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Edited Transcript of 067160.KQ earnings conference call or presentation 31-Jul-19 12:30am GMT

Q2 2019 AfreecaTV Co Ltd Earnings Call

Aug 12, 2019 (Thomson StreetEvents) -- Edited Transcript of AfreecaTV Co Ltd earnings conference call or presentation Wednesday, July 31, 2019 at 12:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Jung Chan-Yong

AfreecaTV Co., Ltd. - Co-CEO & Inside Director

* Kim Jiyeon

AfreecaTV Co., Ltd. - Head of IR

* Kim Joonsung

AfreecaTV Co., Ltd. - Chief Security and Financial Officer

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Presentation

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Unidentified Participant [1]

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Good morning. Welcome to AfreecaTV Live Conference, a.k.a. ALCON. I'm BJ Han Hyo-Joo. ALCON is open to anyone who's interested in AfreecaTV. However, since it's related to our earnings, only fund managers and analysts who are preregistered with us can ask a question via chat window. Thank you for your kind understanding.

Today, we have: Mr. Jung Chan-Yong, our CEO; Mr. Kim Joonsung, our CSO and CFO; and Ms. Kim Jiyeon, Head of IR.

First of all, could I ask you to greet those who've joined us?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [2]

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Good morning. My name is Jung Chan-Yong, the CEO of AfreecaTV. And time flew by. It's already -- we are reporting on the H1. And it looks like August will fly by after summer vacation. So we did our best for the H1. And we have great plans ahead of us. So with ALCON, we'll have a pleasure of reporting on our earnings.

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Kim Joonsung, AfreecaTV Co., Ltd. - Chief Security and Financial Officer [3]

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Good morning, everyone. It's a rainy day this morning. Thank you very much for joining us this morning. I mean, Mr. Jung, you speak so fluently and flawlessly. And I feel like I'm going to be compared to you. Well, I hope that we'll have a productive and informative time together. Thank you very much.

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Unidentified Participant [4]

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How about Ms. Kim?

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [5]

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Good morning, everybody. And thank you for joining us despite your busy schedule because of the summer vacation. I look forward to your active participation.

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Unidentified Participant [6]

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So how is it going to be?

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [7]

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Okay. So first of all, briefly, we'll go over the earnings highlights for the second quarter and then the first half of this year and then we'll take questions.

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Unidentified Participant [8]

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Okay, let us move on to the earnings report. And Ms. Kim will take it over.

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [9]

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Here are the business highlights of the Q2 and H1 of 2019. The total revenue in Q2 was KRW 41.6 billion, recording 9% growth Q-o-Q and 44% Y-o-Y. Revenues from platform, advertisement, multi-platform grew tremendously, recording Y-o-Y growth rate of 38%, 66% and 100%, respectively.

ARPU growth in gift-giving drove the growth in platform. And as for the advertisement, eSports League revenue increased a little Q-o-Q. The revenue from the 14 Open Studios is reflected in the multi-platform revenue. Gwangju, Nam branch and Jeju branch were added in the second quarter, so their revenue has also been reflected.

Accumulated revenue of the first half of -- first half was KRW 79.7 billion, which is a 40% increase Y-o-Y. In the first half, platform revenue, including the gifts, grew by 33% Y-o-Y and advertisement revenue recorded 63% growth Y-o-Y, thanks to branded content. As for multi-platform revenue, the growth in branches from 8 in H1 2018 to 14 in H1 2019 drove the 126% growth Y-o-Y.

Next slide, the operating income of Q2 is KRW 9.6 billion, which is a 6% growth Q-o-Q and 56% Y-o-Y. Operating margin is 23%. Revenue grew by 9% comparing to last quarter. But because we invested more on contents, like broadcasting rights for traditional sports, like pro baseball league, and in-house content production costs, like eSports League, the operating margin decreased by 0.79 percent point Q-o-Q, recording 23%.

Since our investment in content is crucial in AfreecaTV ecosystem since it creates a better environment for our BJs and boosts user communities, we continue to invest in discovering and supporting good contents. Accumulated operating income of H1 is KRW 18.7 billion, which is a 53% increase Y-o-Y. H1's operating income came to be 23.4%, recording 2.03 percent point increase Y-o-Y, showing the leverage effect of revenue growth.

Let me now go over the cost breakdown in the next slide. Now turning to the operating expense of the 2Q. 2Q's total operating expense recorded KRW 32 billion, a 10% increase Q-o-Q. Of those paying charges, which is variable expense related to the turnover of the sharing, our gifting economy went up and the commission and service charge as well as the content production costs, which are both a reflection of content investment, went up.

