Watcha, a Korean streaming platform, is gearing up to tap into Japan and Southeast Asian markets following the completion of Series D funding worth 19 billion won ($16 million). The company will begin providing services in Japan this September, then dive into Southeast Asia starting in June 2021.
The company is also preparing to go public as early as 2021, according to industry sources. The proceeds will be used to further boost the company’s global operations. Watcha has selected NH Investment & Securities as the initial public offering manager to get listed on the tech-heavy KOSDAQ market.
The company’s pre-IPO value is estimated to be near 130 billion won ($109 million). The company has yet to announce official plans.
Watcha was founded in 2011 by Taehoon Park, the chief executive officer, while he attended KAIST, a leading science and tech university located in Daejeon, South Korea. Park was keen on the concept of customizing all types of services which led to the creation of Watcha, a curation service that recommends movies based on users’ preferences, reviews, and ratings.
The service was a big success in Korea, accumulating over 500 million reviews and ratings. It outperformed online giant Naver which has over 100 million movie reviews as well as the leading multiplex chain CJ CGV which has over 230 million movie reviews.
Watcha laid out the framework for streaming platform WatchaPlay which launched in 2016. The new over-the-top (OTT) service offering about 80,000 domestic and foreign shows pushed the company to grow at a faster pace, with nearly 1 million users and over 5.7 million downloads.
The basic monthly plan is 7,900 won ($6.60), and the monthly premium is set at 12,900 won for four users to use the service at the same time.
Watcha’s competitive strategy is driven by its strong data portfolio. According to Park, the company’s advanced algorithm offers highly accurate recommendations and predicts the types of shows that would appeal to users. This gives the company an advantage over industry competitors as Watcha uses comprehensive big data to identify and secure attractive content that is not available on competitors’ platforms such as the popular BBC drama ‘Killing Eve’, HBO’s ‘Game of Thrones’, and more.
According to the RMSE index, an index that measures accuracy in recommendations, Watcha scored 0.6998 compared to Netflix’s 0.9525. The lower score indicates higher accuracy in recommendations.
“The existing content market was steered by platform providers’ hunch on what would work. We figured we could add value by integrating data analysis to optimize user experience,” said Park. “Many of our users sign up to see shows that aren’t offered on other platforms,” he added.
Watcha is the only domestic provider that has signed with all six large content distributors including Disney, Warner Brothers, Sony Pictures, and 20th Century Fox among others.
“Another key advantage of ours is that we have a strong portfolio of Korean content. The increased global demand for Korean shows will be good leverage for us as we expand. Our goal is to secure 20 million to 30 million paid subscribers in Asia within five to seven years,” Park said.
The OTT market has seen substantial growth during the global pandemic due to social distancing and shelter-in-place becoming the daily norm. Streaming services such as Netflix, Hulu, and Disney Plus have become familiar household names with large companies including Apple and Amazon also coming onboard.
Watcha is aiming to join the ranks of global players as it rolls out its services to overseas markets. It also plans to expand into music, performance, game, and webtoon (digital comics) sectors.
Watcha has raised a total of 42 billion won to date. It received seed money worth 800 million won in May 2012 from Kakao Ventures, an early-stage venture capital held by platform giant Kakao, as the first portfolio company. The company then raised 2.7 billion won in October 2013 for Series A, 5.5 billion won in December 2016 for Series B, and 14 billion won in March 2018 for Series C.
In July 2019, the company was selected as a Unicorn Startup by the Ministry of SMEs and Startups and Korea Technology Finance Corporation. A Unicorn startup refers to a privately-held company with the potential to exceed 1 trillion won in value.
By Kyeong-je Han
<Edited by Danbee Lee>