[Company Exploration] Kidari Studio, Successful Overseas Expansion of K-Webtoon

Content Supply to TikTok... First Half Sales Up 83%
Active Expansion of Business Areas with Intellectual Property NFT Production

As inflation concerns, sparked by rising raw material prices, grow stronger, consumers are tightening their wallets and companies are showing reluctance to invest. Exchange rate fluctuations and reopening (resumption of economic activities) are acting in combination, casting a shadow over economic outlooks. Domestic listed companies on the stock market have released their first-half performance reports. Despite recession fears, many companies have recorded 'earnings surprises' that far exceeded market expectations. Asia Economy examines the business structures and sustainability of growth of HYBE and Kidari Studio.

[Asia Economy Reporter Park Hyungsoo] The number of subscribers to webtoons and web novels is rapidly increasing not only domestically but also overseas. The platforms providing these services are also expanding in scale. Comprehensive content company Kidari Studio has been improving its performance by actively supplying webtoon content to ByteDance, the operator of the short-form mobile video platform 'TikTok.'

Kidari Studio recorded consolidated sales of 51.7 billion KRW and operating profit of 7.2 billion KRW in the second quarter of this year. These figures represent increases of 65% and 290%, respectively, compared to the same period last year. For the first half of the year, cumulative sales reached 93.6 billion KRW and operating profit 9.4 billion KRW, up 83% and 129% year-on-year, respectively.

Founded in 1987, Kidari Studio operates in the webtoon and web novel business. It runs webtoon supply platforms such as 'Bomtoon,' 'Lezhin Comics,' and 'Delitoon.' The company holds copyrights and transmission rights of numerous authors and provides exclusive services. It maximizes revenue by serializing various webtoon content first on the Bomtoon platform and then servicing them on portals like Kakao, Naver, and One Store.

Bomtoon started as a female-oriented webtoon platform. It offers services optimized for mobile devices to adult female readers. Due to active cultural activities related to secondary works and strong content purchasing power, it has significant growth potential.

Kidari Studio also operates Delitoon SAS, the number one webtoon platform in the European Union (EU), as a subsidiary. It provides its own IP works in France and Germany. Recently, webtoons have gained great popularity in the EU, leading to increased traffic.

In December last year, Kidari ENT was merged into the company, securing the capability to directly produce content videos. The company is expanding its business areas by producing its owned content intellectual property (IP) into videos, games, and non-fungible tokens (NFTs).

Researcher Lee Byunghwa of Shinhan Financial Investment explained, "The headquarters, as well as Lezhin's payment amounts and subscriber numbers, are steadily increasing." He added, "The second-quarter sales of the headquarters and Lezhin increased by 96.8% and 53.7%, respectively, compared to the same period last year." He continued, "Lezhin Comics achieved 33.9 million subscribers and sales of 27.6 billion KRW," adding, "Bomtoon's quarterly payment amount surpassed 10 billion KRW for the first time, and its cumulative subscriber count exceeded 6 million."

Kidari Studio and ByteDance signed a webtoon content supply contract last February. ByteDance invested a total of 47.6 billion KRW in Kidari Studio and its subsidiary Lezhin Comics. Hana Securities researcher Yoon Yeji explained, "They will supply 5,000 webtoon IPs over the next four years," and estimated, "The minimum guaranteed revenue Kidari Studio receives from supplying webtoons is about 50 billion KRW."

She added, "The existing content provider (CP) business that supplies IPs has a low profit-sharing ratio with authors, so it is highly profitable," and "It will play a significant role as a cash cow going forward."

The value of IPs owned by Kidari Studio is expected to grow over time. Korean webtoon content is rapidly expanding overseas. Webtoon subscribers have increased since the COVID-19 pandemic. The Korea Creative Content Agency announced that the global comic market size reached 11 billion USD in 2020. Growing at an average annual rate of 9%, it is expected to reach 13.1 billion USD this year. Webtoon platform services are used in about 200 countries, and domestic platform companies are actively expanding overseas. According to the Content Industry Trend Analysis Report, Korea's comic industry export value in the first half of 2021 was about 45.3 million USD, a 45.5% increase compared to the same period last year.

Kidari Studio is steadily expanding its overseas presence. Last month, it officially launched the Japanese version of Bomtoon, 'Beltoon.' Since the Japanese webtoon market is larger than the domestic one, aggressive marketing is expected in the second half of this year to establish Beltoon in the market. If successful, it could achieve results surpassing domestic sales scale.

Based on strong financial soundness, stable growth is expected to continue through active investments. As of the end of the first half of this year, total borrowings stood at 25.3 billion KRW, and cash and cash equivalents amounted to 55.2 billion KRW.

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