As for the commission and service charge as the broadcasting rights of the sporting events starting 2Q that led to the 7% increase and the content production costs went up to ramp up the pro eSports League, such as the PKL and as well as the amateur league, such as BJ Death Match, which are all parts of investment. Besides those, there is no particular increase or decrease of the OI for this quarter.

The last slide on the financial statement, please refer to them later. Thank you very much.

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Unidentified Participant [10]

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Thank you very much. And from now on, we're going to open this for all of the viewers to ask questions. (Operator Instructions)

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Questions and Answers

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Unidentified Participant [1]

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Now I am a BJ myself. So I'm very interested in the Star Balloons. Now this is a part of the gifting economy. Is there any other business model that you have planned?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [2]

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Well, first of all, we have the advertising revenue. And traditionally, for the broadcasting platforms like us, usually it's the display advertising. However, as for AfreecaTV, we have many other different types of content. So it's not just a display advertisement but also the branded content that lead us to the advertising revenue. Also there's many other like ad balloons and types of advertising that we have diversified. So that can be the business models for our platform. So advertising recently is a very hot topic and has actually been that for a long time. As for ad balloon, the growth is very, very remarkable and pronounced.

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Unidentified Participant [3]

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Yes, I can actually see that myself. Compared to the past, you can actually contact the select ad balloons, which actually induces more participation from different stakeholders.

For the branded content, how much does it have to grow for us to actually enjoy the 10% margin?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [4]

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What do you think?

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Kim Joonsung, AfreecaTV Co., Ltd. - Chief Security and Financial Officer [5]

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Well, actually he's passing that question to me very naturally. Well, I guess I can answer that. As you know, the branded content -- actually, do you want to go?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [6]

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No, I think you can go.

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Kim Joonsung, AfreecaTV Co., Ltd. - Chief Security and Financial Officer [7]

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Sure. As for the branded content's advertisement compared to other platform advertisement, the margin has to be low. As you know, the BJs will have to take in the share as well. And we have to do the production ourselves in-house. So there's a cost involved it. But the engagement level of the co-branded content is a lot higher because the users want to see them. It's not -- we're not enforcing or forcing these contents to them one way. So it's a lot more fun and engaging.

That's why our advertisers are highly keen on these type of advertising and which is why we are seeing a lot more trend going up for the branded content. Now what we think is that right now, we do enjoy about 10% of a margin at this point even. But going forward, we want to be able -- if we have more leverage, I think that number could go up in the near future.

Now I think we -- do you see any differences in the fan?

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Unidentified Participant [8]

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Yes, I've seen a lot of fans, thanks to the ad balloon. I'm seeing it like firsthand as a BJ myself. Okay. I think we have a question here.

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Unidentified Analyst [9]

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I'm from [Korea] Securities, Kim Sung. And I have two questions. The ARPU growth rate was higher than expected. What is the cause? So what is driving that growth? And you are investing more on eSports, then can you give us the future guidance?

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Unidentified Participant [10]

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And then -- she hasn't completed her question yet. Okay. So the question number one can go to Ms. Kim.

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [11]

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ARPU growth, we can't really pinpoint what exactly drove that growth, but our contents have been diversified. So thanks to that, like amateur sports, non-eSports, but billiards or traditional sports, that drove the diversification of content and that's why there's higher ARPU. The game programs or visible radio, I think BJs are really generating more ARPU for themselves, just like professionals. And there are more pro BJs now. So BJs themselves are doing really well. And we also support them so that they can do better. And also we discovered new content for our users.

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Unidentified Participant [12]

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And the second question, so you are expanding your investment in eSports. What's your future guidance and then how you plan to monetize the investment?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [13]

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For eSports, was it last year? Last year, November, we launched the joint venture with SBS. And that's when our investment went up because that was really the reason why we did the joint venture with them.

I had a meeting with the soccer team. In a traditional soccer team, it's really hard for them to have profit because their fixed cost is so high. But for eSports, in my opinion, compared to other sports, the fixed cost is quite low. And the industry is at its fledgling stage, so there's a lot more room to grow. So once the investment is done on infrastructure and content and we have the platform, so when we drive the investment, I think the profit will be generated at one point. So profit is depending on the advertisement.

