AfreecaTV Co Ltd

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Earnings Call Transcript

[Unknown Attendee]

Welcome. Hello, everybody. I feel like I'm back last year -- back to last year's call. Anyway, welcome to the live conference of Soop's Q4 2024 and Annual Earnings Report. It's a great way to wrap up our 2024 and welcoming the new year. Well, happy New Year, everybody. I took a month off, and I came back just 2 days ago. So, you guys told me that you have a high expectation on me, but I'm quite nervous. Well, that's what I say, but I'll do my best to make this fun and constructive. All right. So, great to be back in the studio and I'm streamer, I'm [ Annye Seulti ] and welcome to the live conference on Soop's Q4 2024 and annual earnings report. This live conference is open to anyone who is interested in Soop, but as this is related to earnings, only those who have registered in advance can ask questions in the chat room.

Today, we have CSO, Daniel Choi; Ellen Kim, Head of IR; and Isla Jun, IR Manager. Will you say hi to those who joined us this morning. We have a new face here. Hello? Can you introduce yourself?

[Daniel Choi, executive]

Hello. My name is Daniel Choi. I'm the CSO of Soop. Happy New Year, everyone.

[Unknown Attendee]

So, could you rate from 0 to 10, your nervousness.

[Daniel Choi, executive]

Before I started, I would say 10 maximum. But now that we started -- and with your great introduction, my rating is now going down and down. So, at the end of the session, I will do my best that your rating will be 0.

[Unknown Attendee]

How was your New Year celebration?

[Daniel Choi, executive]

I didn't have anything special, but I went to see my mother and my family. I spent some time with my family.

[Unknown Attendee]

Yes, that's what you do for the New Year celebration, right? So, we look forward to a fruitful conversation with you. Ellen, can you say hi?

[Kim Jiyeon, executive]

Hello, I'm Ellen Kim. This is a new format, and since we're going to cover last year 2024, and I'm really glad that we are back with great results from 2024. And we will do our best to answer all your questions about last year and also in our future plan. We will do our best to answer all your questions. Now that we have new CSO.

[Unknown Attendee]

You guys are okay with each other?

[Kim Jiyeon, executive]

We need some time to get accustomed to each other, but we prepared a lot.

[Unknown Attendee]

Yes, you guys practiced. All right. That's nice. At [indiscernible], I had a time to spend with Daniel last year and we had like a group dinner and he seemed very relaxed. And at the streamer award, when he shouted catch, we could really feel that he's a fun guy too, not just relaxed, but he's a fun guy. So, we would like to see that part of you. And Isla, can you say hi?

[Kyunghee Jun, executive]

Hello. Great to meet you. My name is Isla Jun. So, this is the first call for 2025 and I will do my best to answer your questions to the fullest as possible.

[Unknown Attendee]

And we anticipate your high engagement and participation. All right. So, we are going to start the conference call, the business strategy and the results call.

[Kyunghee Jun, executive]

All right. Now that we have our CSO who is joining the earnings presentation for the first time today, I will first present our 2024 business performance and financial results. Then the CSO will follow with the 2025 business strategy. We will have a Q&A session after all the presentations are complete.

[Unknown Attendee]

Okay. then without further ado, let's get right into it. Take us away, Isla.

[Kyunghee Jun, executive]

Let me present the business performance and financial results for Q4 and the full year of 2024. Let us begin. As a leader in the domestic live streaming industry, Soop has played a key role in driving the structural growth of the market for years. In 2024, we revamped our domestic platform and launched the beta service for a new global platform, laying the groundwork for expanding beyond Korea. At the same time, we have continued developing new technologies, including AI and introducing various features to support streamers' creative capabilities while enhancing user convenience and engagement.

For Soop Korea, we are poised to expand our domestic market share while reinforcing our support programs for creators. We will adopt next-generation technologies to drive the growth of both our service and community. We'll further enhance core services such as channels, subscriptions and search to improve overall service quality while strengthening our platforms business model through features like gifting and subscriptions. With these initiatives, we expect to achieve further growth while expanding our market share this year.

Despite a sluggish advertising market last year, we drove growth by diversifying ad products. While we do not expect major shifts in the macroeconomic or advertising landscape this year, we -- there is a stronger pipeline of new game releases and it should highlight Soop's advertising strengths. At the same time, we will continue efforts to grow our ad business by launching platform ads on Soop Global and expanding sales in non-gaming sectors. Soop Global remains in its early stages, prioritizing P2P tech and service reliability, while gradually expanding content and solidifying its business model. To expand content, we are maintaining Esports and gaming as core categories while scaling up social content.

