Naver to invest 200 billion won to enhance video content

Naver plans to invest an additional 200 billion won ($179 million) over the next two years to boost the creation of exclusive online content, said CEO Han Seong-sook on Thursday.

The portal giant’s second quarter results were slower than the previous year. Han nonetheless remained confident in her investment plans in a conference call with analysts.

“Investments are necessary for existing businesses to keep a competitive edge and for preparing growth engines for the future,” she said.

“From last year, we invested 400 billion won in developing [online] content and global expansion. The plan is to infuse a total of 600 billion won over three years starting from last year to develop smart content.”

Han especially stressed the importance of videos, adding that the online service market was rapidly moving to be dominated by video content. She added that users nowadays spend more time on consuming video than looking at portal sites and social media networks.

“The plan is to make strong improvements in video-related functions so that users can more actively make and distribute videos through [Naver’s] blogs,” she said.

Naver will add a video editing tool to its blogs and launch a service to search for videos from all over the world in this year’s second half.

The portal currently offers “V Live” which is popular as a platform where Korean celebrities film live videos to directly communicate with fans. Naver’s video strategy will move in the same direction: to develop content exclusive for the website.

CFO Park Sang-jin said that the company plans to increase collaboration and video sourcing from external studios and entertainment companies. The company hopes this will give them a competitive edge against other foreign players like YouTube and Daily Motion, which announced its official launch in Korea this week.

The pro-investment initiative was also notable in that the company had seen reduced operating profits for the year’s second quarter results, despite record-high revenue. Operating profit between April and June fell 12.1 percent year on year to 250.6 billion won. Sales had grown 20.7 percent year on year to 1.36 trillion won, but the cost of aggressive investments took a toll on the bottom line. Operating costs rose 31.8 percent to 1.11 trillion won.

Naver also announced on Thursday a 5-to-1 stock split that would reduce its nominal value from 500 won to 100 won. Park said the purpose was to lower the barrier for investors.

Naver’s shares closed at 746,000 won on Wednesday. Trading at the Korea Exchange will be halted between Oct. 8 and 11, after which Naver shares will be sold at roughly 150,000 won per stock.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]