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[Exclusive] Media

Naver to gain toehold in OTT market via CJ ENM

Naver will buy 10-15% stake in CJ's OTT platform TVing for multi-ten million dollars

By Jun 02, 2021 (Gmt+09:00)

TVing's recently-released original drama series, Scripting Your Destiny
TVing's recently-released original drama series, Scripting Your Destiny

South Korea's Naver Corp. is expanding its footprint into the over-the-top (OTT) media service market by acquiring a stake in CJ ENM Co.'s OTT platform TVing. The upcoming deal follows the online behemoth's recent series of acquisitions of web-based novel platforms aimed at bolstering its storytelling platform, as well as its closest rival Kakao Corp.'s foray into the OTT market.

Naver is in the final stages of negotiations to take a 10-15% stake in TVing, 83.3% owned by South Korean media company CJ ENM, for multi-tens of millions of dollars, according to investment banking sources on June 2.

Now, both sides are fine-tuning the detailed terms of their agreement, which will position Naver as the third-largest shareholder in TVing, after No. 2 shareholder JTBC, a local cable TV channel.

Naver's investment amount in the OTT platform will not exceed 100 billion won ($90 million) because JTBC insisted it retain the No. 2 shareholder position with its current 16.67% stake, the sources said. 

The share purchase is separate from the 600 billion won share swap deal between Naver and CJ Group announced in October 2020. Under the deal, Naver has already become the second, or third-largest shareholder of three CJ Group units. In return, CJ took over 1.24% of Naver worth 600 billion won.

At the time, both Naver and CJ Group also agreed to jointly invest 300 billion won in content creation over the next three years.

Naver's stakes in CJ Group units under 600 billion won share swap deal

Company name Ownership
CJ Logistics Corp 7.85%
CJ ENM 4.99%
Studio Dragon 6.26%

It has yet to be known about TVing's current valuation. Back in January this year, when the cable TV network JTBC acquired a stake in TVing, it valued the latter at around 50 billion won.

But the number did not properly reflect TVing's enterprise value, analysts said, given that the investment was made as part of their business partnership just a few months after the OTT platform was spun off from CJ ENM.

"OTT companies such as Netflix and Wavve are valued at seven to 10 times their sales at least. Considering that, it would be reasonable to put TVing's enterprise value somewhere between 500 billion and 800 billion won," said a media analyst. 

(Courtesy of TVing)
(Courtesy of TVing)

The stake purchase is expected to further tighten Naver's grip on the online service market, which also encompasses web-based novels and digital comics, or webtoons, where the country's top online portal has been solidifying its position.  

OTT streaming services will help Naver keep its portal users on its platform. The company has already rolled out subscription services to watch TVing's releases since March of this year.  

With about 1.5 million paid subscribers, TVing is trailing Netflix and South Korean rival Wavve. But it has been expanding its presence at a rapid pace. Since its spin-off from CJ ENM in October 2020, its number of paid subscribers has surged 63% until April of this year.

For CJ ENM, the parent company of TVing will be able to use Naver's intellectual property content to create TV series and films.

Last week, Naver joined forces with CJ ENM to acquire the country's leading web novel platform Munpia Inc. for around 240 billion won, beating mobile giant Kakao. In the same month, Naver took over Wattpad, the world's largest web novel platform for 684.8 billion won.

Almost simultaneously, Kakao announced its entry into the OTT streaming market by acquiring domestic video streaming technology company, INISOFT Co., for 25 billion won. Deep-pocketed e-commerce platform Coupang Corp. has also joined the OTT race by launching Coupang Play in December 2020.

Acquiring the stake in TVing will further heat up the rivalry between Naver and Kakao in the entertainment business, in addition to their competition in e-commerce, gaming and fintech. 

Over the past few weeks, both companies reportedly were in separate talks with SM Entertainment, the label behind global talents such as Red Velvet, NCT, EXO and SuperJunior, to acquire a stake from SM's founder and Chairman Lee Soo-man.

"In the face of cutthroat competition, platform companies need to have something new to keep users on their platforms," said an IT industry source. "To that end, content is key. To OTT subscribers, they can sell various membership services including shopping and internet searching."

On May 31, CJ ENM unveiled a 5 trillion won spending plan to step up original content production over the next five years, with an aim to beef up its OTT media services.

Write to Jun-ho Cha and Min-ki Koo at

Yeonhee Kim edited this article.

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