We will actively support social content, starting with global simultaneous streaming by Korean entertainment streamers and expanding into original K entertainment content production. For gaming content, we secured exclusive operating rights for VALORANT Challengers Thailand last year, the country's second-tier VALORANT league, achieving strong results. This year, we secured a contract to expand production and broadcast across Southeast Asia. This is a remarkable achievement for an emerging platform like Soop Global, demonstrating the value of Soop KR's track record and our shared global vision. We will continue reaching out to partners on global content collaborations.

Soop Global's top priority at this stage is service stabilization and scaling up. However, its ultimate business model centers on advertising and gifting. To this end, we are ensuring the fundamental operation of our business model to build a sustainable ecosystem, including simultaneous streaming by Korean streamers while shaping Soop's unique gifting culture. Additionally, based on our previously announced shareholder return policy, the 2024 shareholder return fund is set at KRW 16 billion, equivalent to 14% of Soop's 2-year average FCF, a 75% increase from last year. This represents 16% of our 2024 net income with a dividend of KRW 1,500 per share.

Next, here are the financial results for Q4 and the full year of 2024. Q4 revenue reached KRW 117.6 billion, growing 7% Q-o-Q and 17% Y-o-Y, driven by strong ad revenue growth. Q4 platform revenue was KRW 82.4 billion, showing a slight Q-o-Q adjustment of minus 0.3% as the expanded community stabilized, but growing 20% Y-o-Y. Full year 2024 cumulative revenue reached KRW 326.5 billion, up 26% Y-o-Y. Q4 ad revenue reached KRW 33.9 billion, up 29% Q-o-Q and 13% Y-o-Y. Breaking it down, platform ad revenue grew 9% Q-o-Q and 2% Y-o-Y, reflecting peak season effects. Branded content surged 62% Q-o-Q and 20% Y-o-Y, driven by increased demand for off-line BTL ads. Lastly, other ad revenue declined 19% Q-o-Q, but grew 2% Y-o-Y. 2024 yearly cumulative ad revenue totaled KRW 98 billion, marking an 18% Y-o-Y increase. 2024 yearly revenue reached KRW 429.1 billion, achieving solid 23% Y-o-Y growth, driven by both platform and ad revenue expansion.

Next, operating expenses. Q4 operating expenses totaled KRW 89 billion, up 3% Q-o-Q and 20% Y-o-Y. The main Q-o-Q increase was driven by higher event costs from G-STAR participation and the year-end streamer awards as well as a rise in advertising commission fees due to increased ad revenue. Breaking down by cost category, paying charges, which is a variable cost, totaled KRW 13.4 billion, down 1% Q-o-Q, but up 25% Y-o-Y. Advertising commissions reached KRW 19.9 billion, rising 63% Q-o-Q and 34% Y-o-Y. Content production costs totaled KRW 2.7 billion, down 15% Q-o-Q and 17% Y-o-Y due to reduced league and original content production.

Here's the fixed cost breakdown. Employment costs increased to KRW 23.6 billion, up 4% Q-o-Q and 17% Y-o-Y. Broadcasting and other commissions rose to KRW 9.2 billion, up 7% Q-o-Q and 21% Y-o-Y. Streamer support expense decreased 6% Q-o-Q to KRW 3 billion, but jumped 69% Y-o-Y due to increased contracts and support for the migrated streamers. Internet circuit expense fell 14% Q-o-Q to KRW 4.5 billion, but grew 24% Y-o-Y. Event expenses. Event expenses increased to KRW 3.5 billion, a 1,108% increase Q-o-Q and 207% increase Y-o-Y due to G-STAR and the year-end awards. Other expenses dropped to KRW 3.5 billion, down 70% Q-o-Q and 33% Y-o-Y as one-off Q3 costs were removed.

As for the annual operating expense, it totaled KRW 314.7 billion, up 22% Y-o-Y, primarily driven by higher costs from an increased headcount and rising variable expenses linked to platform and advertising revenue growth, particularly in paying charges and advertising commissions. Now breaking down further by cost type. As for paying charge, which is variable cost in nature, platform revenue growth fueled section up by 38% Y-o-Y to record KRW 53.1 billion and the growth of advertising revenue pushed advertising commissions up by 43% Y-o-Y to record KRW 51 billion. Employment costs, which are fixed costs, grew by 18% Y-o-Y to KRW 91.7 billion. Commissions for copyrights and others reached KRW 30.2 billion, up 20% Y-o-Y.

