Following the news of Wattpad’s acquisition, which will see it purchased by South Korea’s Naver Corp., CEO Allen Lau says the deal will not slow down plans to make Wattpad a global entertainment giant.
The co-founder has previously expressed hopes to make Wattpad, which started as an online self-publishing platform, into the next Disney. Speaking with BetaKit shortly after the deal was announced, Lau stated the acquisition changes nothing for Wattpad’s vision, expressing hopes that it will only serve to accelerate the company’s current growth trajectory.
“We can only go faster. We can only do more.”
– Allen Lau, Wattpad
“I’m not done yet. What I would say is, today is the last episode of season one, but tomorrow is the more amazing first episode of season two,” said Lau. “It will only be better, and I’m so looking forward to growing the company at an accelerated pace.”
Following the $754 million CAD ($600 million USD) deal, which is expected to close in the second quarter of 2021, Wattpad will continue to operate independently, with Lau remaining at the helm. Fellow co-founder Ivan Yuen, who currently serves as chief strategy officer at Wattpad, will also remain on.
Lau told BetaKit there will be no changes to Wattpad’s employee base. “We expect our growth to accelerate because of this acquisition,” he said.
“I would also emphasize that selling the company and continuing, they are not mutually exclusive,” said Lau. “We can do both at the same time. So, selling, in this case, definitely means that we will continue our journey, but at a much faster pace.”
The Toronto-based company has turned into a global media studio since it was founded in 2006. Its cache of millions of original stories has led to Wattpad being an abundant source of intellectual property (IP) to the entertainment industry.
Over the past number of years, it has penned production deals that have seen stories on its platform become books, movies, podcasts and television series on a global level, including for Netflix. It has also launched its own publishing arm, Wattpad Books, and production company, Wattpad Studios. The company claims that, to date, around 1,500 Wattpad stories have been published as books, or adapted for TV and film. Its own publishing arm has published 21 books since it launched in 2019.
Part of Naver’s endeavours includes WEBTOON, a global digital comics platform, where it works with production companies to create comics and animation content. Lau explained that Naver’s acquisition will see Wattpad aligning closely with WEBTOON to create new content.
“There are a lot of similarities already between the two [companies]; extremely, extremely complimentary,” said Lau. “It’s not hard to imagine some of our top IPs, top stories on Wattpad’s platform, for example, can be adapted into comics or animation. That’s a very obvious example, and there are many more. So, we can absolutely maintain our independence, and, at the same time, there is so much synergy, so much we can do through collaboration.”
Lau would not provide specifics on what an increased trajectory for Wattpad’s growth might look like, noting only that Wattpad is focused on expanding its entertainment ecosystem. The combination of books, TV, film, animation, and comics, he said, opens up even more platforms Wattpad can leverage to increase the value of its IP cache.
“We want to accelerate with WEBTOON and the massive, massive resources of Naver,” Lau said. “We can only go faster. We can only do more.”
Naver is South Korea’s largest online search engine. In addition to WEBTOON, it also operates a mobile messaging app, as well as other internet properties like the Snow video app, and a K-pop popular live-streaming platform. In 2018, Naver was ranked as the ninth most innovative company by Forbes and the top sixth Future 50 company by Fortune magazine.
Naver’s purchase of Wattpad will combine the Canadian company’s more than 90 million user base with WEBTOON’s 72 million monthly active users.
Much like Lau’s goal for Wattpad, WEBTOON founder and CEO Jun Koo Kim expressed the South Korean company’s own goal to be a leading global multimedia entertainment company. The CEO called Wattpad joining WEBTOON under the Naver umbrella a big step towards that goal.
Despite the success that Wattpad has seen pulling in 90 million active monthly users and penning deals with media companies like CBC, Picturestart, Singapore’s MediaCorp, its financial growth has not matched. According to The Globe and Mail, Wattpad is believed to generate annual revenue of $40 million. Lau told BetaKit following the announcement of the deal, Wattpad is “fast approaching cash flow break even.”
To date, Wattpad has raised more than $117 million, with investors that include Tencent Holdings Limited, BDC, OMERS Ventures, Golden Venture Partners, Khosla Ventures, and Northleaf Venture Catalyst Fund.
“Outcomes like this help feed an ecosystem and have lasting positive impact.”
It was first reported by The Globe, at the beginning of the month, that Wattpad was in talks with “multiple parties” about a potential sale after receiving an unsolicited takeover offer from a United States “internet company.” The publication has since reported that the offer came from Fandom Inc., with both Spotify and Tik-Tok owner ByteDance Ltd. making offers as well.
Lau refused to comment on the bidding process. He stated only that Wattpad’s investors have been supportive of the company and did not apply pressure to sell.
The exit for Wattpad is set to create another windfall for the Canadian tech ecosystem. It is one of many such deals of late.
“Canadian tech has been a bright spot in an otherwise difficult past twelve months,” OMERS Ventures managing partner Damien Steel said in a statement to BetaKit. “Outcomes like this help feed an ecosystem and have lasting positive impact. I have never felt more optimistic about the Canadian tech ecosystem and think the positive news is just beginning.”
Lau is also the co-founder of venture capital firm Two Small Fish Ventures, alongside his wife, Eva Lau. He told BetaKit that while it was too early to make any commitments, it’s likely his pace of angel investments will definitely increase due to the deal.
“I’m absolutely sure that it will be amazing for the Canadian ecosystem, that I can guarantee,” the CEO stated.
In regards to hopes of being the ‘next Disney,’ Lau said, “The ‘next Disney’ is a shorthand to describe a full-stack, multi-platform entertainment company that is very good at nurturing … intellectual properties … and monetiz[ing] it so many different ways so that they can capture the value.”
“The vision is closer than ever,” he said. “And with the backing up Naver, our success is more guaranteed than ever, our path to becoming a global entertainment giant is also closer than ever.”