Expectations are running high that a merger between Kakao, owner of Korea’s leading mobile messaging service KakaoTalk, and Daum Communications, the country’s second-biggest portal, will even out competition in a fast-changing digital space where desktop leader Naver has long ruled the roost.

“It will take time, but the merger will bring synergy in the long run,” says MJ Kim, GM for media agency UM Korea. “Through competition, consumers and marketers should expect a more creative, innovative market ecosystem.”

Access to content and talent from Daum, which was founded in 1995, can help sustain momentum for four-year-old Kakao, which is effectively taking over the older company via a backdoor listing.

Kakao is a profitable business, making most of its money from people buying digital content.

However, it continues to experiment with new services and potential revenue streams in a still young mobile environment, where there is little clarity on what might deliver profits and user loyalty long-term.

A successful merger broadens access to a large digital market at home, where mobile internet access is supplanting PC browsing, thanks to widespread smartphone ownership and some of the fastest mobile broadband in the world.

Overseas however, competition is more severe. Other apps have taken the lead in other large internet markets – Line in Japan, developed by Naver’s Japanese arm, and WeChat in China, created by Chinese giant Tencent.

All three are competing in Southeast Asia alongside Viber, recently bought by Japanese e-retailer Rakuten, and WhatsApp, which is being acquired by Facebook.

Kakao, which has a JV with Yahoo Japan in Japan, is focusing on Indonesia, Malaysia and the Philippines.

This article first appeared in Media Business Asia magazine, Q2 2014.