Virtual Reality Webtoon:
Market and Business Model
Comix V Byung-suk Yang Representative
|§ Virtual Reality (VR) webtoon, VR and the webtoon market received high expectations, but the pros and cons are clear. Like PC/Mobile era, it is crucial to not only search changes for User’s Experience (UX) and contents, but also constantly seek reliable financial sources in order to create a sustainable ecosystem. For these reasons, we can approach through user and distribution business models for higher success.
§ In addition, VR webtoon demands attention and support for its predictable effect of posterior on content industry and global market.
□ The Light and Darkness of Webtoon and VR Market in 2018
◦ The growth of Korean digital manhwa (webtoon), based on global mobile market growth, have grown up to 100 billion dollar worth. However, compared to its growth scale, the diversity of its ecosystem decreased and the polarization of the platform has become clear.
– Snack culture focuses on the mobile contents that continues to grow globally, and provides personified adult contents that contributes to the growth of webtoon market.
– To Lezhin Comics’ success in 2013, users are confirming and validating various content platforms, and it currently shows the form of Winner-Takes-All in the platform market.
– In addition, the competitive market pushes distributors and producers to become an enterprise in order to develop high quality webtoons and OSMU’s strategy has become the main topic.
– Although Naver combined VR/AR technology with webtoon, their trials were unsuccessful failing to make it mainstream. Even though they successfully presented the new merged technology to a practical product, they failed to develop a cycle to produce, consume, and circulate. The reality of webtoon market is only using its technology for marketing purposes just as mobile companies used before Pokémon Go appeared.
<Naver webtoon’s VR/AR Webtoon, Running Into>
◦ The Virtual Reality (VR) market has not successfully reaped rapid results and its growth are not enough, unlike the increased anticipation of the VR market which fired off by Facebook acquiring Oculus. However, positive views on VR entertainment is increasing as well as the announcement made by Oculus’s VR introduction in May 2018.
– Expansion of VR market needs improvements in expensive costs of VR Head Mounted Device (HMD), inconvenience in wearing headsets, and dizziness.
– Increase in VR experience is on the rise based on the business, location-based businesses has a low late of productivity compared to their ratio of online sales because they exclude land cost and such costs.
– Steep increase of sales of Oculus’ independent VR HMD, released in 2018 was close to PSVR sales within just a year shows to be promising. This results from lower cost of VR and provisions made in inconveniences of the headsets.
□ Reasons why webtoon is suitable to VR market and the scale of future VR market
◦ The developmental cost of VR mobile content is high but its market pool is yet small. This causes difficulty in supplies of digital contents as well as expansion within the market itself. Nevertheless, Korea’s webtoon may be the key to solve the problem.
– Due to the nature of 2D still images and stories, webtoon is mainly Intellectual Property (IP)-based content.
– It adjusts well to the expanding independent VR headsets and does not require large space.
– Enterprises mainly supplies webtoon contents, but still author (artist/writer) based system allows low cost creations.
– Fast production with low cost in a weekly base is also a positive feature.
– Creator based system allows easier and lower cost to supply Intellectual Property (IP) instead of enterprise-oriented industry structure. A creator obtains his own webtoon’s IP or the artist himself can become an IP if he is influential enough.
– Content production and IP, and easy applicable consumption provides advantage in VR market.
◦ VR webtoon market anticipates 200 million dollars in 2020
– Although views varies, the market value of VR contents anticipates being 24.5billion dollars.
– According to The Korea Creative Content Agency (KOCCA), Korean digital manhwa market is 1% of the entire digital content market. Based on this it creates 200 million dollars by VR digital manhwa market globally.
– Analyze shows the number of worldwide VR users, roughly sur passed Korean webtoon consumers in 2017.
□ Definition of VR Webtoon Content
◦ If we suppose virtual market will come, the definition of VR webtoon/digital manhwa has yet been adjusted. However, the change of Korean digital manhwa will help define and find the meaning when mobile digital platform changes.
– (Content Changes Lead by UX) The change of user’s experiences of manhwa have changed depending on digital platforms. The mouse scroll wheel and browser’s content expression created vertical scroll method in PC.
This continues from vertical screen to touch in mobiles. However, the biggest change from PC and mobile is the continuous decrease in size of screen. Although Lezhin Comics promoted HD quality, the increase of PPI in mobiles was not effective in small screens. It is more applicable to Snack culture. In result, it produced lighter manhwa and concerns of art quality began to rise.