One of the ways that we cooperated with SBS is that our own league and the eSports itself will be expanded and plus advertisement will be attached to the league. I think in H1, how much was the investment? Did we make -- oh, we didn't tell them? No. I think the -- our volume of investment will be the same for H1 and H2 2019. And with major game companies, we will expand our cooperation with them in like ASL or Death Match will be our original content, one of the represented ones. But we're going to expand on that, too.

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Unidentified Participant [14]

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Death Match. When is the match next -- when is the next one?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [15]

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Oh, because I'm involving game BJ. No, it's going to be held soon.

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Unidentified Participant [16]

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I look forward to that. Okay. So keep on giving us questions. I think there's a third part of this question. There are plans for the new games in the second half of the year. What's the direction?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [17]

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Well, there is a team specifically dedicated for the advertising for the game publishers and developers. And the first half of the year, they did a very good job. And I think it actually was the #1 team of the entire company of AfreecaTV. So I asked them, "Can you do the same in the second half of the year?" And they said they have a lot already lined up for the second half of the year. So they're very excited.

And I told them that only they can enjoy going to the overseas workshop. It was half-joking. But I think, like mentioned, there are many new games launched. And in line with that, our advertising team is working very closely with them for the branded content. So I think we have a bright future for the second half of this year.

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Unidentified Participant [18]

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Thank you very much for that. We don't have any other questions yet. In that case, let me ask a question about traffic. So what's the trend in the second quarter's traffic? And with the U-20, what are the strategies to retain the traffic that was coming in, thanks to the U-20?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [19]

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I'm giving this question to Ms. Kim.

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [20]

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Well, in the second quarter, there are unexpected traffic, which was, thanks to the U-20. So we were very lucky with that. And in June actually, 7 million MUV was recorded locally. And I think it's a very good trend. Continuing from the last year, last year, it was the Asian Games and the World Cup. And now people don't see that TV is the only source of viewing for the sports. They know that it can come actually from platforms like us with more added fun. And I think it was a reconfirmation of that new trend with the U-20.

Now for the retention, so strategically, we are making many plans with one of the example is the VOD. Because for the first -- there's a first time to the AfreecaTV just to watch the U-20, and we need to retain them. And as a way to do that, we want to curate them with better view of this and with better recommendation services. So to the mid- to long term, we are investing a lot for the VOD service.

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Unidentified Participant [21]

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Thank you very much. I think there's one question here.

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Unidentified Analyst [22]

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My name is Lee Moonjong. I have a question about the first quarter labor cost. I think the labor cost decrease was quite small. And why is that? And can you give us the guidance in terms of labor costs? For the H2.

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [23]

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For the quarter 1, it wasn't the onetime cost. We hired more people for the first quarter. And that's why it went up a little bit. And that's going to be decreased as the time goes by. And for the second quarter, we gave the stock buying option to our employees. So that was the offset effect.

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Unidentified Participant [24]

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Next question.

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Unidentified Analyst [25]

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My name is -- Samsung Securities. The major target is 20 to 30 -- men in their 20s and 30s. And do you have any plan to develop more content to secure female and middle-aged users?

And second question, where is the -- how are you going to diversify your advertisers?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [26]

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Our -- in terms of demographics, yes, this comes up every time. The men in 20 to 30s are our main target. And how about females? And how about older demographics? For female users, it's kind of difficult for us to jump into conclusion. So our main target will remain the same.

In order to expand our demographics, I think we have to take 2 strategies. One is for female, we can do it by partnering with other companies. Already, we can partner with a company that has large female users and viewers.

And also for the older demographics, starting this year, I think they are on the rise. And that will depend on hobbies and daily sports, like everyday sports like fishing. So that lured a lot of users in, billiards and ping pong. So the sports or the hobbies that the older generation like to do is something that we need to tap on. So I think at the end of this year, we're going to see more of them coming in.

The second part of the question was about the nature of advertisers, whether there has been any change. Well, our focus has been on the game companies, and we're expanding from that point. I'm not sure if I can say they are all conglomerates. What I can tell you is that we have advertise from different industries, different types of businesses. We have direct advertising, but we also have a sponsored advertisement. And we also have the ad balloon as a type of a product for the advertisement. So we have 3 different types for the advertisement. And for each type, I think we have a variety of advertisers in their nature.

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Unidentified Participant [27]

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So thank you very much for that. Moving on, we're still waiting for more questions to come along.

Do you have anything to say, Joon? Anything that you must say before we go on?

