Naver and Kakao Webtoons Make Their Mark in the US and Japan

Kakao, Tapas-Radish Media Merger in August
Aiming to Be No.1 Operator in North America

Naver Acquires EbookJapan
Neck and Neck with Kakao in Japan

[Asia Economy Reporter Seungjin Lee] Naver and Kakao have entered into a direct competition for the number one position in the webtoon market in Japan and the United States. Both companies plan to use Japan and the U.S., the world's first and second largest comic markets, as forward bases to strengthen their influence in the global content market.

Kakao "Aiming to be No. 1 Business Operator in North America"

Kakao Entertainment announced on the 20th that it will merge its North American webtoon subsidiary Tapas Media and its web novel subsidiary Radish Media. The merger date is targeted for August 1, and the new merged company's CEO will be Kim Chang-won. The company name has not yet been decided.

Tapas is the first webtoon platform in North America, with an estimated monthly active user (MAU) count of over 3.2 million. It became a subsidiary of Kakao Entertainment last year. Radish, established in 2016, is a web novel company that also became a subsidiary of Kakao Entertainment last year. It holds numerous intellectual properties (IPs) mainly focused on romance works. It also has a subsidiary called Usia World under its umbrella.

Lee Jin-soo, CEO of Kakao Entertainment, said, "The merger of Tapas and Radish will be a turning point toward becoming the number one business operator in North America, beyond a simple combination of platforms. By combining unique IP capabilities with Kakao Entertainment's Korean IPs, we will build a powerful 'IP pipeline' and create success stories." Kakao Entertainment plans to achieve a threefold growth in global transaction volume and reach 500 billion KRW in North American transaction volume within three years.

Currently, the North American webtoon market is dominated by Naver, which entered in 2014. Naver Webtoon's North American platform 'Webtoon' has 14 million monthly users, surpassing even Apple TV's user base. It also maintains the number one position in Google Play Comics app revenue. In January this year, Naver acquired 'Wattpad,' the largest North American web novel platform with 94 million monthly users. Through 'Wattpad Webtoon Studio,' which combines the strengths of Naver Webtoon and Wattpad, over 100 video adaptation projects are underway.

Neck-and-Neck Competition in Japan

The competition between the two companies is even fiercer in Japan, the world's largest comic market. Although Naver entered Japan earlier than Kakao, it lost the number one position in the webtoon market to Kakao in 2020 and is now attempting to reclaim the top spot through aggressive mergers and acquisitions (M&A).

Naver recently completed the acquisition of Japan's e-book specialist 'eBook Initiative Japan,' preparing to retake the number one position in the Japanese market. eBook Japan is a platform well recognized within the Japanese market, linked with Yahoo Japan. It holds over 800,000 works, with 95% of its content transaction volume coming from comics. With this acquisition, Naver is expected to regain the top spot it lost to Kakao. Based on last year's transaction volume, the combined transaction volume of Naver's Line Manga and eBook Japan is about 800 billion KRW. The combined MAU is estimated to exceed 20 million, surpassing Kakao Piccoma's approximately 730 billion KRW transaction volume, which was number one last year.

Naver launched the webtoon platform 'Line Manga' in 2013 and became number one in the Japanese market. However, it lost the top spot in 2020 due to fierce competition from Kakao's 'Piccoma,' launched in 2016. Japan is the world's largest comic market, more than four times larger than North America, and being number one in Japan is considered equivalent to being number one globally.

To strengthen its influence in the local content market, Naver's Japanese subsidiary 'Line Digital Frontier' will launch a joint venture called 'Studio Dragon Japan' (tentative name) in the first half of the year in partnership with CJ ENM and Studio Dragon. Additionally, it has established a joint venture webtoon production company called 'Studio Toon' with Japan's terrestrial broadcaster TBS and webtoon producer Shine Partners.

Piccoma plans to launch a digital publishing platform called 'Picverse' in Japan as early as the first half of this year. This is part of its strategy to maintain its number one position in the Japanese webtoon market. Kakao has also formalized the Tokyo Stock Exchange listing of Piccoma to strengthen its position. Kakao Piccoma's corporate value is estimated at over 800 billion yen (approximately 8.2 trillion KRW). To enhance Kakao Piccoma's competitiveness, integration with Kakao Games Japan is also under consideration.