Background of Munhakdongne's Stake Sale: Limitations of the Trade Book Market Despite Han Kang's Nobel Prize

As the largest shareholder of Munhakdongne, Korea's number one trade book publisher, recently expressed intentions to sell its stake, analyses regarding the structural changes in the publishing industry are emerging. In a video released on the YouTube channel 'Understanding: All the Knowledge in the World', Pitch Deck CEO Lee Dong-yeol analyzed the situation where the founder of Munhakdongne has put a 41% stake up for sale, along with the market characteristics of the publishing industry.

Trade Book Publishing: A Structure Closer to the Entertainment Industry Than the Knowledge Industry

CEO Lee Dong-yeol divided the publishing market into three leagues: educational publishing, trade books, and comics/webtoons/web novels. Among these, the trade book market, which we commonly encounter, is the smallest in terms of scale. According to association standards, the trade book market is about 400 billion won in scale, which is very narrow compared to the educational publishing market that reaches the 4 trillion won range. The gap is so large that the combined revenue of the top 10 trade book publishers does not exceed the revenue of a single top educational publishing company.

The profit structure of trade book publishing shows a different pattern from general knowledge service industries. Lee Dong-yeol explained that trade book publishing has a strong character of an entertainment industry, where success or failure depends on 'which authors and hits are secured'. This is because books by new authors have low sales volumes and are difficult to generate profit, whereas the structure is such that a small number of major hits cover the losses of other books. In the case of Munhakdongne, it is confirmed that the existence of star authors has a decisive impact on the publisher's performance, such as the significant improvement in results following Han Kang's Nobel Prize in Literature.

Declining Literacy Rates and Competition with Leisure Content such as OTT

The biggest risk facing the publishing industry is the continuous decline in literacy rates. The paper book reading rate, which reached 86% of the adult population in 1994, has fallen to the level of 38% when combining paper books and e-books. In particular, the reading rate for those in their 60s and older was found to be only 14%. The only generation where the reading rate rose is the 20s, but this is analyzed to include purchases of certification books for job preparation.

The reason why the amount of reading has decreased despite leisure time increasing compared to the past is that the axis of content competition has shifted. Lee Dong-yeol analyzed that the increased leisure time has been dispersed into offline activities like ski resorts or OTT services like Netflix and YouTube. He explained that the spread of smartphones and the surge of SNS such as Instagram created an environment that makes consuming paper books difficult.

Changes in Educational Publishing and the Necessity of IP Expansion

The nature of the risk varies by market. While the educational publishing market has the largest revenue scale, the workbook market is showing a shrinking trend due to the development of AI and app services. On the other hand, the textbook and reference book market shows signs of being maintained or growing due to demand for self-study despite the decrease in the number of students. In the comics/webtoon/web novel market, the structure is such that platform companies take a significant portion of the revenue, which is a point where a change in the profit model is required from the perspective of content production companies.

Regarding the background of Munhakdongne's stake sale, an analysis was presented that the growth limitations of the trade book business and the necessity of IP (Intellectual Property) expansion played a role. It was considered that despite the achievement of winning the Nobel Prize in Literature, the company size did not grow explosively, and new businesses such as the book cafe 'Cafe Comma' did not achieve great results. It was discussed that to expand high-quality literary IP into webtoons, web novels, movies, and games, combining with content companies or external capital beyond the existing publisher's capital and capabilities could become a new growth path.