Internet circuit expense due to the launch of Soop Global and the increase in Soop Korea's user engagement climbed 31% Y-o-Y to KRW 18.1 billion. Streamer support costs, reflecting the impact of streamer transfer agreement surged 66% Y-o-Y to reach KRW 10.9 billion. Event expenses due to Soop Korea's rebranding and G-STAR participation increased 119% Y-o-Y to reach KRW 5 billion.

Fourth quarter's operating profit came in at KRW 28.6 billion, up 20% Q-o-Q and 8% Y-o-Y with an operating margin of 24.3%. Annual operating profit for year 2024 reached KRW 114.3 billion, up 27% Y-o-Y with an OPM of 27%. Q4's net income stood at KRW 22.7 billion, down 6% Q-o-Q, but up by 41% Y-o-Y. Annual net income for 2024 was KRW 99.1 billion, an increase of 33% Y-o-Y. Lastly, please do refer to the annual financial statements for details on the financial positions.

This concludes the presentation on business performance and financial results. Next, our CSO, Mr. Choi, will present Soop's 2025 business strategy.

[Daniel Choi, executive]

Hello, everyone. Soop's core business goals for 2025 will be briefed and I do have a presentation slides here for you. Now as you see, our core business goals for this year is focusing on the continued growth of the Soop ecosystem in Korea and also our accelerating global business expansion. To achieve these objectives, we have identified 3 strategic priorities. One is the content sharing between Soop Korea and Global. And second is continuous expansion of the B2B partnership and the third is leveraging AI technology.

Let's first talk about the global -- the content sharing. This is not just about cross-platform of live broadcast by streamers from both Soop Korea and Soop Global. We're also talking about original content and partnership-based content that is not restricted by regional limitations. So, this is a great opportunity for the streamers abroad to expand their audience internationally and diversify revenue streams. And for users, it broadens access to variety of programs and the content. For Soop Global, this initiative provides users with easy access to high-quality and premium Korean content and allows global streamers to learn best practice and user engagement from their Korean creators as well. Great know-hows can be shared.

To facilitate this, Soop has integrated several technology solutions, including AI-powered automatic live translation subtitles and chat translation and easy simultaneous streaming setup tools through Freeshot. Moving forward, we plan to extend these capabilities beyond Soop's own platform, actively supporting not only Soop Korea streamers, but also streamers from other platforms who seek global exposure.

Now on the second priority, which is B2B partnership expansion. Beyond live streaming, Soop has capitalized on our various assets such as content production and e-commerce to develop deep and wide business opportunities with our various partners. In this year, in particular, Soop will further globalize our B2B partnerships. For example, we're already expanding our partnerships with gaming companies from Korea to broader APAC region, leveraging our Korean and Thai production teams already. A prime example of this is our partnership with Riot Games.

As you know, we oversee content production across entire VALORANT Esports ecosystem, including VCT Pacific, the top and premier tournament in Asia Pacific region as well as VCTC and other sub-leagues. Additionally, we're actively negotiating partnership expansions for PUBG and FC Online. These discussions go beyond simple content productions. We're already exploring profound collaborations with our partners, such as account integrations with game developers, which could open up new great opportunities for deeper engagement with our partners. Now Soop's e-commerce model, which is called Soop Store, has seen strong results through live commerce by connecting partners with streamers. We're currently exploring partnerships with professional Esports teams to further integrate streaming with merchandise sales, leveraging the existing products already.

Now on the AI. AI is a key area of our future-oriented strategy designed to enhance user convenience. We have Savvy, which is already in operation, and we will soon be operating Soop P, an AI video assistant for users. And then we also have Shark, which is an AI-generated replay highlights and [ Sasha ], which is an AI streaming manager. These tools will enhance both user experience and streamer convenience while also opening new monetization opportunities for streamers. Ultimately, we're also preparing to introduce [ Suma ], an AI-powered virtual streamer by integrating these technologies. Now on this, each platform under Soop is driving forward with distinct priorities.

First, on Soop Korea, we will focus on community expansion and advertising business upgrade and to strengthen our new brand as Soop, which we launched last year, we will actively invest in brand marketing campaigns this year in full swing. Now on global of Soop. So Soop Global, which launched in mid-2024, is already gaining significant traction in Southeast Asia, attracting a stronger base for streamers and users. The top priority for Soop Global for now is enhancing and expanding the platform service while we continue to recruit local streamers as part of our business strategy. Additionally, simultaneous streaming, which has been receiving significant attention lately, has garnered strong interest from many Korean streamers with many already preparing for integration.

