Refinement of Recommendations with 'AI Curator'
Partial Global Application Results in 20% Increase in Payment Amount
Profitability Improvement Ahead of US Listing Next Year
Naver Webtoon is changing its recommendation method to an 'Artificial Intelligence (AI) Curator' specialized for webtoons. The results of partial application in overseas services have been clear, with payment amounts increasing by more than 20%. The plan is to accelerate the IPO process on the U.S. stock market by enhancing profitability through sophisticated recommendation technology.
Naver Webtoon will fully switch the recommendation method for global webtoons to the AI Curator in the second half of this year. The AI Curator is an AI recommendation technology specialized for webtoon and web novel content. It is divided into two methods: recommending works similar to preferred content, such as "works that users who enjoyed Hwasan Gwihwan might like," and recommending works based on user preferences, such as "works that OO might like." It was developed by 'WebtoonAI,' Naver Webtoon's internal AI organization.
The global webtoon service completed the transition to similar work recommendations in July. In the second half of the year, the user recommendation method will also be fully applied. The domestic service plans to sequentially apply the similar work recommendation method first.
Until now, Naver Webtoon used Naver's AI recommendation system 'AiRS (AI Recommender System).' AiRS is a model applied universally across various domains such as search and shopping. It basically gauges interest based on the number of clicks. AI curation has refined the recommendation system by reflecting user engagement such as actual content consumption and payments, not just clicks.
The reason for changing the recommendation method is to increase loyal users. Until now, Naver Webtoon focused on expanding its scale by pouring marketing costs. Securing users overseas, where brand awareness is relatively low, was a priority. This is why it continued to operate at a loss despite revenue growth. However, from this year, the direction has shifted to improving profitability. To enter the U.S. stock market as planned next year, it is necessary to raise corporate value through monetization. To this end, Naver Webtoon reduced marketing expenses while increasing paying users. Kim Nam-seon, Naver’s Chief Financial Officer (CFO), said at the Q2 earnings conference call, "We plan to complete preparations to list next year," adding, "We will maintain the optimal balance between profitability and growth."
The results of refining recommendations are clear. In Q2, overseas webtoon transaction volume was 444.8 billion KRW, an 8.6% increase compared to the same period last year. After applying AI curation, clicks on recommended works increased by more than 30%. Especially in the U.S., even with a significant reduction in marketing expenses, the Average Revenue Per Paying User (ARPPU) increased by more than 20%. Unlike ARPU (Average Revenue Per User), which includes free users, ARPPU is used as a profitability indicator when revenue grows to a certain level. In Q2 last year, the U.S. ARPPU was 13,000 KRW. As a result, Naver Webtoon's deficit in Q2 this year was 13 billion KRW, a reduction of 25.6 billion KRW compared to the same period last year. A Naver Webtoon official stated, "We have completed applying recommendation technology to webtoons in five languages including Korean (English, Indonesian, Thai, Traditional Chinese) and will consider applying it to other languages."
Kakao subsidiary Kakao Piccoma has also started increasing loyal users with a new recommendation system. In May, the webtoon platform 'Piccoma' launched 'Picklist,' where users recommend works to other users. Users create recommendation lists based on desired themes, and if these lists are viewed frequently by others, they receive rewards (coins). Coins can be used to view works on Piccoma. This increases platform usage frequency and connects it to monetization. As a result, Kakao Piccoma recorded its highest quarterly revenue of 231 billion KRW in Q2.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
