The Invisible Art of Webtoon's Business & The Future of Netflix
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A comics publisher has quietly surpassed both (Marvel & D.C.), including major European and Japanese manga publishers. So let me tell you about the biggest storytelling platform on the planet. And it's not Disney or Netflix.
This is about Webtoon. A webcomic platform from Korea that has reinvented comics and the industry along with it.
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To understand Webtoon's significance, you must remember a few things about the U.S. comics industry.
From the mid-90s to the early 2000s, many American comic book retailers shut down and haven't recovered since the speculative bubble of the mid-90s.
Since then, it's been difficult for independent creators to make a living. Even for innovative work and pioneering artists. This seriously reduced the talent pool of potential artists and readers.
Although Marvel unlocked more value out of their IP, the comics industry was not innovating, especially regarding creators' rights, gender balance, minority representation, and genre diversity (beyond superheroes).
A New Form of Storytelling
After witnessing the crash of the comics industry, Junkoo Kim launched Webtoon in 2004 because he was looking for a way to get comics created since so few were coming out. He theorized that tall, scrollable comics could work well since users were already used to scrolling through web pages. At first, finding artists to create webtoons on his service was difficult, but the Korean manhwa industry was desperate.
Manhwa=Korean comics
It was an unusual layout. Typically comic books require the reader to read from to right or right to left. Many were skeptical because of the potential problems that an infinite canvas poses. For instance, some thought webcomics may drag on due to a lack of rhythm or punctuated story beats. Webtoons, however, are more intuitive since users can touch scroll on their mobile devices from top to bottom like a news feed.
This keeps readers in the moment without page breaks, flips, or weird control mechanisms. But here's the real insight behind why this all works. Webtoons aren't just digital comics. It's a vertically integrated storyboarding platform. Let me explain.
The Invisible Art
Storyboards were long to be known as invisible art because most artwork generated by storyboard artists never saw the light of day, no matter how beautiful it was. But these images have tremendous power, and storyboard artists are mission-critical to the storytelling process. They're constantly working to make the cut from one scene to the next more interesting. They have to visualize the unscripted inner feelings of a character. This is why Pixar storyboards everything. Even in their casual creative meetings.
As Miyazaki once said "You don't depict fate; you depict will."
Storyboard artists are masters of plot structure, cinematography, tension, and continuity. They're not just the director. They’re the DP, editor, actor, colorist, key artist, light technician, and set designer. All of it.
Alfred Hitchcock, Orsen Welles, Steven Spielberg, Ridley Scott, and Disney all used storyboards to pre-visualize a film. It allows each production team member to understand the project's scope. It's a detailed map for production.
The Prophecy
The comics’ potential—as a seller of newspapers, and as an art form—is great if cartoonists will challenge themselves to create extraordinary work and if the business will work to create a sustainable environment.
— Bill Watterson, Creator of Calvin and Hobbes
By using storyboards, you can not only plan out the shots but also calculate production costs. It smooths everything out and gives everyone a show bible everyone can refer to. This is how a complicated movie like the Matrix got greenlit. Even though it was technically Wachowski's second film. By storyboarding the entire movie, they could communicate complex ideas that were hard to grasp—to a wary studio in Warner Brothers.
Any creative in LA will tell you how difficult it is to get any of their work bought or sold by "the industry." Moreover, even if someone does offer them a deal for their work, artists rarely get to retain creative control or participate in the upside of their own creation: licensing, publishing rights, and profits.
As a result, traditional publishers weren't serving creators, and creators weren't serving their readers. There's the agency problem again. Artists simply want to make enough money to create full-time without getting fleeced, and consumers want a diversity of stories beyond superheroes. This is where Webtoon came in and disrupted the entire model.
An Ecosystem for Creators
Webtoon looks at the growth in two ways. 1. The number of creators on the platform and 2. The number of readers. Webtoon’s business model is built and predicated on supporting creators.
Digital Production: Zero Start-Up Cost
Creators can self-publish on Webtoon and retain all of their intellectual property with little to no start-up cost since all you need is a story and a tablet.
Digital Distribution: Scale
Unlike comic books or graphic novels from publishers, Webtoon is a free platform with new content released daily. This aggregates the demand for the content and allows artists to connect directly with their fans without traditional middlemen (editors, truck drivers, couriers, separators, agents, and accountants). One episode can receive upwards of 700k+ comments. A series can reach over a billion reads. Fans can also read the content in multiple languages. The flywheel supports creating and distributing original content, connecting creators and users.