Through this, we aim to facilitate exchanges between Korean and local streamers, introducing K streaming culture along with Soop's strong business model. This will, in turn, help expand their communities while also creating greater revenue opportunities. Starting this year, Soop is set for a major expansion and innovation in our live interactive services. And this is really in line with the community enhancement and giving opportunities and everyone who wish to. Through these efforts, we aim to reinforce our core value and also our businesses. These efforts are expected to drive sustained revenue growth while optimizing operational efficiency across domestic and international markets, targeting an operating profit margin in the mid-20% ranges.

Let's now talk about the recent FSS issue, which is the financial supervisory service. It's true that FSS audit is currently underway. However, as a publicly traded company, audits are a routine procedure and we are fully cooperating with the authorities. To prevent any misunderstandings, though, which are inaccurate, we want to share some of the accurate information based on what we can disclose at this point of the time.

So, the game content advertising model that's under review at this point was first introduced in 2019 as a new business initiative then. Unlike traditional advertising businesses, Soop operates a unique and integrated advertising model by leveraging its proprietary platform, accumulated data and a 3-way network connecting Soop user and streamers. Utilizing this model, Soop plans, execute and assumes full responsibility for advertising campaigns, distinguishing it from any other conventional ad businesses that we had seen in the past. And given the nature of game branded content advertising, we do collaborate with streamers.

However, Soop is not merely a facilitator, but we are a direct and primary contracting entity offering a full-service advertising solution from concept planning to execution, monitoring and fulfillment. As such, Soop takes full responsibilities for ad production and we also bear the associated risks ensuring a comprehensive service for advertisers. While we cannot disclose specific details regarding the FSS audit period, we can confirm that Soop's game content advertising business began in the second half of 2019 with a significant revenue impact from 2020 onward. So, from 2020 to 2024, the revenue from this particular segment accounted for only about 3% to 4% of Soop's total revenue. Thus, the impact on our overall business remains small and there is, therefore, no motivation for Soop to inflate revenue figures as we have neither pursued an IPO nor sought external investment based on revenue figures. And this revenue stream has no material impact on our operating profit.

Regarding some misleading media reports, we want to clarify that our external auditors have not disputed the classification of game content advertising at gross revenue. And one of the Big 4 accounting firms reviewed the transactions and confirmed that gross revenue recognition was appropriate. If editors or accounting firms had raised concerns, then we would have definitely adjusted our recognition method accordingly at the time. As the FSS audit is still ongoing, we must exercise caution in disclosing further details. However, we remain fully committed to cooperating with the authorities and will provide updates once the review of this supervision is finalized.

Thank you very much for your attention.

[Kim Jiyeon, executive]

Okay. Thank you for both of you for the presentation. Now, we're going to open up for the Q&A session.

[Unknown Attendee]

Well, we're going to have to wait until our first question. So, I'm going to ask my question. Can I ask a question?

[Kim Jiyeon, executive]

Yes, of course.

[Unknown Attendee]

So, you will be using AI technology and Soop is preparing for many programs. And Savvy was introduced at the awards and I kind of got my hands on it and it was a lot of fun. So, I have high expectation about that and other programs, too. So, if we do the simulcast using the local server, then will there be any delays? I mean, in terms of the communication, would that be okay?

[Daniel Choi, executive]

Well, of course, we're going to perfect all the communication groundwork so that there is no problem like that. And a lot of streamers already started simulcasting and they're very much satisfied with. And of course, in terms of the technical side, we have to keep on improving and try to perfect the technology. So, the simple setup is available -- should be available so that it will be more easier and more convenient for the streamers to do that.

[Unknown Attendee]

I would love to do that. So, I'm there to take that. Well, there is one question and I can take that. Cha Minuh from Goldman Sachs. Recently, there is a concern over the cost on overseas expansion. Then what is your outlook on CapEx this year? And how much impact would that have on your P&L? And the second question, in terms of overseas expansion, I'm sure there is a technical issues that you have to resolve to manage the overseas network cost. When will that be resolved? And then can we expect that the full swing will start from there?

[Kim Jiyeon, executive]

In terms of the CapEx or the cost on overseas expansion, I would like to comment on CapEx. Last year, CapEx, in our budget for CapEx, we have KRW 20 billion yearly. And of that, in 2024, the actual CapEx executed that was KRW 16 billion. This year, it's going to be a little bit different because we have to make some investments in global and AI. But then most of the CapEx will be executed for AI, like the View and everything. So, we do have the budget -- we used to have the budget of KRW 20 billion, but it's going to rise for this year. And we will keep you updated on that. We will keep on communicating with you.