– Change of Business Model from Portal to Expert Platform) Portals developed manhwa platform for the purpose to increase the number of users. Therefore, they base on large traffics for advertising business. Strong advertising infra, including searches, allows Portal’s manhwa platforms to earn high profits and therefore the value of manhwa platform business was low. However, appearance of independent platform services caused to profit from selling manhwa contents directly. Unlike portals servicing search infra for profit, independent enterprises started adult webtoon business for profit because of its high purchase needs.
– (Preview and weekly subscription, and to waiting for free view) As the platform changed, users consuming (reading) time feed changed due to higher popularity and increase in larger customer pools as well as industry development. First, it supplies on a weekly basis, charges preview users, and it supplies products for free to help ease slowing productions. Increasing content consumption made suppliers to change in order to increase productivity and profit. This allowed high profit overseas due to their low digital manhwa platform development
– Korean digital manhwa development adjusted successfully by finding the balance of supply and consumption when platform changed. Previous success precast changes made in VR webtoon/digital manhwa.
◦ Basic features of manhwa—2D art-based character and word bubbles in 180 or 360 degrees.
– Manhwa, according to the law of Manhwa Agency, is a produced content expressed through image or text of fiction or non-fictional world on materials such as paper or digital materials. Therefore, cut scenes and images drawn on planes emphasize limited space and drawings, which defines manhwa as a medium.
– Manhwa, a media composed of continuous images and texts, shares common features with VR in which is a large image screen that stretches to 360 degree or 120~180 degree.
– From the view of VR media, it is a spatial change whereas to it’s a change in dimension from the aspect of manhwa.
◦ Increase in Importance of Sound
– Sound itself takes a huge place when we think of immersive spatial experience. Standard webtoon market was consumed like a snack eaten between free times and moving from transportation which did not require high immersed environment. Trials merging background music to webtoons occurred, but rather because of this, user’s immersion rate was low.
– On the other hand, usage of HMD in VRs requires high need of sounds and effects as well. Therefore, Comix V’’s VR webtoon essentially uses background music as well as to guide.
◦ Comix V’s VR webtoon supporting multiplatform
– Fast expansion of VR market compared to high anticipations raises important issues of transition from mobile and PC market.
– The advantage of web service, thanks to its size and easy introductory to global market, made Korean webtoons to expand successfully and quickly.
– Comix V’s VR webtoon provides both 360 degree image with sound, and supports web and mobile services without HMD. Moreover, most customers are mobile users.
– Although optimization falls behind compared to standard scroll based mobile webtoons, not only we hold advantages in visitor transitions but also we can promote new models requiring new forms.
<Comicx V’s VR Webtoon Provides both PC and Mobile Service>
◦ Various Interactive Stereoscopy Cartoons
– Various VR webtoon and foreign trials focuses deep immersion and dimensional through stereoscopy.
– Nevertheless, negative views whether this could advantage the fun of manhwa itself and its productivity. No such sustainable model exists also in foreign countries yet. In addition, competing with interactive focusing games is difficult.
– Moreover, the low profit compared to investments made in digital cartoons and mainly story-focused features poses low separation from standard cartoons.
□ The Value of VR Webtoon: Creating New Content Rules
◦ (Value Change) Previously we have explained the value of VR webtoons in VR market, but it also finds new value in the cartoon market as well.
– VR webtoon market continues from previous print productions. The size of webtoon market have increased while the device’s screen size shrieked and became a ‘snack culture.’ This creates difficulty for webtoons to produce higher quality and longer runs.
– However, VR is the first runner to provide larger screen digitally. Thus, this requires higher needs in high quality just like published manhwas, which forms a system for additional profits.
– Users in need of new and high immerse experience requires other genres such as fantasy and thriller.
– Right now, it is difficult to make presumptions on online user profiling because of technological limitations, location based VR Experience stores allow access for those specific users.
– There is yet room to experiment other business models because of the lack of contents.
◦ (Diversion of Genre) It may help revive consumption of political cartoons digitally. Not only that the genre itself can expand to educational, and other such features that publisher are already promoting.
<360 degree cartoon strip, Walking the Alley – by Hochul Choi>
<Illustration VR Galley, Siitake Gallery – by Siitake Gensodo>
<Educational VR Webtoon, Sunshine Princess and the Secret Herb– Doctor>
◦ (Visualization of VR Webtoon) One of the biggest trends in content is video. There is a high need for short-form videos or video contents just like the growth of webtoon as a snack culture. This raises awareness and questions can cause customer transitions from digital cartoon to animation. There is a high attention to the combination of two genres, cartoon and animation, and the transiting technology.
