[Click eStock] "Studio Dragon, Content Demand Expected to Increase Due to Expansion of Upstream Industries"

[Asia Economy Reporter Eunmo Koo] An analysis suggests that demand for content is expected to increase due to the expansion of upstream industries related to Studio Dragon.

Although programming revenue was sluggish in the third quarter of this year, overseas sales stood out. Studio Dragon's third-quarter revenue was 106.3 billion KRW, down 19.0% compared to the same period last year, while operating profit increased by 46.8% to 16 billion KRW. On the 1st, Dongryun Lee, a researcher at KB Securities, stated in a report, “Programming revenue decreased by 24.9% year-on-year to 45.7 billion KRW due to a decline in TV broadcast demand, but overseas sales showed steady growth as two older works were sold to Chinese online video services (OTT).” He explained, “While supply was minimal due to delays in content production, demand increased with the expansion of OTT platforms, leading to a 25% increase in average selling price (ASP) compared to the same period last year, which improved overseas sales performance.”

Attention should be paid to the fact that third-quarter library sales were made to Chinese OTT platforms other than Netflix. The researcher said, “Although the resumption of content sales to China has not yet been concretized, the growth potential of the Chinese market that does not use Netflix is high.” He added, “Currently, the domestic market is expected to see new OTT entrants such as DisneyTV and AppleTV in addition to existing OTTs like Netflix, Tving, and KakaoTV, which will strengthen content competitiveness.”

Stable sales and customer expansion are also expected through content production using intellectual property (IP) verified by webtoons and web novels. The researcher noted, “Studio Dragon has become easier to receive verified IP through a share exchange with Naver, and it is expected to secure global customers using Naver Webtoon and Line Webtoon.”

The investment opinion was maintained as ‘Buy,’ and the target price was raised by 3.1% to 100,000 KRW. The researcher cited the visible resumption of sales in China and the strengthening of content competitiveness due to intensified global OTT competition as reasons for the target price increase.