Korea's webtoon industry is expanding animation production. Movies and dramas based on web novels and webtoons are gaining popularity, but the hit cycle for video content is getting shorter, making it harder to generate revenue from it. The industry sees animation, which has a longer lifespan once it secures a fixed fan base, as having strong potential for intellectual property (IP) expansion, and it plans to ramp up the animation of web novels and webtoons.
On the 22nd, according to the webtoon industry, dramas and movies based on web novels and webtoons have scored back-to-back hits this year, triggering a surge in readers seeking out the originals—an "IP virtuous cycle effect." A prime example is JTBC's drama "A story about Manager Kim who works at a conglomerate and owns a house in Seoul (hereafter Manager Kim)," which wrapped at the end of last month. In the two weeks right after the drama first aired, views of the same-titled Naver webtoon jumped 30 times compared with just before release. "Dear X," which became the top hit on homegrown over-the-top (OTT) platform Tving, also drove a 17-fold increase in views for the original Naver webtoon after the drama was released last month.
Kakao Entertainment said its popular webtoon series "Taxi Driver" saw views soar 64 times in tandem with the broadcast of the drama "Taxi Driver 3." "Low Life," produced as a Disney+ original drama series and released in July, boosted views of the original webtoon "Pine" by 58 times. An industry official said, "Typically, completed titles see declining views, but during drama broadcast periods, more people seek out the original, so webtoon view spikes have become more pronounced."
However, the industry says this virtuous cycle is temporary, so the popularity of adapted works does not significantly contribute to company profitability. That is because, under contract structures where streaming platforms like Netflix and Disney+ cover the full cost of adaptation and webtoon companies only broker the IP, most of the revenue goes to the OTTs. Another concern is that as dozens of new titles are released every year, the hit cycle for video content shortens, and the indirect benefits to the original remain fleeting.
Securing profitability has long been a challenge for the webtoon industry. Webtoon Entertainment, the U.S. headquarters of Naver Webtoon, has posted operating losses every year since its launch in 2016 through last year. Kakao does not disclose the specific size of operating profit for its content affiliate Kakao Entertainment, but cumulative sales this year have contracted from a year earlier.
The industry plans to increase in-house production of adaptations and ramp up longer-running animation projects to improve profitability. If an animation becomes a hit, a solid fan base flows in, allowing the IP effect to last longer. In fact, the Japanese animation "Demon Slayer," which gained popularity in Korea, drew more than 5 million theatergoers with its film version this year.
Kakao Entertainment's hit webtoon "Solo Leveling" was adapted into an animation last year, and both seasons 1 and 2 were successful in North America, Europe and Japan. The "Solo Leveling" animation was also named "Animation of the Year" by Crunchyroll, the world's largest animation streaming platform with more than 17 million subscribers. "Solo Leveling," with the same-titled hit web novel and webtoon, is one of Kakao Entertainment's flagship IPs, with a cumulative 14.3 billion views. Kakao Entertainment also plans to adapt another popular IP, "Tomb Raider King," into an animation for release next year.
Naver Webtoon is also kicking off animation adaptations of web novels and webtoons by country. There are already 15 titles either in production or planned. In Korea, "Tiger Brother," "Guardians of the Video Game," "Future Antique Shop" and "Denma" will be adapted into animation. In Japan, it has teamed up with local animation studios to begin adapting hit webtoons "Mercenary Enrollment," "Eleceed," "Temple of the Moon," "The Scholar" and "Omniscient Reader." To that end, it plans to actively participate in Japan's animation production committees.
Earlier, Webtoon Entertainment, Naver Webtoon's U.S. headquarters, announced last month a plan to co-produce 10 webtoon-based animations with Warner Bros. Animation. So far, two Korean original webtoons—"Swordmaster Who Embraced the Star" and "Leveling Up, by Only Eating!"—and two English original webtoons—"Down to Earth" and "Elf & Warrior"—have been selected for animation, with additional titles to be revealed later.
An industry official said, "Globally, animation viewing is increasing, led by OTTs, and animation fan bases tend to be active in merchandise purchases and other related consumption or activities, so IP lifespans are longer than dramas or movies."