Digitally Native Comics: A New Medium
Since the comics are digitally native, creators can deliver memorable experiences uniquely enabled by the mobile device. For example, you have a horror Webtoon that animates, vibrates, and calls you on an unknown number. Freaky.
New Virtual Economies: Solo-Leveling Creators
65% of the creators on WEBTOON are women, and depending on Webtoon, you have creators making $225,000 to $250,000 per year. Compare that to South Korea’s median salary of 3,960,000 KRW/month (USD 3301.19). Some creators make more than 10 million dollars a year.
Webtoon creators have a variety of business models to choose from:
Paid Subscriptions
Webtoon has paid English-language creators over $27,000,000 since 2000.
Licensed Products
Webtoon helps creators turn their characters into licensed products and merch.
Brand & Advertising Deals
Creators can earn 40% from ads displayed on their series and integrate brands into their stories.
Adaptations
Since Webtoons are storyboards with built-in demand, they are fast-tracked into production for tv-shows, games, movies, and books. Netflix has already bought and produced a significant amount of Webtoons.
Today, NAVER’s Webtoon is the most profitable webtoon application in 99 countries.
It has over 72 million global (MAUs) monthly active users.
Gen Z and younger Millennials make up 75% of Webtoon users worldwide, and 70% of the users in the U.S. are under age 24. In addition, 58% of Webtoon users are female. However, those demographics differ significantly from the audience for printed periodical comics in the U.S.
In January 2021, NAVER signed a contract to acquire the web novel platform Wattpad, thus becoming the operator of the world’s No.1 webtoon and web novel platforms.
$100 million monthly revenue. Most revenue transactions come from Korea and Japan, with the U.S. third. The company sees the American market overtaking Asia in 3-5 years at current growth rates.
Netflix’s End Game
Netflix changed the game, but it’s no secret that they’re struggling. The company realizes that what got it here won’t take them to the next level. Becoming rich and staying wealthy are two completely different skill sets. They can no longer just outspend the competition, and more technology isn’t the answer to creative content problems. Unfortunately, there’s no algorithm for these problems:
Rising production costs.
External forces are putting pressure on their business model.
Internal forces are tearing them apart.
Content isn’t king when tech companies have more money than god, and everyone in Hollywood can be bought.
With an advertising-based model and its bet on games, it’s clear that Netflix is facing similar product innovation issues as Google, Apple, and Facebook. I’m reminded of what Ed Catmull, the president of Pixar, said when dealing with the challenges that come with the success of a creative company.
I have noted that there are forces at work in any company that is hard to see. At Pixar, those forces–among them the impact of growth and the reverberations of success–had sparked several problems. For example, as we’d grown, we had taken in quite a mixture of people. So, in addition to the colleagues who had been with us from the beginning and who understood the principles that guided the company since they’d lived through the events that had forged those principles, we now had more recent arrivals. While some of these people learned quickly, absorbing the ideas that made our company work and becoming new leaders, others were in awe of the place-respectful of our history to the point that they could be hindered by it. Many brought good new ideas with them, but some were reluctant to suggest them. After all, this is the great and mighty Pixar; they thought–who were they to call for change? Some were grateful for the supportive environment—the subsidized cafeteria, the top-of-the-line tools–but others took them for granted, figuring that such perks came with the territory. There were many who loved how successful we’d been, but some didn’t understand the struggle and risk that success had entailed.
— Ed Catmull, Co-founder of Pixar
There are a few ways this could play out.
Games and advertising will become cost centers for Netflix and will bring the business down even further because it was out of sequence and not in the correct substance or form. For reasons I’ll explore further, social media companies in the United States cannot adapt gaming successfully into their business model. Facebook shut down its stand-alone gaming app in October of 2022, and Snapchat suspended its gaming business after laying off 20% of its staff.
Instead of spending over $15 billion on a random content strategy, continue to partner or even partially acquire a games studio like RIOT Games. RIOT becomes an exclusive content provider, and Netflix becomes a distribution channel for exclusive new games, events, and experiences. This has the most potential and entertaining outcomes. Addressing the current cost structures, network defects, and the changing streaming landscape. The strategic value of RIOT’s IP will give Netflix a publishing advantage over other streaming and gaming companies that take away time from their users. Leanne Loombe who heads External Games at Netflix comes from RIOT, and seems more than capable of recognizing these opportunities.
Netflix creates and invests in its own version of Webtoon platform to make it easier to get original content. Allowing those poor writers in Studio City to make a decent living, reduce churn, and drive revenue. A digitally enabled American renaissance. Add the gaming mechanics and advertising monetization, thereafter, in service of the creators on the platform. Netflix will have to master the art of micro-transactions and virtual economies. It’s worth noting that RIOT games also imported its core business model from Korea.
