Kakao to close European webtoon platform after failing to read the market

Kakao's webtoon platform subsidiary in Europe, Piccoma, will close after failing to localize its content and collaborate with regional publishers.

Kakao Piccoma, Kakao's European webtoon platform subsidiary based in Paris, will be dissolved in September in line with the company's push to downsize or shut down unprofitable overseas units.[KAKAO]

[NEWS ANALYSIS]

A lack of localization and cooperation with local publishers are the main causes behind Kakao's closure of its webtoon platform in Europe, according to market insiders in the region.

It has only been weeks since Kakao Piccoma, the European webtoon platform subsidiary based in Paris, made a surprise announcement that it will be dissolved in September in line with the parent company's push to downsize or shut down unprofitable overseas units.

The platform's inability to establish a presence may stem from a lack of physical copies and partnerships with local publishers who understand how to appeal to avid comic readers.

“I believe webtoons’ core consumer group is part of the already existing Japanese manga community rather than the usual K-content consumer,” perceived Annabell Fuhres, a webtoon translator based Berlin, Germany. “And for this consumer group, physical books, offline conventions, searching through bookstores, collecting the series and displaying them at home, buying merchandise bundles and getting your hands on special editions is a huge, huge part of the hobby.

“Local publishers know the market very well and have added even more collector value by introducing webtoon and manga photo cards, and merch bundles for first prints to boost promotion. These things come with far bigger costs than opening an online service, but could possibly lead to better results long term.”

Kakao's total investment in the European subsidiary snowballed to 40 million euros ($43.4 million) from its establishment in September 2021, according to French magazine ActuaLitte. In 2022, the subsidiary logged a 13.26 million-euro loss and posted 1.65 million euros in revenue.

Kakao Piccoma cited the primary reason behind its termination as “subdued market growth in contrast to the initial expectations at the time of the entry.”

When the company first established its European branch, it aimed to reach the core comic fandom in France before gradually expanding to other European regions. The company noted that the digital comics market in France is rapidly growing, with a strong preference for Japanese manga and an increasing interest in Korean webtoons.

The European comic book market, including digital publishing, represents a significant portion of the global market, account for more than 30 percent of worldwide revenue, with a market worth $4.56 billion, according to tracker Cognitive Market Research. Within Europe, the French and German comic book markets are the largest at $419.91 million and $903.72 million, respectively.

Another webtoon marketer who wished to remain anonymous analyzed that the concept of webtoons still remains a niche industry in Europe.

“Manga and manhwa are newish and Asian concepts,” said the source. “The French and the Belgians are known — have been for many decades — to be the most avid consumers of comics. Think Obelix, Tintin. They are very happy to purchase comics at high prices and at a high volume. That includes digital comics. German and English-speaking audiences in Europe are huge, too, due to the large amount of people with disposable income. If you fail to make it in the European market, you are either not reaching the right people with your advertising strategy, or you simply don’t have compelling content. Or both.”

Another major webtoon operator in Korea, Naver Webtoon, halted the establishment of a European subsidiary back in August 2023 to redirect its global strategy for listing in the U.S. stock market, which is planned for some time this year.

Both Naver and Kakao’s largest webtoon consumer base outside of Korea is Japan, but the two companies are aiming to expand their market presence in North America as well. Tapas Entertainment, Kakao Entertainment’s North American webtoon subsidiary, has a short-term goal of 100 billion won ($72.2 million) in annual transaction volume in the region.

Last year, the subsidiary reached 71.1 billion won in annual revenue.

Jang Min-ji, a media communications specialist at Kyungnam University, projects that Korean webtoons might resonate better with a North American audience.

“The North American market is larger in terms of numbers compared to Europe, and it has a more unified taste for Korean content than Europe,” Jang said. “So, if localization is done well, there is considerable market potential.

“Even though platforms are becoming increasingly globalized, there are inevitably cultural differences in preferences by region that Naver seems to be well aware of — which is why it seems to be actively hiring webtoonists tailored to the North American market.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]