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Kim Joonsung, AfreecaTV Co., Ltd. - Chief Security and Financial Officer [28]

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Well, there is something that I wanted to add about cost. We talked about the league production cost. I think it's a very critical and crucial part of our investment for AfreecaTV. BJs always are concerned about what content that they can show to the viewers. Because again, the BJs want to provide more fun and better contents to their viewers. Now from the company's perspective, we want to address your concerns from the BJ by providing more original content.

I think through that, we can really have a win-win ecosystem for the company and for the BJs and also for the viewers. So that's where we want to have more investment going on. It will help you. And I think in a way, it will also elicit more loyalty from the BJs to the platform. And with that, I think we can enhance the type or quality of the content as well. I think, yes, it will cost us, but it will strengthen our ecosystem and I think a very positive, very useful investment for all of us.

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [29]

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That's very, very correct. Now at the same time, there is also the -- what we call the homework broadcasting for the BJ that we are very, very cautious around this. It's not just -- it cannot just benefit the company nor it cannot just benefit the BJs only. It should benefit both the company, the BJs and the viewers. That's why we're taking a very cautious approach here. But again, we're doing our best to find a way to benefit all 3. And because original content production does have a possibility to benefit all 3, we're making all these investments.

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Unidentified Analyst [30]

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AfreecaTV is leading in eSports. Do you have any strategy or methods to expand eSports outside Korea, led by AfreecaTV? So anything global.

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [31]

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I feel a little bit reluctant to say anything about global. So globalization, there are 2 strategies. We have original content that can be suitable for global users, like game leagues. All other platforms are transmitting those content. So transmission itself is limited. So the key is original content. And related to that, do we have our user-oriented eSports League regardless of the size? That is the key.

And secondly, we have a game -- professional game team -- eSports team. And that team can create a momentum, too.

How about you, Joon? Do you have any comment?

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Kim Joonsung, AfreecaTV Co., Ltd. - Chief Security and Financial Officer [32]

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Well, as Mr. Jung said, let me just add a little bit. So because of that, we are planning on country-versus-country championship, too. So Korean BJs versus -- Korean BJs and Korean team versus Hong Kong or Taiwan or something. That will boost AfreecaTV's image. And also we can support our BJs and eSports teams. For Hearthstone, we're working on it. And also StarCraft, we have a plan for StarCraft, too, and we're going to expand to other items, too.

The reason why we can do that is because we have a lot of value chains related to eSports. So league development and planning capability, we have the transmission platform. And since you have the platform, that means you have secured the users and you have the team. So for Vietnam, Thailand, Japan, they sometimes call us for cooperating on league production. So we do have the upper hand in that. But then how are we going to make that to original content? That really depends on our effort.

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Unidentified Participant [33]

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Thank you very much. VOD is a hot topic. In terms of increasing VOD, what's the biggest hurdle?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [34]

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Well, there are many hurdles for VOD growth. So yes, there are many challenges ahead of us. But they're not impossible to overcome. Say, we have secured a lot of VODs and the usability can be provided to our users. So we have all the conditions met. Then how about other -- then how are we going to attract the users who will be willing to leave other platforms for those kinds of VODs? So on that, we're going to have to prepare some strategies on that. And we have prepared ourselves for the VOD services in the H1, and the H2 will be all about execution.

So in terms of functions and technology and servicing, starting this fourth quarter, I think our -- other users will be communicated on our VOD service. And it will be a good surprise for them. More marketing events and promotion campaign will be launched and then we're going to collaborate more with BJs on some projects. Now for our users to use our VOD service, we are going to have to give them some kind of benefit.

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Unidentified Participant [35]

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I think there is another question related to VOD again from Mr. (inaudible) from Shinhan Securities.

Recently, there are many eSports hosted by AfreecaTV. A lot of those contents are shown not on YouTube but more on the AfreecaTV's VOD site. Is that intentional?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [36]

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I'm actually not sure what that question is. We are working very hard towards VOD. So yes, I think it was intentional from our company's perspective. You talked about the contents of the eSports hosted by the AfreecaTV, do you mean by the users? I'm actually not quite sure what that question is intended for.

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Unidentified Participant [37]

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A lot of -- a lot more users are seeing this?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [38]

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Well, the edited content are exposed a lot to our VOD platform.

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Unidentified Participant [39]

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Well, compared to the past, the BJs today are putting more of the edited contents to their own broadcasting platform rather than the YouTube.

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [40]

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I think there's actually a comment related to this, the Afreeca's VOD platform's update speed is faster than that of the YouTube. Yes, our speed is our strength. The update speed that you mentioned is already quite good on our part. But we have even better ideas to bump up that speed even further in the future. I would say by October of this year, end of October, I can share more information on that. So speed and users are the 2 key words. And that will be our main strength that we can really take advantage of. So for speed, we are faster, of course, because it's from directly from the platform.

