Indonesia has been confirmed as the second most important market for Cocoa, after its home country.

Kakao CEO Jimmy Rim said in a statement, "By combining Kakao's various platforms and content services and Loen's music content services, we expect tremendous synergies that can build a solid foundation for global expansion."