With the government announcing plans to block illegal distribution sites and step up enforcement, attention is turning to the chances for performance improvement at small and mid-sized webtoon platforms. The expectation is that if users who left because of illegal distribution return to the platforms, it could boost revenue and improve conversion rates to paid subscriptions.
According to the industry on the 11th, small and mid-sized webtoon platforms are closely watching changes in membership and paid spending following the government's push to strengthen blocks on illegal sites. As the Ministry of Culture, Sports and Tourism moved to implement the "emergency blocking and access blocking system for illegal sites" starting on the 11th in line with amendments to the Copyright Act, leading domestic illegal webtoon sites such as "NewToki" voluntarily shut down in succession. Within the industry, companies are internally reviewing metrics such as users' time spent and the potential for increased paid spending.
KOSDAQ-listed Topco Media, Lezhin Entertainment, and Toomics are cited as representative small and mid-sized webtoon platforms. Compared with major platforms such as Naver Webtoon and Kakao Entertainment, these corporations have a smaller share of ancillary businesses like advertising, global services, and video production. There are also gaps in expanding secondary businesses that leverage intellectual property (IP), such as drama, film, and merchandise, so paid subscriptions on the platform and securing loyal users have a greater impact on performance.
Until now, users flocked to illegal distribution sites because all works could be viewed for free and access was easy. According to the Ministry of Culture, Sports and Tourism (MCST), estimated losses from illegal online webtoons in 2022–2023 totaled 840 billion won, which is about 40% compared with the webtoon industry's total sales (2.189 trillion won). Within the industry, the view is that as large-scale blocking measures take full effect, some users who stayed on illegal sites may move to legal platforms.
There is also growing expectation that sweeping blocks on illegal distribution sites will trigger a rebound in results. Topco Media merged last April with its affiliate Toptoon, which operated webtoon platforms in Korea, North America, and Taiwan, posting 48.6 billion won in sales and 3.7 billion won in operating profit on a consolidation basis. If illegal sites are blocked, there will be greater room for the platform to capture consumption of AI-animated versions of popular webtoon IPs being prepared as new businesses, as well as original works dedicated to animation.
Lezhin Entertainment maintained sales in the 100 billion won range, but last year's operating profit fell to 8.1 billion won, about half from a year earlier. Toomics also recorded 10.5 billion won in operating profit last year, down from 11.7 billion won the previous year. Given their structure's higher reliance on paid subscriptions compared with major platforms, analysts say the impact from reduced illegal distribution is highly likely to feed directly into results.
An industry official said, "Because the shutdown and reopening of illegal distribution sites has repeatedly happened in the past, we need to watch the situation," adding, "It is true that when you can't see the latest episodes on illegal sites, platform payment rates rise sharply."
The official added, "Small and mid-sized webtoon platforms have a large share of content aimed at adult readers, so once they secure a loyal readership, paid conversion tends to rise quickly," and "Even if only some of the users who stayed on illegal sites return, the impact will be noticeable."