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Unidentified Analyst [41]

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Mr. Yu Incheol from Citi Securities. The first question is the advertising revenue of the first half of the year was KRW 12.1 billion. Now the year's target that you mentioned to the media is KRW 30 billion. Is that still the same?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [42]

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Well, I did not actually say the KRW 30 billion target to the media. That was a misunderstanding. Actually, when I had that interview, I said that -- I said we're going to work a lot towards the advertising revenue. And they said, "What's the meaningful level of revenue from the advertisement?" And I said, "It doesn't mean anything if it's from the KRW 10 billion to KRW 20 billion." I said, "It should at least be KRW 30 billion for the advertising revenue to be considered meaningful and significant."

And because of the economies of scale, you should at least have KRW 30 billion. That's what I said as a minimum level of the advertising target. But it wasn't the target of our company, per se. So again, that's not right. I don't think we can reach the KRW 30 billion by the end of this year. If we do reach the KRW 30 billion, that will be really the solid foundation for the economies of scale to really tick up. But I guess, we can say KRW 30 billion is a good target. But I didn't mention that it was our specific target.

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Unidentified Participant [43]

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The branded content advertisement is on the rise. But for platform advertisement, down, first quarter. In the second quarter, Y-o-Y growth has been in the 6%. So is that going to be the trend for the second half?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [44]

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For second half, it's going to be better. Usually, it's better than the first half. And the summer season, and it's a high season for us, so all the inventories are filled. So it's going to perform better in the latter half. But we're going to need some dramatic growth in traffic to drive the advertisement. And network advertisers are affected by the advertisement cost -- price. So for the second half, I think the Facebook network advertisement price has gone down. So that influenced us a little bit, too.

For platform, advertisement is reliable on the traffic and also network advertisers. So we're going to look into -- we're going to put -- channel our energy into things that we can actually execute.

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Unidentified Participant [45]

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The third one, the platform advertisement price is not as high compared to other platform. So do you have any plan to increase the price or improve on that?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [46]

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For advertisement pricing, we don't have much power in that. So Facebook network advertisement is about at least 20%. And that's quite big. So we're going to be influenced by that price change of the 20%. But our own advertisement takes up about 60%. So we can control those prices, but we have to follow the market logic.

So for platform advertisement, this world is quite polarized. So for YouTube that dominates, so they have very high pricing. If not, you're quite low. But the network advertisers who can actually do -- run their advertisement on us are quite limited because we have quite high traffic, too. Well, comparing to YouTube, we are quite low compared to YouTube. But our traffic is quite meaningful, too.

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [47]

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Let me add on that. The 6% growth Y-o-Y -- well, in fact, there's a lot more growth. Because there were some banner advertisements that looked old-fashioned, so we took those out. Instead, we developed ad balloons who are more suitable and fitting for AfreecaTV. So the nominal growth rate is 6%, but we -- considering that we took out those old-fashioned advertisement, the actual growth rate is higher than that. So ad balloon is more user-friendly and user participatory. So in terms of quality, our advertisement is better.

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [48]

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We still have the banner advertisements, right?

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [49]

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Yes, we do.

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [50]

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We took those out since they were intervening with user participation, like the whole -- the advertisement that would cover the whole monitor or something, we took those out.

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Unidentified Participant [51]

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Next question comes from [Hoon Sun-young] of Nomura Financial Investment. Please let us know of the recent progress, such as the traffic and user trend of Afreeca as well as the mid- to long-term strategy.

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [52]

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Well, Afreeca is still a beta version. There is a number of downloaders. That's a hurdle actually because you have to download this. I think I mentioned already. But we have our own VOD service and the chocolate video service VOD, so we have a two-track approach. That's because we want to have more options for the VOD service, but we also want to expand our global business. Now for the global business, the platform technology or the ecosystem for the local BJs could be a strategy. But I think content should be another part of the strategy.

So we have the short-clip videos, and we are adding various functions and features to that. We're actually in preparation of that right now. But functionally and technologically, there are still some concerns that we have to address. That's why we're not trying to attract that many users at this point. We're not -- and related to this, we're not doing much marketing aggressively.

Right now, what we are doing is we are studying the user patterns and trying to reflect those patterns into our mid- to long-term strategies for Afreeca. So I don't think we can say what the progress or achievement is yet. And I don't think we're in the position to tell you about the mid- to long-term strategy just yet.

