OTT startup Watcha expands into music distribution service

South Korea-based over-the-top (OTT) startup Watcha Inc. is ramping up efforts to transform into a comprehensive content data company as it expands its scope of business to cover music, books, concerts and even webtoons.

Earlier this month, Watcha announced that it will be acquiring Vlending, a music distribution service under the country’s major broadcasting network, Munhwa Broadcasting Corporation (MBC).

The announcement came as a surprise as the merger seemed a bit out of blue, stirring up rumors that Watcha may be looking to leave behind the OTT business and tap into fresh segments. But Watcha debunked such rumors, explaining that its original business blueprint remains intact.

“Watcha can’t be limited to just an OTT startup. It’s a content data company, and there are so many content businesses that can be expanded by making use of data," said Park Tae-hoon, the founder and chief executive of Watcha, in an interview with The Korea Economic Daily on Aug. 17.

Watcha was founded in 2011 while CEO Park attended KAIST, the country's leading science and tech university. Park was keen on the concept of customizing all types of services which led to the creation of Watcha, an artificial intelligence-powered curation service that offers highly accurate recommendations and predicts the types of shows that would appeal to users, making it a huge hit among younger viewers. 

Watcha first began as Watchapedia, a rating platform for movies and dramas, which has accumulated around 620 million rating data so far. Although Watchapedia currently focuses on mostly films and dramas, the company plans to expand it to include ratings for books, music, performances and even webtoons.

Watcha is the only startup to compete against OTT giants including Netflix, Wavve and Tving in Korea. But CEO Park says that Watcha is a comprehensive content data company, not just an OTT platform. 

"We chose OTT because it was a service model that could be monetized the fastest in the process of securing content data," said Park, adding that the company is exploring other segments to expand into with content data.

Over the past few years, a number of large companies and major commerce platforms have approached Park to consider selling Watcha, but he rejected all of the proposals on grounds that Watcha's business expansion would face many restrictions if it were to be acquired by a large company.

"Unless it's a startup, it's nearly impossible to have a working environment that moves in perfect order with a speedy decision-making process," said Park, adding that Watcha is keen on maintaining its startup identity and broadening its business to cover all areas of culture.

Last year, Watcha became the first local OTT platform to foray abroad with its launch in Japan. The company is also considering expanding into Southeast Asia and North America as well, according to CEO Park.

The company is also looking to make a trading debut this year. Watcha has already selected NH Investment & Securities as the initial public offering manager to get listed on the tech-heavy KOSDAQ market.

In 2020, the company logged revenue of 37.7 billion won ($32.1 million), the second-highest turnover among local OTTs.

Write to Min-ki Koo at kook@hankyung.com
Danbee Lee edited this article.