Naver and Kakao, the twin engines of the domestic webtoon industry, received mixed results last year. Naver Webtoon’s parent company, Webtoon Entertainment, reported a 25.8% increase in revenue from its Japanese operations, while Kakao's Japanese business, 'Piccoma,' saw a 6% decline in revenue. The industry analyzed this as the impact of Naver's attempts to secure local intellectual property (IP), which is a 'blue ocean' market in Japan.
Webtoon Entertainment, the parent company of Naver Webtoon, revealed on the 26th through a public disclosure that its revenue last year reached $1.35 billion (1.84 trillion won), marking a 5.1% increase from the previous year. The revenue from Japan amounted to $648.2 million (883.6 billion won), which is a 25.8% increase compared to the previous year (based on the same exchange rate) and exceeds its revenue in the Korean market, setting a record high. However, due to an increase in marketing expenses, it recorded an operating loss of $10.7 million (137.3 billion won).
During the same period, Kakao's institutional sector revenue was 3.971 trillion won, a 1% decrease compared to the same period last year. According to Kakao, its Japanese webtoon business, Kakao Piccoma, recorded a revenue of 476 billion won, which is a 6% decline compared to the previous year. However, revenue in yen terms increased by 2% compared to the previous year. Kakao Entertainment, which handles web novels, also saw a 6% decrease compared to the previous year, recording 389 billion won.
The webtoon industry believes that the ability to discover new intellectual properties (IPs) has divided the performances of the two companies. Kakao Piccoma's reliance on popular IPs like 'Solo Leveling' has led to underwhelming results compared to 2022 and 2023. In contrast, Line Digital Frontier has been investing in discovering emerging writers by operating the amateur writer platform 'Indies' both domestically and locally.
The changes in the performance of both companies are also affecting their market shares. Kakao Piccoma, which entered Japan in 2016, has maintained an overwhelming first place in the local webtoon market. Line Manga started its business in Japan earlier in 2013, but fell behind local publishers and Piccoma, remaining in second place for years. However, last year, Line Manga caught up to Piccoma in market share. According to Sensor Tower, Line Manga's market share in Japan increased from 31% in January last year to 51% in January this year. However, based on last year's annual transaction volume, Piccoma maintained its number one position with over 100 billion yen (approximately 95 billion won).
As the Japanese electronic comic market proves its growth potential, competition between the two companies is expected to intensify. According to the Japan Publishing Association and the Publishing Research Institute, the market size of Japan's electronic comic market reached 512.2 billion yen (approximately 4.8459 trillion won) last year, a 6% increase compared to 483 billion yen in 2023. Line Digital Frontier is accelerating its localization strategy by acquiring a local manga studio last January.
An official from the content industry noted, 'It is true that Solo Leveling serves as a cash cow for Piccoma, but the lack of emerging works means that, in the long run, revenue is bound to decline.' They added, 'To survive overseas, new works that can perform locally must be developed.'