Webtoon Entertainment, a major player in the global digital comics landscape, is strategically expanding its reach by investing in No. 9, a prominent Japanese webcomic and manga studio. This move, executed through Webtoon’s Japanese subsidiary, LINE Digital Frontier, marks a significant step in the company’s global growth strategy, particularly within the rapidly expanding Japanese market.
Strategic Investment in No. 9
The investment in No. 9 is a calculated move to bolster Webtoon Entertainment’s content pipeline in Japan, which is currently its fastest-growing market. This strategic alliance will see No. 9 appoint an external director from LINE Digital Frontier to its board, fostering closer collaboration and synergy between the two entities.
No. 9, based in Tokyo, is renowned for producing and publishing a range of popular manga and webcomics. Their portfolio includes hit titles such as “Savior of Divine Blood” and “I Am the Strongest Transcendent,” both of which have found success on Webtoon Entertainment’s global platforms. These webcomics have been localized for fans worldwide, with translations available in Korean, English, Chinese (Traditional), French, Thai, and Indonesian.
This investment represents Webtoon’s first since its U.S. initial public offering (IPO) in June, highlighting the company’s focus on strategic partnerships to fuel growth. While the exact amount of the investment remains undisclosed, the move underscores Webtoon’s commitment to solidifying its presence in Japan.
Strengthening Content Pipeline
The partnership aims to leverage No. 9’s production expertise with LINE Digital Frontier’s digital distribution capabilities to foster sustainable growth for Japanese webtoon titles and accelerate their global expansion. By collaborating closely, the two companies seek to develop intellectual properties (IPs) that resonate with audiences worldwide.
Junkoo Kim, CEO and Founder of Webtoon Entertainment, emphasized the importance of the Japanese market, stating, “Japan is the home of manga and some of the world’s most exciting comic art, so it’s a natural growth market for our global business. We’ve spent years cultivating our IP & Creator Ecosystem in Japan, leading to strong growth and a string of hits. Working with No. 9 Inc., we’ve already developed global hits with series like ‘Savior of Divine Blood,’ and we’re excited to expand our partnership to produce more incredible Japanese webcomics for local and global audiences.”
Japan’s Booming Webtoon Market
Japan’s webtoon market is experiencing rapid expansion. In 2022, it was estimated to be approximately 50 billion yen, which constitutes about 10 percent of the total electronic comic market. The number of homegrown webtoon titles is increasing, with some achieving significant milestones such as anime and film adaptations or surpassing monthly sales of 100 million yen.
LINE Manga, operated by LINE Digital Frontier, has solidified its position as the leading comic app in Japan’s overall app market by revenue, consistently topping charts, even when including revenue from mobile games. This success underscores the immense potential of the Japanese market for Webtoon Entertainment.
Webtoon’s Global Expansion Strategy
The investment in No. 9 is part of Webtoon Entertainment’s broader global expansion strategy. The company has been actively working to establish a robust creator ecosystem in Japan, focusing on the development of compelling intellectual property for international audiences.
Expanding Beyond Asia
While Webtoon expects significant growth in the U.S. market in the coming years, Japan is currently its fastest-growing market. This emphasis on Japan is evidenced by the company’s efforts to increase the proportion of locally produced content. This approach is in line with the broader trend of webcomics platform operators seeking to boost user engagement and paid subscriptions amid slowing growth concerns.
Webtoon’s IP strategy is multifaceted, encompassing licensing, co-productions, and in-house productions. The company recognizes the importance of IP adaptations for both business and marketing purposes. The more IP adaptations there are, the more users are drawn to the platform.
Strategic Partnerships and Adaptations
Webtoon Entertainment is also working with Japanese partners to develop several hit IPs for screens around the world, including an anime adaptation of the popular “Omniscient Reader’s Viewpoint” series, in collaboration with Aniplex and Crunchyroll. Furthermore, an adaptation of “GOSU” is underway with Toei, the creators of iconic series such as “Dragon Ball” and “One Piece.” These collaborations showcase Webtoon’s commitment to extending the reach of its content and solidifying its status as a global entertainment platform.
Webtoon’s Financial Performance and Market Position
Webtoon Entertainment has experienced significant growth in recent years, transitioning into a profitable entity following its spin-off from Naver in 2017. The company’s U.S. headquarters, known as WEBTOON Entertainment, has been actively expanding its intellectual property and diversifying its business models. The company also successfully listed on the NASDAQ in June, further solidifying its financial standing.
Webtoon is currently one of the largest webcomic platforms globally, boasting around 170 million monthly active users across over 150 countries. The platform is not just a space for content consumption; it provides an end-to-end creator technology toolkit, enabling anyone to become a creator regardless of their background. This vast user base is a testament to Webtoon’s global appeal and its strong position in the digital comics market.
Despite not having a positive price-to-earnings (P/E) ratio due to negative earnings over the last 12 months, Webtoon Entertainment’s trailing 12-month revenue is approximately $1.3 billion. While not currently paying dividends, analysts anticipate adjusted earnings to improve. This financial backdrop reflects both the challenges and opportunities that come with expansion and market leadership.
Webtoon’s Future Outlook
Webtoon Entertainment’s investment in No. 9 demonstrates a commitment to fostering the growth of the webtoon industry, particularly in Japan. The company’s approach is not just about business; it is about developing a global ecosystem for creators and fans. With the Japanese webcomic market continuing to grow and Webtoon Entertainment’s solid foundation, the future appears promising for both the company and the industry at large.
This strategic partnership is expected to accelerate the development and global expansion of Japanese webtoons, further cementing Webtoon Entertainment’s position as a leading force in the global digital entertainment market.
