Korean homegrown OTT platform Watcha up for sale

South Korea’s over-the-top (OTT) platform Watcha Inc. is in talks with some companies to sell off its shares, according to investment banking sources on July 27.

Some game developers, online portal giants and e-commerce platforms have talked to Watcha under the table about the deal, sources said. Watcha's management chooses to talk directly to investors and potential buyers without external financial advisors, an IB source said.

The equity value for the sale hasn’t been set yet. Watcha was valued at 338 billion won ($257.3 million) last October when it attracted 49 billion won by issuing convertible bonds.    

If clinched, the deal will reflect some discount as the Korean homegrown OTT platform suffers from financial challenges, the source said.  

Founded in 2011 as a content review aggregator, Watcha entered the Korean OTT market with its streaming service Watcha Play in 2015.

It garnered huge attention with an in-house artificial intelligence system that analyzes 650 million pieces of review data and recommends films and drama series. Based on the AI results, Wacha released its original drama Semantic Error, a gay romance, in February. 

However, the platform failed in the fierce competition with other platform giants. It ranks only seventh in Korea in terms of monthly active users, just 1.09 million as of end-June, following Netflix, Wavve, TVing, Coupang Play and Disney+.

It posted 70.8 billion won in sales and 24.8 billion won in operating losses on a consolidated basis last year. The company announced in May it will attract 100 billion won via a pre-IPO, but recently shifted the plan.

Founder and CEO Park Tae-hoon is the largest shareholder with a 15.8% stake. Other major investors include Korea’s VC firms Atinum Investment Co., Kakao Ventures Corp. and Company K Partners Co. as well as state-run Korea Development Bank. CEO Park hopes to keep participating in management even if it means losing some shares, sources said.

Write to Joo-Wan Kim and Chae-Yeon Kim at kjwan@hankyung.com
Jihyun Kim edited this article.