And in terms of the network cost, well, it won't be any big rise in the CapEx. But in terms of the impact of the increase of CapEx and P&L will be quite limited. That's our expectation because CapEx will be recognized as depreciation and we're not going to make a huge investment in AI from the very beginning. And it's going to be consecutively recognized. So that amount will be recognized starting second half of this year. So, the impact will be limited. But in terms of overseas expansion, like the network cost, well, we opened last May. So that was recognized in the Q2 and Q3. But then now this cost will be recognized from Q1. So, it could have a slight impact, but it's not going to be any big.

[Unknown Attendee]

So, can you comment on the network management and cost?

[Daniel Choi, executive]

Well, like you said, for global platform, not just the media player, but the entire application and the site have to be equipped with a brand-new technology and that was our intention. So, the P2P efficiency is not as effective as Korea. But of course, technologically addressing the network cost is important, but it's a priority for us to revitalize and really boost the global platform by inviting many streamers and really having the solid ecosystem. So, it's kind -- if you ask me when we're going to make this expansion in full swing, we have already did that. And we are really putting all our efforts and preparations to make it as sophisticated as possible. But to answer your question about when it will be all resolved, I can only say be patient with us. But ever since we launched the P2P front has advanced quite fast. So, we're going to push it forward so that it will reach to the level of Korea as soon as possible.

[Unknown Attendee]

All right. So we have a very rosy picture on that. Next question. Okay. From Daiwa Securities, Mr. Hyok Joong raised a question. So the Korean streamers are now allowed for simulcasting. Can you share initial performance results and some data?

[Kyunghee Jun, executive]

Maybe I can answer that question. So, the Korean streamers are also doing simulcasting on Global Soop. I think it's received very well in the market and we're very grateful for this kind of response. Now on this particular topic of simulcasting, I think we're still devising and planning for the strategies and doing some testing on different stages and methods. And we are trying to find the most optimal way approaching the simulcasting. Fortunately, the first round of testing garnered great results and the streamers and users love this new approach, the new idea. And because of this kind of positive response, I mean, I'm not sure if I can share any data at this point. But internally, the results is that, first of all, in terms of community building, it really is showing great positive signals.

And also, we do offer many technological and technical support to our streamers and especially for this kind of subscription models and the platforms are very new thing for the global audiences and the global audience, therefore, love it. And there's also the live automatic translation given out and the foreign users are very much satisfied with this kind of technological features. So, I think in the first quarter, many of the Korean streamers will integrate simulcasting into their programs. And we hope to see more diversified content and many types of the simulcasting available. Of course, the donation business that we have and also a variety of content will be our top priority to be introduced for the global audience.

[Unknown Attendee]

We'll take the next question. Dong Hwan from Samsung Securities. You're expanding social content on Soop Global, too. Now what criteria will you have on domestic streamers for simulcasting? What's your target on simulcasting ratio among domestic streamers?

[Daniel Choi, executive]

Well, there's something I would like to emphasize. I just love these questions and very sharp, to be honest with you. Wonderful, wonderful questions. Thank you so much. Well, on our Soop Global, as you know, till last year, we focused on Esports and we try to expand our share and securing partnerships. Of course, that's what we're going to continue to do this year also. But like you said, social content and our social streamers will be fostered and so that our social streamers can go outward. There are 2 things I would like to talk about. The first one is expanding the community of Korean streamers outward to overseas. And the other one is providing diverse content to local users. And to foster local streamers' growth, we can't just do that with something other than making sure that they communicate with each other and sharing know-how.

Well, there are so many initiatives that we would like to do, but there's a cost that's attached to that it. So, we have to be cautious about that. Now we are going to allow all the domestic streamers who want to do the simulcasting, we're going to allow them to do that as many as possible. I think there are some hundreds of people who are willing to do that. Not just allowing, but if there are any unique and fun content, then they have our full support. And we would love to work with our domestic streamers for the simulcasting. In terms of the ratio, it's quite difficult to come up with any number right now. But what I can disclose right now is that as many as possible, we would love to have many domestic streamers going overseas and doing the simulcasting. And not just soup streamers, but streamers from other platforms can have our support, too.

[Unknown Attendee]

Wow, that is a wonderful service. Yes, even the streamers from outside platform. I think there's an additional question. So of course, we try to look at the performance, but MUV trend has always been very important for us. It's been around 5 million to 7 million, somewhere between for a long time. Can somebody take that question?

[Daniel Choi, executive]

Yes, I think I can.

[Unknown Attendee]

Maybe we can continue to read the question. So from the management, is this an important metric? Or should we also look at other indexes and figures? Maybe you can also include the -- in the fact sheet down the road if that other indexes are equally important to MUV and et cetera.

