Naver, Kakao in race to acquire local storytelling platform

Kakao Page Vice President Hong Min-young poses at the company's headquarters in Bundang, Gyeonggi Province, in August, 2020. Courtesy of Kakao Page

By Kim Jae-heun

Naver and Kakao are competing against each other to acquire Munpia, a local web novel platform.

The two companies are seeking to gain management control over S2L Partners, which runs Munpia, by acquiring a 64.42 percent stake. Munpia's enterprise value is estimated at a minimum of 300 billion won.

Naver has already formed a consortium with a local private equity fund to acquire Munpia, while Kakao is also in talks with a strategic investor.

In January, Naver took over the world's largest social storytelling platform, Wattpad, which boasts 90 million monthly active users. Kakao is working on acquiring No. 3 player, Tapas, and No. 5 player, Radish, although the first deal is facing obstacles.

The main impetus behind the push to acquire the storytelling platforms is to secure intellectual property (IP) rights over stories. Such content can be used in different fields of entertainment, including movies, TV dramas or games, which Naver and Kakao can distribute through their IP channels to maximize profits.

Kakao Page's most-popular web manga, “Solo Leveling,” has achieved 620 million cumulative views and generated 40 billion won in online sales.

Naver Webtoon's “Sweet Home” was also made into original content for Netflix that rose to the number one spot in terms of ratings in eight different countries, including Malaysia, Singapore and Taiwan.

Kakao's “Space Sweepers” that was made into a film on Netflix also ranked No.1 in the movie category.

Consulting firm PwC said the global over-the-top service market will grow from 58 trillion won in 2020 to 73 trillion won in 2022.

However, Naver and Kakao face a hurdle in the race to acquire Munpia.

Chinese IT firm Tencent's investment subsidiary, CLL, and Korean game company NCSoft are the second and third-largest shareholders of S2L Partners with 24 percent and 6 percent stakes, respectively. The two have invested 25 billion won in Munpia and have priority rights to take over the web novel platform if they are interested.

Tencent is not expected to join the competition, due to the declining popularity of Korean cultural content in China at the moment. Also, NCSoft has not shown much interest in running a web content business, prompting market watchers to forecast Kakao or Naver to be the likely candidates to acquire Munpia.