20160406-三星证券-Internet__OVERWEIGHT_Snack_culture_blooming_28页_4mb

Sector Update Summary

Core Content and Snack Culture

The rise of snack culture—defined as the consumption of bite-sized digital content (10-15 minutes) in various formats—has transformed the digital media landscape, particularly among young audiences aged 10-20. This shift is driven by the increasing use of mobile devices, which have replaced traditional media like PCs and TVs as the primary source of content consumption. The preferred formats include webtoons, video clips, and news cards, which are more engaging and accessible for mobile users.

• Webtoons are digital comics tailored for mobile consumption, with a growing market and diverse revenue models including subscriptions, ads, and intellectual property (IP) licensing.
• Video clips (5-10 minutes) are popular for their quick consumption and sharing on platforms like YouTube and Kakao TV.
• News cards use images and captions to deliver concise news, replacing traditional text-heavy journalism and becoming a preferred format on SNS and mobile portals.

Market Outlook: One-Source, Multi-Use

Content providers are increasingly leveraging one-source, multi-use strategies, where popular content is reimagined across various formats (e.g., films, dramas, games). This trend is boosting the value of IP and diversifying revenue streams for platforms and creators.

• Webtoons are being adapted into films, dramas, and mobile games, with over 100 examples already in production.
• Webtoon agencies are playing a crucial role in managing IP rights and promoting content across multiple platforms.
• The growth of MCNs (Multi-Channel Networks) and individual creators is also driving content diversification and increasing competition in the market.

Platform Competition for Quality Content

Platform firms are intensifying their efforts to secure quality content to enhance user engagement and ad revenue. This competition is particularly evident in the mobile video space, where platforms like Naver and Kakao are signing contracts with broadcasters and investing in their own content production.

• Naver is positioning itself as the leading mobile content distribution channel in Korea, leveraging its massive user traffic from search services.
• Kakao has also expanded its video offerings with Kakao TV, while LINE Live has gained traction as a major mobile video platform.
• Platforms are increasingly competing with content providers by offering higher ad revenue shares (e.g., Naver and Kakao pay 90% to broadcasters, up from 55% on YouTube).

Revenue Models and Market Trends

• Webtoons generate revenue primarily through subscriptions and ads, with a growing trend towards IP licensing.
• Video clip services such as Naver's TVCast and Kakao's Kakao TV are becoming significant revenue generators, with ad costs reaching up to KRW25 per view.
• News cards are gaining popularity due to their native advertising potential and ease of consumption on mobile devices.

Company Analysis

Naver

• Market Position: Korea's largest internet portal and webtoon distribution platform.
• Strategies: Expanding video services (e.g., TVCast, V app) to compete with YouTube. Leveraging its user traffic to drive ad sales and using IP for diversified revenue streams.
• Performance: TVCast's traffic doubled after securing content from major broadcasters. Webtoons and web dramas are core growth areas.

Kakao

• Market Position: A major player in the Korean digital content space.
• Strategies: Acquiring content distribution rights from SMR and launching Kakao TV. Focusing on mobile content and expanding its video offerings.
• Performance: Competing with Naver in the mobile video market, though less dominant than Naver in terms of traffic and ad revenue.

Key Figures and Data

• Naver's Target Price: KRW760,000 (21.0% upside)
• Kakao's Target Price: KRW120,000 (17.9% upside)
• Naver's TVCast: Traffic doubled after securing content from broadcasters, with ad revenue share at 90%.
• Kakao's Kakao TV: Launched in June 2015, competing with Naver in the mobile video space.
• Webtoon Revenue Models: Include subscriptions, ads, and IP licensing, with Naver receiving 10-20% of game sales from its webtoon IP.

Conclusion

The digital media landscape in Korea is evolving rapidly due to the rise of snack culture and the increasing demand for mobile-friendly content. Platforms like Naver and Kakao are leveraging their user bases to expand into video and webtoon content, while content providers are diversifying their revenue through multiple formats and IP licensing. The competition for quality content is intensifying, and the market is expected to grow significantly as more creators and MCNs enter the space. Naver remains the top pick due to its strong user traffic and strategic positioning in the mobile content market.