Promote acquisition of the exclusive Kakao web novel platform Radish 400 billion

Kakao will spend 400 billion won to acquire Radish, a global web novel platform. This is to secure story content to be used in movies, dramas, and webtoons.

According to the investment banking (IB) industry on the 4th, Kakao is discussing to acquire Radish management rights with Kakao Entertainment, a content subsidiary. Radish is an Anglo-American-based web novel platform. Founded in 2016 by CEO Seung-yoon Lee (31), who graduated from Oxford University in the UK. It is the top 5 company in terms of sales among web novel platforms in the United States.

Kakao’s investment in the acquisition of Radish is known to be 400 billion won. This investment is the largest after Kakao acquired Loen Entertainment with an investment of 1.9 trillion won in 2016. Kakao Entertainment secured a 12% stake by investing 32.2 billion won in Radish in July of last year. In February of this year, it is reported that it additionally took over the shares of Radish held by venture capital (VC). If the acquisition is completed with this investment of 400 billion won, Kakao Entertainment will become the largest shareholder of Radish and secure management rights.

It is analyzed that Kakao’s investment is a match for Naver’s acquisition of the web novel platform Wattpad this year. Whatpad is the world’s No. 1 in web fiction field with 90 million active users (MAU). Naver took over it last January with an investment of 650 billion won. While Wattpad is focusing on expanding users with free services, Radish is focusing on paid content services created through an online collaboration system. Last year, radish sales were 23 billion won, a 10-fold increase from 2019 (2.2 billion won). An official in the information technology (IT) industry said, “To take the lead in the content intellectual property (IP) business, the competition between Naver and Kakao in the US market will be fierce.”

Kakao vs Naver, infinite competition for global content
Kakao acquires a US web novel company

Kakao wasn’t the only one showing interest in the global web novel platform Radish. It is known that a large global venture capital (VC) company A also sent a love call to Radish. The amount that Company A wrote down was 700 billion won, much more than Kakao (400 billion). Nevertheless, Radish chose Kakao. It is said that the judgment that synergy is great if Kakao and the content copyright (IP) business unite.

As Kakao is pushing for the acquisition of Radish, the global IP business war with Naver is heating up. Kakao is expected to compete for a global web novel platform with Radish and Naver with Wattpad.

Kakao launches its IP business in earnest

Radish is a mobile-specific web novel platform. It is gaining popularity as an original content platform that is collectively created around the ecosystem of local artists. The growth trend is steep, with sales of 22 billion won last year, a 10-fold increase over the previous year. The founder is Lee Seung-yoon, a Korean born in 1991. Lee, who studied politics, philosophy, and economy at Oxford University in the UK, founded Radish in 2016. Sue Johnson, former vice president of ABC, and Shin Jong-hoon, co-founder of Kakao Page, are currently conducting business in North America.

The key reason for Kakao to acquire Radish is its IP business. It is a business that expands Radish’s’story IP’ to other entertainment contents. Basically, Radish’s web novel IP can be converted into a webtoon and distributed through the Kakao webtoon platform. Kakao Page’s web novel, the original webtoon, is calculated to release hits such as’I Only Level Up’. This work achieved 620 million cumulative views and 40 billion won in cumulative sales.

IP can also be extended to other genres such as movies, dramas, and games. It is also possible to sell IP to online video service (OTT) companies. Recently, OTT companies such as Netflix and Disney Plus are focusing their efforts on securing content IPs around the world. Naver Webtoon’s original drama’Sweet Home’ distributed on Netflix topped the viewership rating in eight countries, including Korea, Malaysia, Singapore, and Taiwan. Kakao Page’s IP-based movie’Seungriho’ also ranked first in the Netflix movie rankings.

According to the Korea Creative Content Agency, the scale of the global content market such as drama webtoon reached $2,294.9 billion last year. It is expected to reach $ 2.796.6 billion in 2024. An official in the information technology (IT) industry said, “The possibility of expanding the IP of web novel platforms such as Radish and Wattpad is evaluated at an astronomical level.”

Naver’s acquisition of Whatpad’matches’

Another reason for Kakao’s acquisition of Radish is to enter the web fiction market as quickly as possible so as not to hand over’IP business supremacy’ to Naver. Naver has entered the US web fiction and webtoon market, which is the most important IP business. In January, Naver took over the web novel platform Whatpad with an all-time maximum of 650 billion won as an external corporate investment. Wattpad is a competitor of Radish, with monthly users (MAU) of 90 million. ‘Webtoon’, a webtoon platform that Naver has fostered since 2014, ranks first in sales in the United States. In February, it secured a 25% stake by investing 33.4 billion won in Content First, which operates the second-largest webtoon platform, Tapetoon.

On the other hand, Kakao is not performing well in the US market. Although it holds a 40% stake in Tapas, the third-largest webtoon platform in sales, it has not yet secured management rights. Kakao’s plan is to reverse the charter by taking over Radish. The IT industry is predicting that Kakao will be able to create the same situation in the US as it has caught up with Naver by growing Piccoma in the Japanese webtoon market. The U.S. is the world’s largest market for contents such as movies, dramas, and animations at $809.8 billion.

Reporter Koo Min-ki/Kim Chae-yeon [email protected]