Zepeto, Asia’s Largest Metaverse Platform, Accelerates Global Expansion

Asia’s largest metaverse platform, Zepeto, is accelerating its global expansion as it seeks to compete with Big Tech groups betting billions on creating avatar-filled virtual worlds.
Owned by Korean technology group Naver, Zepeto has attracted 340 million users since its launch in 2018. Unlike rival platforms developed by game companies, it is dominated by young female users.
The K-pop and fashion-focused avatar platform, which is valued at over $1 billion, has attracted investment from Korean entertainment companies JYP Entertainment, YG Entertainment and Hybe, as well as Vision Fund II from SoftBank.
“We still have a long way to go to become a more dominant player globally, but we are on the right track,” said Ricky Kang, Chief Commercial Officer of Naver Z, the subsidiary that operates the Zepeto platform. .
“We have established a very strong presence in Asia-Pacific, so we want to grow further in the region, but we also place a very high emphasis on growth in the United States and Western Europe, [for example] in France, where we have already established strong growth,” Kang said.
He added that Zepeto was popular in Brazil and was working on Turkish and Arabic language versions of the platform as part of a push in the Middle East.
It comes as groups ranging from Meta, Facebook’s parent company, to Microsoft are betting billions that the three-dimensional metaverse will become the next big tech platform.
Zepeto quickly became the largest such site in Asia. It has around 15-20 million monthly active users, mostly in South Korea, Japan, and China. Among them, 70% are women and are mostly between 13 and 21 years old.
But it still has a long way to go to catch up with American rival Roblox, the $50 billion online gaming company that also has a dedicated pre-teen among its 200 million monthly active users.
Kang said that while Zepeto has focused on users purchasing virtual items, “in the future, the items and experience they can purchase will be more focused on individual virtual worlds. . . it’s a business model very similar to Roblox”.
Other competitors Kang cited include online social platforms Rec Room and VR Chat, as well as gaming juggernaut Fortnite.
But he also pointed out that “Zepeto is essentially a social network, not just people chatting while playing games.”
“It’s actually a feed that really looks like TikTok or Instagram, but only contains avatar content – the first avatar-centric social network of its kind,” he added.
Accessible primarily through a smartphone app, Zepeto has monetized its audience by offering users the ability to customize their avatars and design and swap millions of items – primarily clothing, accessories and hairstyles – as well as creating their own virtual worlds.
Household appliances and furniture for virtual houses can also be purchased on the market.
It operates a licensing model, forming partnerships with athletic and luxury fashion brands such as Gucci, Ralph Lauren, Bulgari, Adidas and Nike.
Samsung devices are offered and avatars can drive Hyundai cars.
Naver Z has also sealed IP partnerships with Disney and Universal. Girl group Blackpink, represented by YG, held a virtual signing on the platform during the pandemic.
“One of our biggest strengths has been our relationship with K-pop companies,” Kang said.
Last year, the South Korean government launched a “Metaverse Alliance” of more than 200 companies and institutions. It has earmarked nearly $8 billion of its 2022 budget for the country’s next digital transformation.
But analysts have questioned the sustainability of Zepeto’s popularity, citing its limited user base.
“It needs to expand its user base beyond teenagers, like Facebook and Instagram have done,” said Choi Joon-chul, head of VIP Research and Management.
“Teenagers are enthusiastic users, but their interest tends to be short-lived. They derive satisfaction from the platform by relishing things they cannot afford in reality. But I doubt they will continue to use Zepeto as they get older.
Kang admitted that the platform needs to “grow” with its users as they age.
“As our users age, we want to make sure we grow with them. This is true for all social platforms that have become dominant players, including Snapchat or TikTok,” Kang added. “They always started with teenagers and then became more of a mainstream app.”
But Korean scholars and activists have raised concerns about the potential vulnerability of Zepeto users. While in the EU the minimum age for these platforms is 16, in many Asian countries it is 13 and in some places even younger.
Earlier this month, Naver Z joined the Tech Coalition, a global alliance of companies fighting online child sexual abuse and exploitation.
Kang acknowledged the difficulties in controlling the metaverse, saying Naver Z has artificial intelligence programs to identify inappropriate behavior and call centers users can contact for help. But he admitted that “bad apples can be very sneaky and go through these protective mechanisms”.
Wi Jong-hyun, a business professor at Chung-Ang University in Seoul, said the company needed to “come up with tougher and more pragmatic measures.”
“A lot of these teens totally identify with their avatars, so they’re shocked by these unpleasant online experiences,” he said.