Tving turns first-ever profit after years of losses

Tving, South Korea's homegrown streaming platform, has broken its cycle of chronic losses, posting its first-ever operating profit in the second quarter of this year.

The turnaround was driven by a string of original content hits, led by "Dear X" — a boldly themed drama rated for viewers 19 and older that generated significant buzz late last year — along with "The Cook Becomes a Legend" and other originals that performed well through the first half of the year, sustaining steady subscriber growth. Tving's live broadcasts of Korea Baseball Organization games are also credited as a key factor.

However, uncertainties remain, including an ongoing personal data breach, leaving the outlook for continued earnings improvement in the second half unclear.

Tving recorded an operating profit of 6 billion won ($4.33 million) in the second quarter, its first profit since the platform launched in 2020.

Subscribers grew 24.7 percent year-on-year on a net basis, while advertising sales surged 52.2 percent.

The company said subscriber growth was sustained by KBO broadcasts and the strong performance of originals including "The Cook Becomes a Legend" and "Yumi's Cells Season 3." With KBO live streaming proving particularly effective at attracting new subscribers, Tving has decided to extend its KBO broadcasting rights through 2031, beyond the current contract that runs through this year.

Tving's strong showing also provided relief for CJ ENM. The company's media platform business posted sales of 380 billion won in the second quarter, up 19 percent year-on-year, with operating profit of 11 billion won — a turnaround from a loss in the same period last year.

An image related to the contract signing between Tving and the Korea Baseball Organization for wired and wireless broadcasting rights to the KBO League from 2024 to 2026 [Provided by Tving]

Still, it is too early to declare victory. Tving has finally posted a profit after roughly six years of losses, but the second half of the year remains treacherous.

The biggest wildcard is the personal data breach. The Ministry of Science and ICT is expected to release its investigation findings soon, including the precise scope and scale of the damage.

Tving plans to announce a customer compensation package in response. The financial burden of compensation and potential regulatory fines leaves considerable room for the fallout to weigh on second-half earnings.

During a conference call following CJ ENM's earnings release Thursday, Tving said internal discussions on the compensation plan are continuing and the company expects to announce it around September or October. "We want to design it in a way that provides customers with as much compensation as possible while minimizing the financial impact on our bottom line," the company said.

Analysts also say Tving urgently needs to complete its planned merger with Wavve to build the scale needed to compete against Netflix's dominance in the market.

CJ ENM said KT Corp and Tving are in discussions on various forms of cooperation related to advertising content, and that the company plans to begin full-scale talks on the Tving-Wavve merger in the second half of the year on that basis.

sjpark@heraldcorp.com