[Daniel Choi, executive]

Okay. I think I can take that question. As for MUV, for a streaming business like ourselves, MUV always experiences ups and downs. I think it's a natural thing. And the buffer is, I think, somewhere around 1 million, I would assume. So, for content and sometimes timing do determine that 1 million range. And last year, we had a large sports event, we didn't have any large sports and KPO did not happen last year. I think that probably impacted our MUV. And global Esports events did take place, but in a very short duration, which also impacted our MUV. Now we do know this, and that's why we focus on other areas where we have stronger influence in our IP situations. Having said that, within our platform, we do know that there are variabilities, but there are many loyal users, the core users. And I think that group actually increased, which is a greatly positive signal. So, DUV and PUV are equally important indexes, which are on a growing trend.

[Kim Jiyeon, executive]

To add to that, as Mr. Choi mentioned just now, we say there are light users, and they are usually very much into sports like baseball. And in 2024, we weren't that strong in that particular sector. But there are many other indexes. Overall traffic, of course, the light traffic -- light users come and go. But if you're looking at the real authentic top users, they have been very strong and have been loyal to us. So, if you look at their engagement time per day, it's 3 hours, 30 minutes on average, daily users as of 2024. And this figure is 17% increase compared to the year before, which is 2023. Also for paying user, I mean, this is really important index to understand the real engaged users. And it grew by 23% and this is a testament to our strong community that we've built over a period of time. So of course, the overall traffic is important. And in order to increase that portion, we're making various efforts. So, please stay tuned to see what we can do further.

And for other matrices and whether we want to increase -- include it in our fact sheet, we're actually looking to see if that's possible and we can maybe come back to see if we would like to add these metrics in the fact sheet. I say that because our traffic and other important matrices and there is different ways of measuring it the way we do it versus the way other companies traditionally do it. So, if you are to just include one metric in the way that we measure it, I mean, it may add some confusion. So we're very, very cautious about this. So, we're going to look into all these potential issues and also benefits and pros and cons and everything. And again, we are exercising caution to adding any other metrics, but we'll see what we can do.

[Unknown Attendee]

Many questions. Wonderful. From Shinhan Investment. Recently, LoL Pro Gamer started simulcasting and I saw the rise in VALORANT viewership. How is the retention rate of those Esports viewers? Also, would you confirm that our strategy of accumulating viewers by investing in content and broadcasting rights is working, even though it's still in the beginning stage? It will be wonderful if you can share your thoughts.

[Daniel Choi, executive]

Thank you so much for your wonderful question. Yes, the League of Legend, Pro Gamers simulcasting, yes, that was already planned since last year. And -- but then DDoS attack, some of those challenges was real to us, of course. But this year, we communicated very closely with the gamers and we started the simulcasting. And the viewership is relatively low in comparison to Korea, but it is on the rise and it's quite meaningful. In terms of the retention, this is related to our support for gamer's simulcasting. That's because not just the LoL or VALORANT gamers and other games also, the VALORANT is widely viewed and we have a lot of big viewership on VALORANT.

So, this such effort is put in so that we can retain our viewers. And I think the retention is there, of course, but to strengthen the retention rate, we're going to strengthen the original content of the streamers. And for Korea, it will be death match or making the original content of the death match and the collaboration with the related streamers and the gamers will be part of our strategies. And accumulating viewers by investing in content and broadcasting rights.

[Unknown Attendee]

Well, if I understood you correctly, you want to know if we can confirm or if we keep track of this.

[Daniel Choi, executive]

And of course, we view this very positively, and we're so thankful that our partners, for example, VALORANT, we have the exclusive rights in the Southeast Asia for VALORANT. So of course, our loyal and engaged core users are there very active. So, this is very positive to us. And the indicators show us there's growth definitely. So, this element of death match or the pro gamers community is boosted, then there is even further growth.

[Unknown Attendee]

Let's move on to the next question. Yu Incheol from Citi. So, comparing Korea versus Thai or other Southeast Asian countries, what's the regulation like for social and entertainment content? And also what's the sentiment amongst the consumers or users?

[Daniel Choi, executive]

Okay. Sorry for the delay. Maybe I can take that question. So, Southeast Asian cultures is what we generally refer to. I mean, I lived in one of the countries there myself. But again, I want to be cautious because each country has a different regulatory environment. We, from Korea, believe that's one block, but it's not something that we can just kind of inclusively say that these countries -- these countries are the same. But I will say, in general, the regulatory environment is less strict than that is in Korea. And we can take full advantage of that and we are actually doing that.

As for the consumer sentiment, I don't know how to easily make a comparison or contrast. But for Esports users in general, they love content, they engage and that pattern remains the same across those countries. And as for social content consumers, I think they also show similar patterns. However, the format or type of content have been different. What I mean is, let me give an example. So, if you look at the K social streamers, I know that they're going to be very successful for sure because if you look at other social content, other countries, they're very simple. And they're not that creative, if you know what I mean.