The Future of the Entertainment Business Lies Within the Arts & The Artist
The fact that someone can solo-level all the way up to creating your own show or movie is just extraordinary. It’s more likely that the next Harry Potter will come from a Webtoon 1st instead of a “community-based” co-creation with tokens. The game of entertainment today is about making your platform and content more valuable in other mediums. The value of an IP is determined by how easily it can successfully transfer from one medium to the next. Video game franchises and anime are the biggest and clearest categories for additional value creation, and although incredibly saturated, the nuance of understanding these mediums is still underappreciated.
Bill Waterson’s Warning: The Art & The Artist
While webtoons have changed how stories are created, opening it up to anyone with a story to tell, the lines between art and business, commercial art and fine art, work, and life are more blurred than ever. The people and companies that play with these boundaries will be the ones to reap the rewards.
The creator of Calvin and Hobbes, Bill Waterson, famously refused to allow his comic strips to be commercialized. Maintaining the purity of form in his work. In my opinion, the questions and answers to the future of the entertainment business in America lie within the arts and the artists of the past. It would do us all well to take heed of the wisdom of artists instead of the wisdom of the crowds.
Comic strips have been licensed from the beginning, but today the merchandising of popular cartoon characters is more profitable than ever. Derivative products—dolls, T-shirts, TV specials, and so on—can turn the right strip into a gold mine. Everyone is looking for the next Snoopy or Garfield, and Calvin and Hobbes were imagined to be the perfect candidates. The more I thought about licensing, however, the less I liked it. I spent nearly five years fighting my syndicate’s pressure to merchandise my creation.
In an age of shameless commercialism, my objections to licensing are not widely shared. Many cartoonists view the comic strip as a commercial product itself, so they regard licensing as a natural extension of their work. As most people ask, what’s wrong with comic strop characters appearing on calendars and coffee mugs? If people want to buy stuff, why not give it to them?
I have several problems with licensing. First of all, I believe licensing usually cheapens the original creation. When cartoon characters appear on countless products, the public inevitably grows bored and irritated with them, and the appeal and value of the original work are diminished. Nothing dulls the edge of a new and clever cartoon-like saturating the market with it.
Second, commercial products rarely respect how a comic strip works. A wordy, multiple-panel strop with extended conversation and developed personalities does not condense to a coffee mug illustration without great violation of the strip’s spirit. The subtleties of a multi-dimensional strop are sacrificed for the one-dimensional needs of the product. The world of a comic strip ought to be a special place with its own logic and life. I don’t want some animation studio giving Hobbes an actor’s voice, and I don’t want some greeting card company using Calvin to wish people a happy anniversary, and I don’t want the issue of Hobbes’s reality settled by a doll manufacturer. When everything fun and magical is turned into something for sale, the strip’s world is diminished. Calvin and Hobbes was designed to be a comic strip, and that’s all I want it to be. It’s the one place where everything works the way I intend to.
Third, as a practical matter, licensing requires a staff of assistants to do the work. The cartoonist must become a factory foreman, delegating responsibilities and overseeing the production of things he does not create. Some cartoonists don’t mind this, but I went into cartooning to draw cartoons, not to run a corporate empire. I take great pride in the fact that I write every word, draw every line, color every Sunday strop, and paint every book illustration myself. My strip is a low-tech, one-person operation, and I like it that way. I believe it’s the only way to preserve the craft and to keep the strip personal. Despite what some cartoonists say, approving someone else’s work is not the same as doing it yourself.
Beyond all this, however, lies a deeper issue: the corruption of a strip’s integrity. All strips are supposed to be entertaining, but some strips have a point of view and a serious purpose behind the jokes. When the cartoonist is trying to talk honestly and seriously about life, then I believe he has a responsibility to think beyond satisfying the market’s every whim and desire. Cartoonists think they can be taken seriously as artists while using the strip’s protagonists to sell boxer shorts are deluding themselves.
The world of a comic strip is much more fragile than most people realize or will admit. Believable characters are hard to develop and easy to destroy. When a cartoonist licenses his characters, his voice is co-opted by the business concerns of toy makers, television producers, and advertisers. The cartoonist’s job is no longer to be an original thinker; his job is to keep his characters profitable. The characters become “celebrities,” endorsing companies and products, avoiding controversy, and saying whatever someone will pay them to say. At that point, the strip has no soul. With its integrity gone, a strip loses its deeper significance.