– VR webtoon easily transits into videos because of its continuous 360-degree images combined with voice acting, sound, and easy controllable timeline.
– This newly created video develop new markets as well as providing new experiences when combined with 4D chairs.
◦ (New Demand on Storytelling) Simply considering VR webtoon as an extension of the standard webtoon ecology requires considerations; however, it requires artist’s active participation as well as promoting continuous experiments and thoughts on storytelling and genres.
<Comicx V’s Feedbacks on VR Webtoon Story Board>
– Comix V, a Korean VR webtoon platform, supports and educates expert directors and develops and provides on these insights with Korean Webtoon artists. Trials will be a valuable advantage for the future of Korean webtoon competitiveness.
□ Sustainable VR Webtoon Ecosystem
◦ In order for VR webtoon to overcome the marketing supply, first, it needs to clarify the construction of the foundation for a clear value chain, which activates supply and consumption circulation. The foundation will then allow previous standard webtoon suppliers—enterprises and artists—to transit to the rising consumption of VR—enterprises and users—ecology.
<An Outsourcing Test of An Animation Scene for a Cartoon Producing Enterprise>
– Creating a synergy in both cartoon ecosystem that needs to achieve new outbreaks and VR ecology that lacks contents.
<Comicx V’s Supply Chain Management (SCM)>
– Once the Supply Chain Management (SCM) is constructed, it is possible that not only would it be a simple solution but also, establishing VR webtoon as a new industry model, following the current vertical scroll webtoon. One of the concerns of digital webtoon ecosystem, the diversification of distribution sites and global market accomplishment are easily achievable by VR. Currently, global platforms such as Facebook and YouTube actively introduces 360-degree images or videos.
<360-Degree Illustration Used as Advertisement- Created by Hotduck>
◦ (Problem of 360-degree webtoon production cost) The issue of production cost of still remains even if stereoscopy and interaction are excluded. This is because the plane is much wider than the scroll webtoon. However, the solution is to use 120~180-degree projection and the expansion of 3D background tools. In addition, there will be differences in the length of stay of customers.
– Previous cartoon productions used small and big cuts for storytelling effects. Therefore, there is no need for all pages to be 360-degree images, but rather this could amplify the effect when used correctly. Recently spreading VR devices assume users in a sitting environment, making them difficult to turn around. Such VR user’s actual environment enables investors like Netflix to apply VR as an emerging bigger screen which is the talk of the town, instead of 360-degree.
– Quality competition within current webtoon market is expanding to 3D background that also benefits building 360-degree images for VR webtoon.
<Crying Ghosts Apartment, a VR webtoon using 3D background – created by Changho Oh>
– A webtoon usually consists 60~70 cuts per one episode, consuming about three minutes. Whereas a VR webtoon consumes the same three minutes but instead consists 30 to 40 cuts per episode, requiring half the cost of residence time; and therefore can expect higher profit.
□ Business Model of VR Webtoon
◦ The target group of webtoon are mostly in their 20’s to 30’s and an increasing number of women pays for contents. Since the VR webtoon market is not large enough, one of the first breakthrough would be controlling the market needs.
◦ User pool mainly divides into adults and children, and by distribution: Off-line and Online.
◦ Children Cartoons are mainly educational in VR webtoon market
– In the case of children market in Korea, the cartoon itself has not been established as an independent content market yet, since cartoons have been recognized as harmful media. Instead, acknowledgement of cartoon’s deliverance generated a large educational cartoon market.
– Although needs for educational VR content market is high because of immersion purposes, VR content developers focuses more on games and which as a result the supply for educational VR contents are lacking.
– Therefore, educational VR webtoon market can be a possible business model like the Korean children cartoon market.
◦ A Part of Educational VR Webtoon in Fourth Industrial Revolution: STEAM (Science, Technology, Engineering and Maths)
– Reinforcement of STEAM education for fostering creative convergence talents and incorporating with art is an issue.
– Even though children regards webtoon artists as a future profession and highly expects vocational education, the market and education program process are absent.
– VR webtoon education program recognizes cartoon as an easy producible content and so applies to current webtoon artists for future vocational program. As a part of STEAM education, easily accessible VR technology combined with art could be the solution to the needs of global desires in the future education market.
<Comicx V’s VR Webtoon Education Program>
◦ Adult comics market takes huge influence in current manhwa and webtoon, and also recording high rising profits in VR. This advantage of webtoon permits a shortcut to proceed into current adult VR content.
