As the government has unveiled plans to block and crack down harder on illegal distribution sites, attention is turning to the potential for earnings improvement at small and midsize webtoon platforms. The expectation is that if users who left due to illegal distribution flow back to the platforms, it could lead to higher sales and improved conversion rates to paid subscriptions.
According to the industry on the 11th, small and midsize webtoon platforms are closely watching changes in membership and paid payments following the government's policy to strengthen the blocking of illegal sites. After the Ministry of Culture, Sports and Tourism decided 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 one after another. The industry is internally reviewing indicators such as the possibility of increased user time on platforms and higher paid payment amounts.
Topco Media, Lezhin Entertainment, and Toomics, which are listed on KOSDAQ, are cited as representative small and midsize webtoon platforms. Compared with large platforms such as Naver Webtoon and Kakao Entertainment, these corporations have a smaller proportion 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, films, and merchandise, so paid subscriptions on the platform and securing loyal users have a greater impact on earnings.
Until now, users flocked to illegal distribution sites because they could watch all works for free and the sites were easy to access. According to the Ministry of Culture, Sports and Tourism (MCST), estimated damages from online illegal webtoons in 2022–2023 totaled 840 billion won, which is about 40% of the webtoon industry's total sales (2.189 trillion won). The industry believes that once large-scale blocking measures fully take effect, some users who had stayed on illegal sites may move to legal platforms.
There are also rising expectations that the sweeping blocking of illegal distribution sites will trigger an earnings rebound. Topco Media merged last April with its affiliate Toptoon, which operated webtoon platforms in Korea, North America, and Taiwan, and posted consolidated sales of 48.6 billion won and operating profit of 3.7 billion won. If illegal sites are blocked, popular webtoon IP slated for AI animation in new businesses, as well as animation-only original works, are more likely to be consumed within the platform.
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 the previous year. Toomics also posted operating profit of 10.5 billion won last year, down from 11.7 billion won the year before. Given their structure, which relies more on paid subscriptions than large platforms do, analysts say the reduction in illegal distribution is highly likely to be reflected directly in their earnings.
An industry official said, "Since closures and openings of illegal distribution sites have repeatedly occurred in the past, we need to watch the situation," but added, "It is true that when the latest episodes are not available on illegal sites, platform payment rates rise sharply."
The official added, "Small and midsize webtoon platforms have a lot of content centered on adult readers, so once they secure a loyal readership, the paid conversion effect tends to appear quickly," and said, "Even if only some of the users who had stayed on illegal sites return, the perceived impact will be significant."