Korea’s top adult webtoon platform targets global market

Topco, South Korea’s top adult webtoon platform operator, is targeting the global digital comic market with the goal to expand its business into other content by merging with its affiliates and raising money from major Chinese players such as ByteDance Ltd.

Topco and its affiliates Topco Media Co., which manufacturers communication equipment, as well as Metacraft, which operates a web novel platform, are working on a merger, according to investment banking industry sources on Sunday. The move is for a backdoor listing of Topco and Metacraft through the Kosdaq-listed Topco Media, the sources said.

Topco Media is reportedly in talks with China’s major content platform operators including ByteDance of TikTok and Bilibili Inc., a video-sharing website, to secure investment and form strategic alliances.

Topco Media, formerly Digital Multimedia Technology Co., was acquired by Topco CEO Yoo Jeong-seok in December of last year. Yoo founded Topco, the parent company of the country’s leading adult webtoon platform Toptoon, in 2014 and Metacraft, the operator of Novelpia, in January 2021.

Toptoon has attracted 24 million accumulated users in South Korea with adult content that are difficult for Naver and Kakao to supply. Toptoon operates a studio for about 100 artists that produce its own webtoons. That helped the platform log higher operating profit margins than those of Naver and Kakao that provide external content and share profit with creators. Topco last year reported 15.1 billion won ($12.4 million) in operating profit with sales of 65.8 billion won.

In March, Topco said it has established a new US unit to advance into the market. Toptoon Plus, a global website version of Toptoon, operating in the US, recently secured 1.5 million members in about nine months since its launch, according to the company.

Novelpia, which provides novels written by about 15,000 artists, has secured about 900,000 subscribers.

COMPREHENSIVE WEB CONTENT PLATFORM FOR GLOBAL MARKET

Once the merger and fundraising are completed, Topco Media is set to transform into a comprehensive web content platform that covers both webtoons and web novels while dropping the equipment business. It already took over Topco’s Japanese business and planned to launch a webtoon platform in the country in May.

The merged entity targets the global webtoon market currently dominated by South Korea’s tech behemoths Naver Corp. and Kakao Corp. It also aims for the intellectual property business by producing drama series and movies based on its webtoons and web novels.

“Domestic web content platform operators rushed to secure IPs such as global webtoons and web novels as those with larger platform influence have better bargaining power since the IP business is in the early stage,” said a platform industry source.

The merger of Topco Media, Topco and Metacraft is expected to create an entity with an expected value of around 1 trillion won, a company source estimated. Topco Media’s current market capitalization was at 144.2 billion won as of April 4.

“Topco’s corporate value was estimated at around 600 billion won. The total value is predicted to rise to 1 trillion won once Metacraft is merged,” said the source.

That would be higher than the market capitalization of the current No. 1 listed web content platform operator KidariStudio Inc.'s 599.2 billion won. Naver Webtoon and Kakao Entertainment, the country’s top web content producers, have yet to go public.

Topco Media aims to raise its corporate value before completing the fundraising from the Chinese investors by the middle of this year to prevent share dilution.

Write to Min-Ki Koo at kook@hankyung.com
Jongwoo Cheon edited this article.