D&C Media Expands Overseas via Webtoon Platform... "IP Expansion is an Opportunity"

Comics were once unwelcome in Korean society. In the 1970s, there were comic book burnings; in the 1990s, campaigns to ban delinquent books; and in 1997, regulations under the Youth Protection Act, all citing comics as a cause of producing 'criminal or delinquent youth.' However, the status of comics is changing. With the advent of smartphones, more people enjoy short content, making comics an indispensable part of the daily commute for ordinary people. The term 'webtoon' has become more familiar than 'comics.' The domestic webtoon market has grown to a scale of 1 trillion won. Recently, it has been exported to various countries overseas, growing into another driving force of the Korean Wave. Asia Economy aims to examine the growth potential and financial structure of D&C Media and Mr. Blue, who are actively thriving in the webtoon market.

[Asia Economy Reporter Yoo Hyun-seok] D&C Media's growth is steep. Web novels and webtoons provided to platforms like Kakao Page and Naver Webtoon have been successful overseas, leading to strong performance. Since web novels and webtoons can easily expand into dramas, movies, and games, the value of the company's intellectual property (IP) is expected to increase further.

D&C Media was established in 2002. It is a content provider (CP) specializing in web novels and webtoons. It supplies genre novels and comics with specific themes such as romance, fantasy, and martial arts. The company was listed on the KOSDAQ market in 2017. Representative works include "Solo Leveling" and "The Emperor's Daughter."

The company owns brands such as Papyrus, Itbook, L Novel, Seed Novel, Black Label Club, D&C Books, and D&C Webtoon. Papyrus mainly produces content in the fantasy and martial arts genres. L Novel and Seed Novel handle novels like light novels. Light novels are a genre of novels originating from Japanese subculture, often featuring anime-style illustrations. Works produced under these brands are provided to major portal sites like Kakao Page and Naver, web novel platforms such as Munpia and Joara, e-book distributors like Ridibooks and Kyobo Bookstore, or released as books in various bookstores.

The comic and genre novel market that D&C Media focuses on was once an industry whose growth was halted due to illegal copying and regulations. However, with the popularization of smartphones, snack culture?consuming cultural content like webtoons and web novels in a short time?has flourished, leading to renewed growth.

Adapting to the mobile era, D&C Media is also growing rapidly. Consolidated sales increased from 26.5 billion won in 2017 to 32.1 billion won in 2018, and 42.1 billion won last year. Operating profit also rose from 5.4 billion won in 2017 to 7.9 billion won last year. In the first quarter, sales reached 12.6 billion won and operating profit 2.7 billion won, up 31.05% and 54.60% respectively compared to the same period last year. E-books accounted for 85.1% of first-quarter sales, while paper books made up 14.5%.

The biggest driver of sales growth is the growth of platforms like Naver Webtoon and Kakao Page. D&C Media recognizes revenue by aggregating the payment amounts from users who access content through client platforms, then paying a certain percentage of sales as platform fees. In other words, as platform sales increase, D&C Media's performance naturally grows. According to Mirae Asset Daewoo, last year, the transaction amounts for Naver Webtoon (including Line Manga) and Kakao Page (including Piccoma) were approximately 564 billion won and 430 billion won, respectively, up 52.8% and 47% year-on-year.

Platforms like Naver Webtoon and Kakao Page are rapidly expanding overseas beyond Korea. This is expected to benefit D&C Media as well. Kakao Page, the second-largest shareholder of D&C Media (18.13%), is accelerating its overseas expansion. It plans to expand its business to North America, China, Thailand, Taiwan, as well as Japan and Indonesia, where it has already entered. Naver is also strengthening its overseas webtoon business. Through a conference call in the second quarter, it plans to restructure Naver Webtoon's governance centered on the U.S., aiming to enhance platform synergy among Korea, the U.S., and Japan.

One of the secrets to D&C Media's growth is the virtuous cycle from One Source Multi Use (OSMU). For example, if a web novel A is adapted into a webtoon B, users who first see B naturally read A. OSMU is a method of developing and selling one piece of content in various forms such as movies, games, and comics. The webtoon "Solo Leveling," serialized on Kakao Page, is based on a web novel. It was produced using the OSMU method. This webtoon has surpassed 1 million cumulative readers on Piccoma, a webtoon service operated by Kakao Japan. Volume 1 of the collected edition ranked number one in sales immediately after release on Amazon in Germany and Brazil.

Since OSMU is possible, the value of IP owned by D&C Media is expected to grow further. The recently aired drama "Itaewon Class" is also based on a webtoon. This means there is limitless potential for expansion into dramas, games, or movies. Kim Jong-min, a researcher at Samsung Securities, explained, "Webtoon-based dramas like 'Itaewon Class' have succeeded, and webtoon-based IPs such as 'Sweet Home' and 'All of Us Are Dead' are being developed as Netflix original content. This environment inevitably increases the value of D&C Media, which holds the largest number of webtoon and web novel IPs in Korea."

Supported by growth, the financial structure is also solid. The debt ratio was 26.6% in the first quarter of this year, and reliance on borrowings was only 0.4%. The company's cash is also increasing. Cash and cash equivalents, which were 5.6 billion won in 2017, rose to 9.2 billion won in the first quarter, and retained earnings increased from 10.9 billion won to 22.5 billion won.

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