[Post IPO]⑭ Carrysoft's Two Consecutive Years of Negative Growth After Listing... "Content Diversification Underway"

[Asia Economy Reporter Yoo Hyun-seok] Carrysoft, famous for 'Carrie and Toy Friends,' has experienced two consecutive years of negative growth since its listing on the KOSDAQ. The offline businesses, such as performances and kids cafes, which were the company's main operations, were hit hard due to the impact of the novel coronavirus (COVID-19). The company plans to overcome the decline in performance by strengthening its online business, including the production of educational video content, instead of offline operations.

Carrysoft began its kids content business in 2014 with the YouTube channel 'Carrie and Toy Friends.' At the time of its listing, the company announced that it had 3.7 million subscribers across all YouTube channels and secured 6.5 million subscribers on five major video platforms combined in China.

The main business includes content intellectual property (IP) utilization and advertising revenue from content production and broadcasting. The content IP business covers performances, commerce, and licensing.

Mirae Asset Daewoo, the lead underwriter at the time of listing, projected operating revenues of 13.5 billion KRW and operating profits of 1.1 billion KRW for 2019. They also expected operating revenues of 20.9 billion KRW and operating profits of 4.7 billion KRW in 2020, followed by 30.1 billion KRW and 9.4 billion KRW in operating revenues and profits respectively in 2021.

Both the underwriter and the company anticipated content sales to increase from 3.4 billion KRW in 2019 to 6.8 billion KRW in 2021. This expectation was based on increased advertising revenue driven by higher view counts due to platform expansion into China and Southeast Asia, in addition to sales from YouTube and Naver TV.

Furthermore, for the content IP business, the company planned to expand commerce, education and publishing, licensing, kids cafes, and performance businesses based on brand recognition. The market expansion was particularly targeted at Vietnam, Thailand, and Indonesia. The related sales forecasts were 10 billion KRW in 2019, 16.3 billion KRW in 2020, and 23.3 billion KRW in 2021.

Carrysoft entered the KOSDAQ market in October 2019 with the ambition to become the 'Disney of Asia' by strengthening its content business. However, its performance declined from the first year of listing. In 2019, the consolidated operating revenue was 9.7 billion KRW with an operating loss of 1.7 billion KRW. Operating revenue decreased by 2.5% compared to the previous year, and losses increased by approximately 1.4 billion KRW.

Specifically, content sales fell short by 500 million KRW compared to projections, and content IP sales were 3.3 billion KRW less than expected. The company explained, "The audience numbers for the movie 'Love Concert The Movie,' released in August last year, were below expectations," and "there was a delay in commerce sales in the Chinese market, which caused the discrepancy."

The situation worsened this year. In the first half, operating revenue was 2.7 billion KRW with an operating loss of 1 billion KRW. This represents a 49.7% sharp decline compared to the same period last year, and operating profit turned negative. Content IP sales, which were 4 billion KRW in the first half of last year, dropped to 1.9 billion KRW, and content sales decreased from 1.4 billion KRW to 800 million KRW.

Carrysoft's offline-centered content IP business, such as kids cafes and performances, accounted for nearly 70% of total sales last year. This shows the significant impact of COVID-19. A company official stated, "Offline businesses were hit hard due to COVID-19," and added, "Changes in YouTube policies also had an effect."

Carrysoft is currently shifting its business focus from offline to online. It is developing 3D animation. The official emphasized, "We believe that animation is the pinnacle of the character IP business," and added, "We are currently planning whether to release it as a movie or as a TV animation, and will decide based on the situation."

Alongside this, the company is strengthening educational content in addition to existing videos. It is currently producing content for foreign language and Taekwondo education, and is developing an app that can professionally provide these services. A company representative explained, "We have educational content that teaches languages such as English, Korean, and French, which has received positive responses overseas, including China," and added, "We are developing an app to professionally provide these services, aiming for release by the end of this year." They further stated, "In the future, we plan to add entertainment-type content such as play and games, not just educational content."