– The possibility of adult VR webtoon can be found from current manhwa market.
– Abundant adult manhwa contents and female-oriented contents easily fulfills the supply in need for VR contents market.
– The biggest weakness and advantage of small screen in mobile adult contents can be improved in VR for it can fulfill the need of higher quality comics content. Japan’s social image sites such as Pixiv already services high quality 2D illustrations; and this suggests possible transition to VR.
– However, regulatory issues exist in adult VR content. Webtoons serviced in Korea follow a creator and platform-based autonomous deliberation system, and as a result, such adult content webtoon cannot be distributed globally. Increasing awareness of LBVR is promoting diverse user’s content market and currently already exists.
|Relevant Japanese Market Size
AV(AdultVideo/DVD/Contents) : 495 MJPY, BL(Boy’s Love) : 220MJPY (Yano Research Institute 2017)
(Japan) Video platform DMM, sold 6.5 million VR videos … Recorded 20 billion sales in 2017
◦ Distribution contracts and revenue sharing through offline LBVR channels
– Because of VR device supplying problems, normally revenue sharing contracts occur from content bundles from VR HMD vendors, VR experience such as LBVR, and experience usage fees.
– The emergence of an independent HMD like Oculus Go demands smaller space, and therefore an increasing tendency to supply light HMD in PC cafés or DVD rooms is occurring.
◦ Online Advertisement Market
– VR currently services for increasing customers and advertising purposes. The existence of an outsourcing cartoon advertisement market supports online outsourcing VR cartoon distribution market.
– For instance, Comix V produced a VR webtoon video advertisement for Nexon in December 2018.
<Nexon’s VR Voice Webtoon-Created by Comix V>
<Comix V’s process of Outsourcing advertisement webtoon production>
◦ The fastest growing online platform with the expansion of VR market
– Comix V’s contract with VR webtoon artists distributes income, if when the profit exceeds the production cost. However, as of December 2018, such acquisition did not yet occur. Shortage of contents and incapacity to compete with larger webtoon platforms for they are heavily invested are some of the obstacles. (Comix V’s VR webtoon supports mobile and most customers uses mobile for access) Even so, the biggest challenge is the supplement of VR Head Mounted Device (HMD) in online VR platform market.
<Charging per episodes from Comix V>
– Expansion of VR market by 2020 if so occurs, it will strengthen VR platform’s competitiveness. The most important matter is the increase of customers in both supply and demand, and longer residence time. To promote these, easy login and payment system will be the key.
– Introduction to social VR increases not only residence time and enjoying comics together, but also offers an expansion to publishing markets.
– The feature of VR market is that even though they are small, each can reach globally. If such specific sections as comics are early occupied then later it will be easier to make it into a global industry that presents high possibility and attracts investors.
<Comix V targets YouTube and Netflix in VR comics business>
□ Other various attempts integrating technology and webtoon
◦ Various efforts integrating other technology rather than VR with webtoon industry
– Artificial Intelligence (AI) holds potential in intelligent platform, comic domain’s technology market, and contents data market.
– Utilizing the block chain allows transparent transaction, distributing the value of contents, or securing financial funds.
◦ Balancing the competitiveness of the comics market itself is the most important issue in these experiments.
– In particular, maintaining a suitable market as well as drawing a clear distinctive line with game and animation requires attention.
◦ Acknowledgment on VR as a promising futuristic platform expects definite possibility of VR webtoon market.
◦ Requirements for VR webtoon market: discovering new content grammar and creating a sustainable ecosystem at the same. Korean digital manhwa, webtoon successfully created an ecosystem that can be adapted to global digital comics market.
◦ Webtoon ecosystem attributed to competitiveness of Korean contents industry through One Source Multi Use (OSMU) and created derivatives such as movies and television series.
◦ VR webtoon market does not yet exist, but its potential possibility is recognized. Therefore, verification of VR webtoon’s existence nor the definition of VR webtoon market and its grammar cause questions.
◦ Clearly, current webtoon portals established various experiments so that Korean webtoon maintain present sustainability.
◦ Process of Korean webtoon market exactly applies to VR webtoon market as well. It requires diverse experiments to produce sustainable contents and instantly seek a reliable financial revenue.
◦ Accomplishing such difficult challenge may demand tolerance and perseverance; however, VR content market holds adequate market value and chance. Korean VR webtoon possesses high global competitiveness in the future global VR content market because of its content industry’s spillover effect.