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Joint Ventures

Kakao, Tencent join forces to tackle Chinese market

By Dec 01, 2020 (Gmt+09:00)

Kakao Page, a popular app that offers webtoons and novels, shown here by Korean actor Park Bo-gum.
Kakao Page, a popular app that offers webtoons and novels, shown here by Korean actor Park Bo-gum.


South Korea’s leading platform giant Kakao Corp. has joined hands with China’s tech giant Tencent Holdings Ltd. to tap into the Chinese market. The two companies have agreed to set up a joint venture to launch a fresh content platform next year.

Kakao Page, the content platform under Kakao, will supply content such as webtoons (digital comics) and web novels for the JV platform, which will be managed by Tencent. It is understood that the two parties are also reviewing Kakao Page’s intellectual property business that sells IP to be adapted into films, dramas, games and other content mediums.

The two parties are currently discussing how much will be injected into the JV, alongside share ratios.

“Kakao Page is entering the Chinese market via a joint venture to avoid regulatory risks that may stem from the Chinese government,” said an industry source. “Considering this, Tencent’s shareholdings in the JV may exceed more than 50%,” the source added.


Itaewon Class, a popular webtoon adapted into a drama series
Itaewon Class, a popular webtoon adapted into a drama series


The JV appears to be a natural progression for the two companies as they have already engaged in years of collaboration. In 2013, Tencent became the third-largest shareholder of Kakao Page when its investment arm Skyblue Creative Investment Pte. Ltd acquired a 6.78% stake in the Korean content company.

The strategic investment strengthened business ties between Kakao Page and Tencent’s comics platform, which was established in 2012.

In 2017, Kakao Page provided around 20 webtoon IP works to Tencent’s comics platform, and this year, Tencent Korea Director Kellyn Jinglan Yu was appointed as a non-executive director at the Korean webtoon platform. 


KAKAO CONTENT GOES GLOBALLY

Kakao Page is moving fast to expand its global content operations given that it has already forayed into Japan, Southeast Asia, and the US. In particular, China is an attractive market for Kakao Page, which aspires to become a global IP business.

According to the Korea Creative Content Agency, the Chinese content market expects to post 5.65% yearly growth until 2023. As of this year, it stands at around $388.3 billion ($351 million), coming second to the US. Meanwhile, Korea’s content market stands at around $69.2 billion.

“Chinese audiences are loyal when it comes to familiar IP content, as demonstrated in the success of the Chinese drama Cheonwolhwaseon, which was based on Smilegate’s CrossFire game,” said an industry source.

“The JV is likely to become a highly profitable company if it offers well-made intellectual property via webtoons,” the source added.

Korean game company Smilegate's CrossFire was adapted into a drama series in China.
Korean game company Smilegate's CrossFire was adapted into a drama series in China.


In addition to China, Kakao established a digital comics platform, Piccoma, in Japan in 2016, followed by taking over Indonesia-based webtoon operator NeoBazar in 2018 to begin its foray into Southeast Asia.

In a move to boost its presence in the US market, Kakao Page also acquired an additional 29.6% stake in Tapas Media, a US-based digital comics platform, valued at around 16.1 billion won ($14.5 million). This raised its shareholdings in Tapas to 40.4%, making it the largest shareholder in the company.

Write to Min-ki Koo at kook@hankyung.com

Danbee Lee edited this article.

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