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Media & Entertainment

South Korean internet giants battle for top spot in web comics

Naver and Kakao make use of smartphone-friendly format to reach global audience

The South Korean web companies Naver and Kakao are aiming to solidify their positions in the world of web comics. (Photo by Kotaro Hosokawa)

SEOUL -- Kakao and Naver, South Korea's two internet titans, are competing for the top spot in the global market for web comics.

Naver will acquire a web comic company in Canada, and Kakao will buy two in the U.S. The driving force behind their growth is the webtoon format of comics in vertical strips optimized for smartphones. South Korean companies are gaining momentum in the entertainment market, such as music and movies, and are becoming a particularly potent force in web comics.

"We will become the platform that attracts the most users and creators anywhere in the world," said Naver President Han Seong-sook at an event for web engineers in late April. The company's goal is to create a "comic version of YouTube" in which users can freely view and share comics.

Naver Webtoon boasts 72 million users worldwide. It is available in 10 languages, including the Japanese-language Line Manga, and over 700,000 comic artists contribute to the platform. The company plans to complete its $600 million acquisition of Wattpad in Canada by the end of May. Its strategy is to solidify its status as a platform by attracting 90 million new users, mainly in English-speaking countries.

Kakao, which operates Piccoma in Japan, is also building a foothold among English-language users through mergers and acquisitions. The company is considering buying two U.S. companies, Tapas Media and Radish Media, and says it is "close to a final agreement."

Kakao has not disclosed its user numbers, but South Korean media put the number at between 30 million and 40 million, most of whom are in Japan and South Korea. It aims to expand its user base in the U.S. and elsewhere by acquiring the U.S. companies.

A single player with an overwhelming market share has not emerged in the web comic sector, although Amazon is developing some services. The two South Korean companies' rise has been fueled by the webtoon system, which is easy to read on a small screen. It was developed by Naver in the 2000s and became popular in the mid-2010s.

The system is basically a full-color comic that scrolls vertically, different from typical Japanese manga, where multiple panels on a page read from top right to bottom left. It is becoming the de facto standard for web comics, as it offers a great amount freedom in panel layout and text placement and makes for easy translation.

Naver has a feature that allows anyone to freely post comics, much like anyone can share videos on YouTube, and many contributors are amateur artists who draw comics as a hobby. Among the contributors, 2,300 popular cartoonists are certified as professionals, and their earnings are distributed according to the number of views they earn.

According to Naver, the average annual income of a professional comic artist is 300 million won ($267,900). The company is drawing in creators from all over the world by improving its system to return profits to artists. As the system generates more popular content, it will attract more users. Revenue for both Naver and Kakao's content businesses has more than quadrupled over the past three years to 50 billion yen ($460 million).

With a population of just over 50 million, South Korea's domestic market is relatively small, meaning expanding overseas is essential for businesses to grow. Just as South Korean movies, television programs and K-pop music, best symbolized by the popular group BTS, have made major strides, the two South Korean web companies are aiming to solidify their positions in the world of web comics.

They will also set up systems for the multifaceted development of comics in other media. In 2020, Naver moved its Webtoon division to the U.S., the home of its intellectual property business, to promote its expansion into television programs and movies.

The two companies plan to list their web comic subsidiaries on the U.S. stock market to secure funds for their expansion strategies. According to South Korean securities companies, each of these companies is estimated to be worth well over 1 trillion yen, and markets expect them to continue growing.

Japan, the "manga superpower," has a wealth of content but is lagging in developing a global market. This is not only due to language barriers, but also because companies that had long focused on physical products, such as comic magazines and books, were reluctant to develop their digital operations.

In Japan, the successful formula for major publishers has been to train manga artists, publish them in weekly magazines and then develop the content into anime, movies and merchandise. With a population of more than 100 million, publishers could secure a certain level of revenue from the domestic market. The persistent problem of pirated manga websites also made companies hesitant.

"It's possible that vertical-reading manga will become the global standard," said Yoichi Yasumoto, executive officer at Kadokawa. The company, which has formed a capital tie-up with Kakao, in March began holding a contest to discover new webtoon titles, and it has set out to develop artists with global audiences.

But it has yet to lay out a strategy to become a global platform for a wide range of works like its South Korean counterparts. Webtoons, which have begun to take hold in Japan, are also revolutionizing the paper-based Japanese manga industry.

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