[Asia Economy Reporter Bu Aeri] Naver is accelerating its move toward becoming a 'content kingdom' by striking a surprise big deal with CJ Group. Following last year's acquisition of shares in YG Entertainment and securing shares in SM Entertainment earlier this year, Naver is now focusing its efforts on securing content aimed at the global market by pursuing cooperation with CJ Group through a share exchange. Industry insiders believe that given Naver's solid position in the Southeast Asian market, the recent consecutive collaborations to secure video content will have significant disruptive power in the global market.
Steps Toward a 'Content Kingdom' in Response to OTT
According to related industry sources on the 15th, Naver is promoting a strategic partnership through share exchanges with three CJ affiliates: CJ ENM, Studio Dragon, and CJ Logistics. CJ ENM owns many popular variety shows such as 'Three Meals a Day,' while Studio Dragon has experience producing popular Korean Wave dramas like 'Goblin' and 'Crash Landing on You.'
Naver stated, "We aim to create various values through multifaceted cooperation with CJ Group," adding, "The scale and timing of the share exchange need further discussion." Earlier, in April, Naver partnered with CJ Logistics to introduce a fulfillment service that delivers orders within 24 hours, responding to the surge in Naver's online shopping demand due to the COVID-19 pandemic. Industry insiders view the expansion of cooperation from this relationship to include CJ ENM and Studio Dragon as a strategic move focused on content. An industry official said, "This cooperation was initiated by Naver proposing it to CJ," adding, "In the OTT (online video streaming service) era, Naver, which urgently needs video content, likely saw the cooperation with CJ ENM and Studio Dragon as essential."
The cooperation between the two companies can immediately create synergy in the Southeast Asian market. Naver owns influential video platforms such as 'V Live' in Japan and Southeast Asia, while CJ can distribute its content globally through Naver in markets like Japan and Southeast Asia. It is also expected that CJ will produce dramas and movies based on Naver's IPs such as webtoons and web novels to enter the global market. Naver Webtoon boasts 67 million monthly active users worldwide and is popular in the U.S., Japan, France, Thailand, and other countries. An industry insider said, "Through CJ's partnership, Naver's content and platform business have become boundless," adding, "Naver's content is expanding into video, and the video platform can attract global users by utilizing CJ's content."
"Naver Had a Plan All Along"
Even before the alliance with CJ, Naver had been steadily building cooperation with the entertainment industry. Above all, Naver views video content businesses such as 'digital concerts' as a new business model. Entertainment companies like SM provide top star content, while Naver offers the platform including streaming and payment systems.
In 2017, Naver invested 100 billion KRW in YG Entertainment and its affiliates. In August this year, it invested another 100 billion KRW in SM Entertainment to strengthen its digital concert business, including 'Beyond Live.' Digital concerts are live broadcasts of singers' concerts online rather than in physical venues. A Naver official explained, "Unlike YouTube, which earns revenue through ads, this is a differentiated business model," adding, "If concert monetization is attempted, a revenue model will emerge, and the platform will grow further." In fact, Beyond Live reportedly earned 2.4 billion KRW in just two hours last April.
Experts view Naver's moves as an effort to counter global OTT companies like YouTube and Netflix. Professor Wi Jeong-hyun of Chung-Ang University's Department of Business Administration said, "How to strengthen video content is Naver's concern, and CJ seemed to be the closest answer."
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