Japan’s highest grossing manga app is Korean

Actually, Piccoma, launched in 2016 by Kakao Japan, a subsidiary of Korea’s dominant mobile platform, is the world’s highest grossing manga app. When it claimed the top spot in Japan in July last year, it displaced LINE Manga, also with Korean heritage, so the digital side of the world’s biggest comic market, valued at just over USD 5bn annually, has been in foreign hands for a while.

Piccoma has disrupted the existing comics market by offering a new drawing technique and storytelling method customized for mobile viewing. Readers can comfortably view content simply by scrolling down, often accompanied by animation effects along with background music to enhance the level of immersion.

One could be tempted to attribute the success solely to the demand for digital content during the pandemic, which certainly was a contributing factor. However, in 2018 and 2019, Piccoma already increased its Gross Merchandise Value (GMV) by around 150% year-on-year, before a near-tripling during 2020. The companies aims for a similar performance this year, targeting approximately JPY 100bn in GMV.

Analysts at Goldman Sachs, performing a Sum-of-the-Parts (SOTP) valuation of Kakao, arrive at an enterprise value of KRW 59trn, of which they attribute 15% to the content business consisting of Kakao Page & Piccoma. As previously reported, Kakao also filed for preliminary IPO approval for Kakao Pay and Kakao Bank, with the former price range indicating a potential USD 10bn debut.

We have been pointing to the manga industry as one of Japan’s strength in the entertainment sector, organically developed without administrative guidance (the equivalent of Honda in automobiles and Sony in electronics), and also as a source for many domestic FinTech companies’ technical talent. However, given the tremendous success of LINE and Kakao on mobile devices, is the industry as a whole missing out on the transition from paper to digital, i.e. is another of Japan’s industries facing a digital cliff?

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