So Korean streamers, on the other hand, work so hard and they put a lot of efforts to be more creative. And when they are simulcasted, users find it very, very engaging. And some streamers, of course, Thai or other countries, those streamers are already copying or in a way, going very similar with the Korean simulcast. And I think the sentiment, therefore, is same across those countries and these Southeast Asian culture, especially Thai in this case, are very well accepting our cultural elements. And maybe when it comes to regulatory, it is sure that Southeast Asian countries in general have less strict environment and this can, when used very well, help our business stabilize and take roots in that Southeast Asian block.

[Kim Jiyeon, executive]

When you say social entertainment content, we have -- we call it gem, not the Star Balloons. So if there's a gem in Thai, because it's global simulcasting, sometimes German users are giving those gems. And there's a little bit of a competition going on amongst users of different countries. So here in Soop Korea, it was competition amongst the Korean users. But in a global platform, it's really fun to see the gems coming from Thailand and also from Germany. And there's this kind of cross-country competition, which is super fun to watch.

[Unknown Attendee]

Great. All right. So I'll maybe check out to see how that's going. And yes, I think simulcasting in different countries are working very well. I just have a question related to this. So, which particular country or region is showing great results in particular?

[Daniel Choi, executive]

Yes, I think one of the follow-up questions are actually touching upon this. So maybe I can also answer that question. So, I guess our hub in a way is Thailand in Southeast Asia and we had FS Thailand, which is a company that we've acquired for content production capabilities. So, I would say that as of now, in terms of the size of the -- or scale of the business, streaming content or the users, Thailand does have the #1. Now as we're expanding to the Southeast Asian nations with our very exclusive content, we're also looking at Taiwan and also Indonesia, especially for Taiwan, we had a previous AfreecaTV platform, and they already -- we already had quite a lot of fans in Taiwan before we changed to Soop. So with the addition of further collaboration with the social content, I think Taiwan can also see great success just as good as Thailand.

[Unknown Attendee]

Okay. Great. Okay. More questions. Yes, I see that there was one question that overlaps. Mr. Kim Dohyoung from CLSA. I'm rooting for Soop Global that provides opportunities to domestic streamers to go abroad. Could you share with us the target milestone or time line of simulcasting in detail, for example, targeting 500 streamers by H2 this year. Right now, there are still not many streamers that do simulcast. So, the fun atmosphere in the show when it features that streamer kind of dissipates without that streamer. We would love to see more global viewers enjoy Korean streamers continuously. And then, yes, he added the question that I already asked.

[Daniel Choi, executive]

Okay. So I think the third question has been answered. So, I'm going to answer the first 2. Yes. Thank you so much for rooting for us for the Global Soop. We are putting so much effort into it. We're very proud. In terms of the simulcast milestone or time line, I mean, we can't force anyone to do anything, you know what I mean? So, it's not something that we can plan for it. But what I can promise is that within Q1, we are striving so that a meaningful number of streamers will participate in this. We don't have much time left, but we are certain that we can achieve that. But then we have strategies in set.

Through such meaningful effects from the simulcasting of those representative streamers, there will be more streamers who come on board. That's because we -- when we explain to the streamers about the simulcast to overseas is that we find out that the streamers didn't know about this and then sometimes they have misinformation. Because technologically, people don't really know about how easy it is. Just click on the Freeshot and that's the simulcast essentially. They were really surprised. And you get the gem donation and subscriptions happen through simulcast and streamers are loving that. So once this really takes root, then even more streamers will come on board and they will enjoy the benefits.

[Unknown Attendee]

So, you're saying that there are not many streamers with the simulcast in the show. Also when the streamer -- during the off time, you're saying that kind of fun kind of dissipates.

[Daniel Choi, executive]

Okay. Well, this simulcast is kind of like initial phase and like a test bed phase, and we do have more streamers who want to try this out. And once this is at full swing, then it's going to be streamed with no breaks. And what's striking is that Korean streamers streaming time is longer than overseas streamers. So that is something that we can anticipate some benefits from.

[Unknown Attendee]

Okay. Next question from Shin Jung of DB Financial Investment. So, paying user of the foreign traffic, how is that going? So, is it a big amount of gem from small amount of numbers? And also for AI functions like Soop P and Sasa, looks more on the convenience. You mentioned it's a new business model briefly. Can you tell us if you're looking at the monetization model from the AI technology?