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Unidentified Participant [53]

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Okay. There's another question to our VP -- or actually VP from my side. The net profit has gone up faster than the OI. Is there a reason for that?

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Kim Joonsung, AfreecaTV Co., Ltd. - Chief Security and Financial Officer [54]

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Question is directed to me, are you sure? I think Ms. Kim can answer better. Well, let me just go on anyway. The OI went up because we had a stock that we have been holding its classes. As you know, we sold that. And with that, compared to the first quarter, the second quarter, we saw greater profit, thanks to the selling of classes. But it's a onetime event, as you can see.

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Unidentified Participant [55]

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Well, thank you very much for that. Do you have any plan to adapt (spoken in Korean)? It's a very fun feature, but it's not being used widely.

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [56]

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It's because of the restriction. BJs can only use from AfreecaTV platform only, so -- and because -- and then we have that restriction because of the copyrights issue. Now I think it's being used little by little. Now yes, we're going to have to see the trend before we make any decision. So this feature, we're going to have to look at the usage pattern and then we're going to decide whether or not we'll expand this feature.

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Unidentified Participant [57]

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After UI has been improved, the ad balloon is being highlighted quite well and the fans will give ad balloons quite a lot to support the BJs. So how is the growth rate in revenue?

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [58]

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For ad balloon, comparing to first quarter, the second quarter ad balloon revenue grew so much. Since before that, the growth was limited. But this quarter, it went up to about KRW 100 million per month. This is included in our platform advertisement category.

It's just the beginning. So in the future, the ad balloon business model is related to game industry. So it's very suitable for new game downloads. So we're going to tap on that. And through ad balloons, we're going to approach commerce, too, like if you -- if you order a fried chicken, then the ad balloon will go up. So there is a good chance to expand that.

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Unidentified Participant [59]

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Wasn't monthly revenue around KRW 20 million?

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [60]

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Yes. Used to be about KRW 10 million to KRW 20 million. But now it's about KRW 100 million. So that's more than a tenfold increase.

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Unidentified Participant [61]

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Actually, I know what that means. I can speak for -- as a BJ, it really does happen.

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [62]

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And to add to that, for the ad balloon, the users' proportion compared to other types, demographic-wise, they are usually the teenagers compared to the other types, which attract more 20s and 30s. So I think that's a good direction and it's structured in the right way.

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Unidentified Participant [63]

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Thank you very much for that. Well, in that case, let me -- should we wait for more questions?

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [64]

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I think we did already get a lot of question today.

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Unidentified Participant [65]

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And I think it's good to go.

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [66]

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Well, you can ask if there are more questions.

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Unidentified Participant [67]

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Well, do you have more questions, viewers? I think there may be some more questions.

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Kim Joonsung, AfreecaTV Co., Ltd. - Chief Security and Financial Officer [68]

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Well, I'm not sure if there are any questions left.

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [69]

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Well, if you have questions, just call me.

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Unidentified Participant [70]

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Yes. Anytime, you can call Ms. Kim, the Head of the IR team. Well, if there are no further questions, I think we can wrap it up today. Well, thank you very much for the Star Balloons. I think in the past, we had about like 2 people that showed us -- that gave us the Star Balloons. But we weren't able to prepare for these as a reaction. But anyways, thank you very much. Well, let's finish up with the last words.

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [71]

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Do you want to go before me?

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Kim Joonsung, AfreecaTV Co., Ltd. - Chief Security and Financial Officer [72]

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You're putting me on the spot. Thank you very much for joining us despite your busy schedule and taking interest in our company. At the end of October, we're going to come back for better earnings report.

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Jung Chan-Yong, AfreecaTV Co., Ltd. - Co-CEO & Inside Director [73]

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For H2, I look forward to the second half. But also I'm a little bit worried because VOD service can be seen as a challenge. But it's also something that looking at what AfreecaTV has, there is a big chance to expand on that. So we are going to do our best and try our best. So thank you very much.

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Kim Jiyeon, AfreecaTV Co., Ltd. - Head of IR [74]

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We've been doing really well. But recently, we've come up with new business model -- well, not really like a new, new, but ad balloon or branded contents are being expanded, so -- and also party -- PODTY from NHN that we bought recently, the news was out. So we're making good attempts. And we look forward to a better performance for the second half, too.

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Unidentified Participant [75]

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Thank you very much for joining us today. And if you have any comments or opinion on ALCON, then you can always contact the IR team. Thank you very much. See you next time.