Webtoon Entertainment Inc., the Nasdaq-listed storytelling platform operator under South Korea’s internet giant Naver Corp., is set to expand its advertisement business to offset flagging revenue from its mainstay paid content business.
The Korea-native digital comic platform operator hinted in a shareholder letter filed with the US Securities and Exchange Commission on Feb. 25 that it will seek to actively monetize ads to generate more revenue this year, citing the lack of ads properly targeting “Generation Z,” referring to those born between 1997 and 2012 who are considered the first truly digital native generation.
“We believe our users are already accustomed to enjoying paid, premium content through ads on other global platforms such as YouTube, Netflix and TikTok,” reads the letter written by Webtoon Entertainment founder and Chief Executive Kim Junkoo.
“Advertising remains a significant and largely untapped opportunity for us, reflecting our highly-valued demographic of deeply engaged Gen Z users.”
On the same day, Webtoon Entertainment, boasting more than 160 million monthly active users in more than 150 countries, reported $166.1 million in ad revenue in 2024, up 14.2% from the prior year.
SLOWDOWN IN PAID CONTENT REVENUE GROWTH
Many digital storytelling platforms are hesitant to use ads as an active means to generate income due to concerns that ads in paid content will face vicious resistance from users.
Webtoon Entertainment’s latest move to buck the broad industrial trend suggests that it needs a breakthrough for revenue growth besides paid content, analysts said.
Sales of its flagship paid content business, which accounts for 80% of its total revenue, grew a mere 5.3% in 2024 from a year ago.
Amid fierce competition from other platforms like YouTube and TikTok, the MAU of Naver Webtoon, the largest web comic platform in Korea under Webtoon Entertainment, dropped 2.1% to 24.40 million over the same period.
To bump up revenue while retaining its users, Webtoon Entertainment is actively developing innovative ad formats designed to reduce user resistance.
In January, it introduced a new ad format called Branded Content, which can be enjoyed as online comics, in partnership with Japanese gaming company Capcom.
Last month, Webtoon Entertainment reported that its total revenue grew 5.6% on-year to $352.8 million in 2024, partially offset by the weaker Korean currency against the US dollar.
Its net loss widened to $102.6 million from $95.3 million over the same period due to a rise in general and administrative expenses related to the company’s initial public offering last year.
Webtoon Entertainment went public on the US Nasdaq market last June, which valued the Los Angeles-based company at $2.67 billion.
The company’s offerings include Japanese web-comic and manga app Line Manga, web-novel platform Wattpad and Korean digital comic offering Naver Webtoon.
By Joo-Wan Kim
kjwan@hankyung.com
Sookyung Seo edited this article.
