Lee Hae-jin, the chairman of the Naver board, established the North America-based investment company 'Naver Ventures' in Silicon Valley and chose Twelve Labs as the first investment target. The chairman, who emphasized 'investment for survival,' is said to have focused on a startup developing video understanding artificial intelligence (AI) to find a breakthrough as Naver's usage time is increasingly lagging behind platforms like YouTube, Instagram, and TikTok.
The chairman announced on the 5th (local time) at the investment event 'Next Chapter' held at the Four Seasons Hotel in Palo Alto, California, that Naver Ventures has been established and that Twelve Labs has been confirmed as the first investment target. This follows his return to management as board chairman after about seven years in March.
On the 10th, the IT industry reported that the chairman's decision for this investment was part of Naver's strategy to strengthen its video ecosystem. Naver has been focusing its investments on startups capable of generating technological synergies with its own services. Naver's corporate venture capital (CVC) D2SF has invested in a total of 115 startups over the past decade, with 64% of them proceeding with specific collaborations with Naver. An IT industry insider noted, 'While the detailed nature of investments by Naver Ventures and D2SF may differ, the overall trend will likely be similar,' adding, 'Naver is expected to strengthen synergies with Twelve Labs in a 'post-investment technology collaboration' sequence.'
◇ 'Video latecomer' Naver sees its app usage time declining
The chairman attended a Silicon Valley investment networking event and emphasized that Naver has maintained its position in the Korean market against the 'search engine' competition with Google. He stated that it was 'thanks to user-generated content (UGC)' that Korea could become one of the very few countries with its own search engine. He said, 'We will invest in AI diligently to secure data to survive once again' and added, 'AI is not something that Naver can handle alone.'
The chairman's mention of 'survival' while announcing the investment strategy is interpreted as a reflection of the crisis that Naver's market share, solidified through search, is wavering. The search sector, which has been responsible for Naver's growth, is predicted to see 'AI replacement,' and in terms of content, Naver is losing its foothold by responding late to the video era.
According to data analysis solution Mobile Index from IAworks, during May, the average time a user spent accessing the Naver app was recorded at 454 minutes. This equates to about 25 minutes a day, which is a decrease of approximately 6.5% compared to a year ago. In contrast, Instagram averaged 53 minutes per day, and TikTok was used for 66 minutes. YouTube users spent 138 minutes on the platform, indicating a difference of 5.5 times compared to Naver. Naver is also outpaced by KakaoTalk, which recorded an average of 28 minutes per day.
As of 2020, the average daily usage time of the Naver app was about 20 minutes, but after five years, it has only increased by 5 minutes. In contrast, YouTube and Instagram have seen increases of approximately 2.3 times and 3.5 times, respectively. A decrease in usage time in the platform industry is considered a factor that could directly impact performance due to reduced advertising expenditures.
The background of Naver allowing usage time to be given to overseas platforms seems to stem from its delayed entry into strengthening video services. YouTube introduced its Shorts feature, focused on short-form content, in July 2021. Instagram Reels began in the U.S. in August 2020 and later expanded globally. In contrast, Naver introduced Clips in August 2023.
◇ 'Naver possesses technology suitable for recommending accumulated content'
The chairman's identification of Twelve Labs as the first investment target for Naver Ventures reflects a desire to create a breakthrough for the Naver app, which has ceded its position to overseas platforms.
Twelve Labs possesses AI technology that can understand videos in their entirety and connect them to searches. Founded in Silicon Valley in 2021, it also operates an office in Yongsan, Seoul. It runs multimodal video understanding model 'Marengo' and the super-large AI video language generation model 'Pegasus.' Multimodal AI refers to technology that processes and learns from various forms of information, including text, images, sounds, and videos, simultaneously.
Searching for 'a baby taking its first steps' will lead to finding the desired scenes and summarizing the video contents in text, showcasing the AI technology that has attracted investments from not only Naver but also SK Telecom, NVIDIA, and Intel. Excluding Naver Ventures, the total investment amounts to $107 million (approximately 145 billion won).
An IT industry insider stated, 'It is evaluated as a place that possesses technology capable of classifying and recommending Naver's accumulated videos in a user-oriented manner,' adding, 'Naver aims to incorporate Twelve Labs' technology into its content and AI ecosystem to increase user convenience and regain lost market share.'
Choi Soo-yeon, the representative of Naver, stated during the conference call for the first quarter earnings that plans to further advance personalized and context-based content recommendation technology are underway. The goal is to enhance differentiated AI, search, and commerce experiences with Naver's unique and diverse content accumulated over time.
Meanwhile, there is analysis suggesting that Naver may execute follow-up investments focused on strengthening large language model (LLM) technology through Naver Ventures in North America. The chairman stated, 'For David to defeat Goliath, he needs to quickly concentrate on a specific area and throw one smooth stone well,' adding, 'Right now, it's the process of catching the stone, and before catching it, we need to prepare the fundamental technologies such as large language models (LLM) and cloud computing.'