Korea’s No. 1 bookstore Kyobo seeks to acquire OTT platform Watcha

The Kyobo Book Centre, South Korea’s largest bookstore chain, is seeking to acquire over-the-top (OTT) platform Watcha Inc. to expand its business scope and offer a video streaming service as a content provider.

Kyobo, wholly owned by Kyobo Life Insurance Co., has been conducting due diligence for the acquisition of Watch through a domestic accounting firm, investment banking sources said on Monday.

Established in 1980, Kyobo Book Centre is the largest bookstore in Korea, operating 40 offline outlets across the country.

The company has been relatively late in entering the e-book market, struggling to compete with bigger rivals such as online giant Amazon.

Through the acquisition of Watcha, analysts say, Kyobo aims to secure video content production capabilities to create synergy with its existing book business.

WATCHA SALE A TOUGH DEAL

Watcha, a homegrown OTT operator, has been in talks with potential buyers since July.

Sources said Watcha has contacted SK Telecom Co., entertainment powerhouse CJ ENM Co., KT Corp. and Ridi Corp., often referred to as Korea’s Kindle.

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

Watcha was valued at 338 billion won ($257.3 million) last October when it attracted 49 billion won by issuing convertible bonds. But its enterprise value has declined to around 100 billion won as the company, in the face of growing competition, fell out of the top ten in Korea in terms of market share.

Founder and Chief Executive 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 the state-run Korea Development Bank. CEO Park hopes to keep participating in management even if it means losing some shares, sources said.

Korea is rapidly emerging as a battleground for domestic and global OTT players to secure content as locally produced TV series and dramas have become global hits.

In Korea, Netflix Inc. is the dominant player with its viewership growth far exceeding that of its competitors thanks to a string of popular content releases like Squid Game and All of Us are Dead.

In mid-July, CJ ENM said it is merging its over-the-top streaming platform TVing with local rival Seezn, run by telecommunications giant KT, to gain the upper hand in the increasingly competitive on-demand video streaming market.

“Even if Kyobo acquires Watcha, It’s uncertain whether the bookstore company can run it effectively to compete with OTT giants,” said an industry official.

Write to Chae-Yeon Kim at Why29@hankyung.com
In-Soo Nam edited this article.