[Click eStock] "Naver Accelerates Global Expansion of Content Business with Weverse Investment"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities expressed on the 28th that Naver (NAVER) is expected to rapidly expand its content business through the integration of Big Hit Entertainment's (hereafter Big Hit) platforms Weverse and V-Live.

On the previous day, Naver announced that it would invest 411.8 billion KRW (49% stake) in Big Hit's subsidiary BNX and transfer the V-Live business for 200 billion KRW. Of the investment amount, 57 billion KRW will be from the sale of existing shares, and 354.8 billion KRW will be executed in the form of a paid-in capital increase. The corporate value of BNX estimated based on the investment amount is 840.6 billion KRW.

Naver plans to participate in the paid-in capital increase in two phases, and it is expected to take about a year until the completion of the paid-in capital increase and the transfer of V-Live. Although the two platforms will operate independently, service integration is also expected to be possible after BNX's business acquisition.

Researcher Dongryun Lee of KB Securities said, “Through the integration of V-Live and Weverse, the two companies will have a higher quality artist and user base compared to domestic competitors in the entertainment platform sector, and global expansion can also accelerate.”

V-Live had 30 million monthly average users (MAU) as of 2019 according to SKS, but its performance and MAU have declined due to the departure of major artists such as BTS (Bangtan Sonyeondan). On the other hand, Weverse has 5 million MAU, and considering BTS's global recognition, its performance is estimated to have improved compared to 2019 (revenue of 78.2 billion KRW, net loss of 1.2 billion KRW).

Lee explained, “V-Live can reverse the decline in MAU and performance through artist recruitment, and Big Hit can receive platform and server-related technical support from Naver,” adding, “This is a part where the interests of the two companies align.”

Naver has recently strengthened investments in global content platforms, including acquiring the Canadian web novel platform Wattpad. Lee said, “They aim to secure core IP to strengthen webtoon and web novel businesses while expanding the IP business for secondary content production,” and added, “Through the partnership with BNX, Naver's influence in the global market will increase further.”