Kakao Piccoma exits European market, refocuses on Japan

[Graphics by Song Ji-yoon]

Kakao Piccoma Corp., a subsidiary of South Korean platform giant Kakao Corp., is pulling out of the European market after around three years in the region.

Maeil Business Newspaper learned on Sunday that Kakao Piccoma is currently in the process of completely shutting down its European operations in France, with plans to begin the liquidation process in the first half of 2024 and complete it by the end of the year. Its digital comic platform Piccoma will cease its European services in September, and the company will notify content providers of these developments shortly.

“Market dynamics have changed since Kakao Piccoma entered Europe. As concerns about profitability and internal assessments persist, the decision to withdraw appears to be aimed at restructuring business focus and strategies,” an industry insider said. According to French media reports and other sources, Kakao Piccoma‘s European subsidiary saw operating losses totaling more than 10 million euros ($10.8 million) in 2022.

Originally rooted in Japan, Kakao Piccoma ventured into Europe in September 2021 following its dominance in the Japanese webtoon market. Despite opening a European unit in Paris and rebranding from Kakao Japan to Kakao Piccoma, the anticipated growth in the French webtoon market did not materialize as expected, prompting the decision to pull out. Research firm Cognitive Market Research reported a modest annual growth forecast of 3.1 percent for the French cartoon market, which was below the global average of 5.1 percent.

In addition to slower growth and the smaller market size compared to other major markets such as the United States and Japan, Kakao Piccoma also faced increased competition in the French digital comics market. Major players such as Média-Participations SCA and Picsou Magazine entered the digital comics market, further challenging Kakao Piccoma’s position.

With its exit from Europe, Kakao Piccoma is expected to refocus on its primary market in Japan, where it recorded over 1,000 billion yen ($641.83 million) in transactions in 2023. In Japan, tech giants such as Apple Inc., Amazon.com Inc., Rakuten Group Inc. and Shueisha Inc. are emerging as potential competitors in the digital comics space.

Against this backdrop, the company is expected to ramp up its efforts to strengthen group-wide IP initiatives. Kakao formed a content IP-related organization within the group‘s control tower in April 2024 with the aim of strengthening IP cooperation among its subsidiaries. Kakao Entertainment Corp. will also continue its efforts via Tapas Entertainment, which was formed in August 2022 after the Kakao subsidiary acquired digital comics platforms Tapas Media Inc. and Radish Media Inc. in the United States.