Wattpad is set to go on a hiring spree after the closing of the Toronto-based publishing platform’s sale this week to South Korean multimedia and technology giant Naver Corp.
The companies announced the cash-and-stock deal, valued at an estimated US$600-million, in January. The Globe and Mail had reported that Wattpad was in talks with multiple parties after an unsolicited offer from a U.S. internet content company. Fifteen-year-old Wattpad will retain its executive team under the leadership of its co-founders – CEO Allen Lau and chief strategy officer Ivan Yuen – and continue to operate out of Toronto and Halifax.
“Almost overnight, the business has been accelerated by years,” Mr. Lau said in a recent interview.
He said he expects Wattpad to see the fastest growth in its history this year. The firm plans to expand its team by 50 per cent in 2021 with about 100 new hires in engineering, marketing and other areas. The new jobs will be concentrated in Toronto – where the bulk of its employees currently work – as well as the newer Halifax base. (Sixteen employees currently work out of Halifax, although Wattpad does not yet have a physical office there.)
“Geographic boundaries are becoming less of a factor,” Mr. Lau said. “But at the same time, we recognize the value of face-to-face interaction, so we do want to concentrate hiring around our two headquarters.”
The deal will align Wattpad with Naver’s Webtoon, a platform for user-generated webcomics analogous to the Toronto company’s platform for self-published writers. Mr. Lau will report to Jun Joo Kim, the CEO of Webtoon. Wattpad’s core app will continue to operate independently while Naver probes ways for its new acquisition to collaborate with Webtoon and other subsidiaries.
“Entertainment is going through a very interesting period of disruption, and the demand for original stories is higher than ever,” Mr. Lau said. “Both Webtoon and Wattpad are data-driven companies with striking similarities, though one works with comics and the other with fiction. By aligning the two, we will further improve our data-based decision-making capabilities and significantly expand our user reach.”
In a November blog post, Wattpad outlined its goal to become a global, multiplatform entertainment company within 10 years. Wattpad and Webtoon combined have more than 166 million monthly users.
Wattpad uses artificial intelligence to mine usage data from readers, gauge the popularity of stories on the platform and adapt them into other formats such as books, TV shows and films. It sells advertising on the platform, which is generally free to use. In 2019 it launched its “paid stories” program, which charges users to access stories by certain authors and splits the proceeds with the writers.
It also recently opened a studio arm that strikes deals between writers and production studios, touting its service as a way to mitigate risk in optioning stories for TV and film adaptation with its data-driven insights.
The company has billed itself as the “next Disney,” but its financial growth has not yet matched its sweeping ambitions. As of earlier this year, its annual revenue was just $40-million a year, The Globe has reported.
The deal puts the two companies “in a position to build an entertainment ecosystem that spans across fiction, comics, audio, video and more,” Mr. Lau added. “In a way, we want to be content-type agnostic, putting more focus on the content [intellectual property] itself and supporting the writers.”
In addition to Webtoon, Naver operates a prominent search engine, commonly referred to as the “Google of South Korea,” as well as Line, the most popular messaging app in Japan. Wattpad is the internet giant’s first Canadian acquisition and only its second outside of South Korea after its 2017 purchase of the Xerox Research Centre Europe, based in Grenoble, France.
The deal is the latest in a string of foreign acquisitions of Canadian tech companies. In December, IBM announced its purchase of Montreal-based cloud payments processor Expertus Technologies Inc. for an unknown sum. Ten days earlier, California’s ServiceNow Inc. bought Montreal tech darling Element AI for US$230-million. In November, St. John’s-based cybersecurity firm Verafin was acquired by Nasdaq Inc. for US$2.75-billion.
Canadian companies have also made cross-border acquisitions, including the takeover of Salt Lake City’s Collective Medical by Mississauga-based PointClickCare Technologies, one of Canada’s largest private software firms, and a flurry of purchases by Montreal’s Lightspeed POS of its rivals in the United States and the Asia-Pacific region. Montreal-based Nuvei Corp. and Toronto-based Dye & Durham Ltd. have also made foreign acquisitions in recent months.
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