This development marks a significant milestone for the digital comics industry, challenging the long-held notion that “webtoons can’t make money.” (Image courtesy of Yonhap)
SEOUL, Jun. 26 (Korea Bizwire) – As Naver Webtoon prepares for its Nasdaq listing, the company has set its initial public offering (IPO) price, catapulting its valuation to around 3.7 trillion won.
This development marks a significant milestone for the digital comics industry, challenging the long-held notion that “webtoons can’t make money.”
Webtoon Entertainment, the North American subsidiary and headquarters of Naver Webtoon, announced on June 26 that it has set its IPO price at $21 per share.
Based on this figure, the company’s expected market capitalization reaches $2.67 billion, equivalent to approximately 3.7 trillion Korean won.
Just a decade ago, most webtoons were offered for free, leading to widespread skepticism about their profit-making potential. While these digital comics were seen as effective in attracting platform users, their ability to generate revenue was questioned.
However, the webtoon industry has experienced exponential growth in recent years, successfully implementing paid content models.
Today, it’s commonplace for readers to purchase “cookies” – the virtual currency used on Naver Webtoon – to access upcoming episodes or collect favorite works.
The increasing adaptation of webtoons into dramas and films has further elevated their status as valuable intellectual property (IP) seeds. Combined with a thriving advertising business, the value of webtoons is being reassessed.
Due to the widespread popularity of K-Webtoons, there has been a surge in the production of dramas and movies adapted from webtoons. Notable examples include “Itaewon Class” (top), “Amazing Rumor” (bottom left), and Naver Webtoon’s “Sweet Home” (bottom center), which are highly acclaimed dramas served by KakaoPage. Additionally, the webtoon “Seungriho” (bottom right) has been successfully adapted into a movie, which was released on Kakao Page. (Image courtesy of Kakao Entertainment, NAVER)
Last year, Webtoon Entertainment reported revenues of approximately $1.28 billion. Of this, 80.2% came from paid content sales, while advertising and IP expansion accounted for 11.3% and 8.4%, respectively.
The company sees significant growth potential in the paid content market, estimating a $130 billion market opportunity.
The average revenue per paying user (ARPPU) has been steadily increasing, rising from $7.8 in Q1 2022 to $11.5 in Q1 2024. As of the first quarter of this year, the platform boasted 7.8 million monthly paying users.
A study commissioned by Webtoon Entertainment suggests that in North America, the annual ARPPU for paid content could grow to $203. The company also foresees market opportunities of $90 billion in IP business and $680 billion in advertising.
However, translating these opportunities into consistent profits remains a challenge. Webtoon Entertainment reported net losses until the first quarter of this year, with a cumulative deficit of $363.3 million as of the end of last year.
The company managed to turn a profit of $6.23 million in Q1 2024, with earnings before interest, taxes, depreciation, and amortization (EBITDA) of $21.97 million.
In its filing with the U.S. Securities and Exchange Commission (SEC), Webtoon Entertainment cautioned, “We have a history of net losses and may not be able to achieve or maintain profitability in the future due to increasing expenses.”
M. H. Lee (mhlee@koreabizwire.com)
