Tech companies expand paid subscription services

Major big tech companies at home and abroad are competing to launch new services as the subscription services market experiences rapid growth. Analysts suggest that expanding membership programs not only helps secure loyal users for their platforms but also serves as a substantial revenue stream.

According to multiple sources from the information technology (IT) industry on Tuesday, Naver Corp.’s paid subscription-based AI translation service launched at the end of September 2024, Papago Plus, has seen an increasing number of users transitioning to paid subscriptions after the free one-month trial period ended.

“We are generating revenue not only domestically but also overseas,” a Naver official said. “We are receiving growing inquiries from both individual users and businesses.”

Papago Plus, which enhances the features of the free Papago service, offers subscription plans ranging from 13,000 won ($9.3) to 75,000 won per month, depending on the features.

Naver’s flagship subscription service, Naver Plus Membership, plans to diversify benefits starting in 2025 based on user life stages. Users will be able to select personalized perks tailored to events such as marriage, childbirth, moving, school enrollment, and pet care.

Netflix subscriptions will also be included as part of the membership benefits starting later in November 2024.

Kakao Corp. also plans to release its AI companion app, Kanana, as a subscription model, as early as the beginning of 2025.

Kakao Mobility also recently piloted a paid subscription service called Kakao T Members, priced at 4,900 won per month. The service offers discounts for auto-dispatch taxi services like Blue Partners and rewards points for using Kakao Navi, Venti, or Black services. Although it initially targeted 10,000 beta testers, the company reported that more users are participating.

The service could eventually transition to a full-scale launch. Kakao also intends to expand subscription options within its core platform, KakaoTalk, by introducing new chat features and conversation tools as subscription products.

This focus on acquiring subscription customers reflects a broader trend in the global tech industry. Beyond offering exclusive benefits to paying subscribers, many companies now implement tiered strategies, providing additional advantages to higher-tier memberships.

Global music streaming platform Spotify, for example, announced plans last week to introduce a higher-tier subscription plan featuring advanced features such as lossless audio. The Super Premium tier is expected to cost about $5 more than the current Premium plan, which ranges from $17 to $18 per month.

Instagram has been operating a subscription service in Korea since 2023, enabling creators to offer exclusive content like Reels, live broadcasts, and stories to subscribers. According to Meta, the platform had about 1 million subscribers by the end of that year.

TikTok introduced a subscription service in September 2024 for fans of select creators in countries like Korea, allowing creators to provide exclusive content such as videos, live streams, and personalized messages to paying subscribers.

X, formerly Twitter, launched an X Premium subscription in March 2024 that offers features like AI chatbot Grok, which summarizes trending stories for users.

The global push for subscription services by big tech highlights the advantages of securing a stable subscriber base.

“While subscription revenue is relatively small in scale, it is less sensitive to economic fluctuations and has the potential for steady growth,” Kakao Chief Executive Officer Chung Shin-a said during a conference call for the company’s third-quarter 2024 earnings.

Naver has not disclosed the number of Naver Plus Membership subscribers but emphasized its high retention rate of 95 percent.

According to KT Economy & Management Research Lab, the size of Korea’s subscription economy market is expected to grow to 100 trillion won by next year from 40.1 trillion won in 2020.

By Kim Tae-sung and Lee Eun-joo
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