AfricaTV, Potential 'UP' in Untact Benefits Despite Decline in Ad Revenue

The Speed of Recovery from Advertising Revenue Slump Is Crucial... "Expecting Normalization in the Second Half"

[Asia Economy Reporter Geum Bo-ryeong] AfreecaTV's advertising revenue has decreased due to the impact of the novel coronavirus infection (COVID-19), but it is analyzed that it has a high potential to benefit from the non-face-to-face (untact) trend.

According to Yuanta Securities on the 2nd, AfreecaTV recorded sales of 41.5 billion KRW and operating profit of 8.1 billion KRW in the first quarter. Compared to the previous year, sales increased by 9%, while operating profit decreased by 11%. Although there was a successful rebound in donation economy gift sales, the decline in advertising revenue led to results falling short of market expectations.

This situation is expected to continue into the second quarter. Researcher Lee Chang-young of Yuanta Securities stated, "Donation economy gift sales, which account for 79% of AfreecaTV's total sales, are expected to show positive indicators in the second quarter due to the recent social distancing measures caused by COVID-19." However, he added, "On the other hand, due to the overall economic downturn, advertising revenue is expected to continue to be negatively affected in the second quarter. Especially, content-type advertising, which experienced significant growth last year, is the most impacted, so until a full economic recovery and advertising market rebound occur, advertising revenue is likely to contract compared to last year."

Normalization of performance is expected from the second half of the year. Researcher Kim Dong-hee of Meritz Securities said, "AfreecaTV's monthly unique visitors (MUV) in March reached 6.15 million, an 8.5% increase compared to February, and traffic remained strong in April. Donation economy sales are showing steady growth due to the untact culture, increased video consumption, and content diversification (hobbies, lifestyle sports, fishing, education, etc.)." He added, "The key issue is how quickly advertising revenue, which has been sluggish due to COVID-19, can recover, and normalization is expected in the second half."

There is also an opinion that the short-term performance slowdown is not a factor that hinders AfreecaTV's corporate value direction. Researcher Lee emphasized, "AfreecaTV's platform can become more influential in the untact era. It is also expected that the current untact lifestyle will continue or become entrenched to some extent in the future." He stressed, "Rather, when the economic downturn caused by COVID-19 recovers, it is a platform that can achieve stronger growth."

This content was produced with the assistance of AI translation services.