The global content giant the Walt Disney Company will join hands with Naver Webtoon's U.S. headquarters, Webtoon Entertainment, to develop a new comics platform. It will be a platform where users can enjoy more than 35,000 comics owned by Disney, including Marvel, Star Wars, Pixar, and 20th Century Studios, all in one place. Webtoon Entertainment will handle platform development and operations, while Disney will provide intellectual property (IP). Disney said it will not stop at simply supplying content and will also consider acquiring 2% equity in Webtoon Entertainment.
Following a content partnership last month to reinvent about 100 of Disney's flagship works such as Spider-Man and the Avengers as vertical-scroll webtoons, the two sides have now decided to build a Disney-dedicated comics platform. On the 15th (local time), the companies signed a non-binding term sheet for cooperation on developing a digital comics platform and a 2% equity investment. News that Webtoon Entertainment had gained a strong ally in the North American market sent the stock of the U.S.-listed Webtoon Entertainment soaring as much as 40% intraday on the day of the announcement, while webtoon-related stocks in Korea also jumped across the board.
Industry insiders and global investment bank analysts said the collaboration offers strategic advantages to both Naver Webtoon, which aims to expand overseas, and Disney, which urgently needs to secure younger fans.
For Disney, it is a chance to secure young readers through the webtoon platform. The "content powerhouse" with a 100-year history has in recent years faced headwinds from an aging fandom, controversy over excessive political correctness, and intensifying streaming competition. Because the generations who grew up on Disney animation and films are mostly in their 30s or older, there is an urgent need for a strategy to attract new fans in their teens and 20s. As the content consumption of Generation Z (born after 1995 to the mid-2010s), which has emerged as a new consumer base, shifts toward short form such as YouTube Shorts and Instagram Reels, concerns are rising that Disney's content, which is centered on feature-length animation and films, is losing influence.
Josh D'Amaro, chairman of Disney Experiences, said, "By expanding cooperation with Webtoon Entertainment, a leader in digital comics, we will secure new readers and provide existing fans with a deeper content experience." Disney noted that most U.S. webtoon readers are under 30. Naver Webtoon's global webtoon app has 156.1 million monthly active users (MAU), and among English app users, Generation Z accounts for 83%.
Some also see this as an attempt by Disney, which has fallen behind in the streaming race, to use webtoons as a channel to acquire new subscribers. Disney+ (Disney Plus), Disney's over-the-top (OTT) service, entered the streaming market in 2019 as a latecomer and remained in the red for nearly four years before barely turning a profit in the second quarter of last year. With Netflix, the industry leader, as well as Amazon Prime, Apple TV, Paramount+, and Max locked in fierce competition, it is hard to stand out without clear differentiation. In response, Disney plans to allow Disney+ subscribers to watch curated titles provided on the new comics platform at no additional cost.
Benjamin Black, a Deutsche Bank analyst, said, "By generating a stable, recurring revenue source through webtoons, Disney can help diversify its sales." Disney is expected to take a portion of the new comics platform's sales as fees.
With this collaboration, Naver Webtoon appears set to ramp up its U.S. expansion. As growth in the domestic market has stalled, Naver Webtoon is focusing on securing growth drivers overseas, including in the United States. According to IGAworks Mobile Index, as of August, the domestic MAU for the Naver Webtoon mobile app (Android + iOS) was 10.23 million, down about 1.7% from a year earlier. Based on Webtoon Entertainment's tally, Naver Webtoon's domestic MAU in the second quarter was 24.4 million, down 2.1% year over year, while monthly paying users (MPU) fell 7.6% to 3.7 million.
In the industry, sentiment is growing that while cultural barriers have long made it difficult for webtoons to break into the U.S. mainstream, Naver Webtoon's access to Disney's popular IP could expand its influence. Deutsche Bank said, "This collaboration solidifies Webtoon Entertainment's position as a major IP distribution platform." Jeong Ho-yun, a Korea Investment & Securities analyst, projected, "Leveraging the power of Disney IP will draw in a large number of additional subscribers."
However, some argue that the collaboration may not help Naver Webtoon's results in the short term. Matthew Cost, a Morgan Stanley analyst, said, "You need to invest to build and operate a new platform," adding that the deal is unlikely to significantly boost Webtoon Entertainment's results right away. Webtoon Entertainment posted an operating loss of $8.763 million in the second quarter, remaining in the red following the first quarter. In this situation, if Naver Webtoon proceeds with investment to develop the new comics platform, returning to profit will be difficult for the time being.