[Kim Jiyeon, executive]

Let me take the first question. Yes, it's a very, very short time that we've only launched simulcasting for a very short time. So, it's only in a way, a testing phases, if you will. And from what we see, simply put, the portion of the paying user from the foreign traffic is higher than we had expected. Now you do know that the foreign users are very used to subscription model. And they're optimized for this. I don't know if I can say optimized. I guess they're familiar with the subscription model. So, they do still use that function. Now what we wish to see is this, the gem, which is the equivalent of the Star Balloon, which is a gift economy and that system is working for sure in other countries. And that is a great signal and I don't think it's going to be a one-off kind of thing. And the ecosystem of the gifting economy that we mentioned, like I mentioned, the competition from Germany, from Taiwan of giving more gifts away. I think looking at what we have seen so far in such a short period of time, it is working very well.

[Daniel Choi, executive]

I can take the second question on AI. So I think you're right in some ways. The products that we mentioned are not launched just yet. And once they are launched, we need to see how that works and how that can be incorporated into the business model. So, a good example in point is I've shared with you 5 offerings of AI. One that's already offered is Savvy. And it's the basically video creating function and it enhances convenience, for example, literally the video generation, but also it can be made into a business model of an advertising revenue stream. So, we are working on this to make it into a monetization model. And of course, we need to have discussions in early stages, but we need to wait to see what the products will be and the early adopters, if you will, the streamers and we need to see what we can do with them and see if it will have an impact to our business model.

So I guess we need to see the products first. They need to be launched in the market and then see how that impacts the convenience. Once we see that, we need to then finally think about whether to make it into business model or not. And the other 4 AI offerings that I've shared with you, which aren't in operation yet. We're also, of course, looking to see in cooperation with the business model. But at this point, I don't think I can share any details just yet. We need to, again, wait for these -- each one of those AI offerings to be launched and then we can have a bigger grasp of this idea to see whether it can impact our stream businesses and the streaming businesses.

[Unknown Attendee]

Okay. So Savvy, which is one of the AI functions of Soop, I've used it myself. And I found myself dancing with it because it's a video balloon. I don't exactly know that dance moves, but somehow I was made into this -- I was made into a video, which show featured me dancing virtually. I don't even know how to make the moves. But anyways, it was very interesting, and I hope to see more coming out of this.

Okay. I don't think there's any further questions.

[Kyunghee Jun, executive]

We can wrap up.

[Unknown Attendee]

I mean, yes, we had a storm of questions. It was wonderful. Thank you so much for your participation. So how was it for you?

[Daniel Choi, executive]

Starting with me.

[Unknown Attendee]

Well, we have one question. Okay. Before we say goodbye, there is one last question from Kim Junhyun. It says hold on, hold on. Okay. What is the barrier to the streamers if they are reluctant to come on board on the simulcast?

[Daniel Choi, executive]

Okay. So I'm answering the question, and I'm going to say a little bit about how I feel today. Okay. So this is -- I mean, this is something clear. So especially when Twitch closed its business in Korea, we saw that in live streaming business, there is definitely separation of Korean live streaming from global live streaming. And I think streamers really feel that because community is the basis of their activity and basis of their business essentially. And they have given us a lot of feedback. So we understood where that voice is coming from, not just the streamers themselves. I mean, of course, the streamers, I would say, some streamers like the professional game team because there are some teams who put more value on overseas fans. So it's very, very important for them to give them the opportunity to go abroad like this. So, if you look at our slide, it says a Soop ecosystem and global expansion. That's because we see that needs coming from the streamers. So that's our keyword. I don't know if I answered your question.

[Kim Jiyeon, executive]

Well, you're a streamer yourself. So what makes you feel reluctant?

[Unknown Attendee]

No, I'm not reluctant at all. I would love to do this simulcast. I have the account and all I should do is just started. And a Freeshot was used. I've been using that ever since I started streaming. So it's not difficult. And I'm going to use it, and I would love to give you feedback. And my feedback will be quite long. Is that okay? Yes, of course.

So Daniel, what is your rating in terms of nervousness from 0 to 10? You started from 10, but now?

[Daniel Choi, executive]

I'm really bad rater. I would say 5.

[Unknown Attendee]

Okay. Still you're half nervous. All right. Well, that's okay. Then Ellen, how would you rate him?

[Kim Jiyeon, executive]

I would give him 8 out of 10 in terms of performance.

[Unknown Attendee]

You know how to serve your boss. All right. Yes. I mean you guys can leave us a question while we have this conversation.

[Kim Jiyeon, executive]

Well, last year, we launched the Soop and we were so busy and we have been running and running and sprinting and sprinting. But then that doesn't mean that our preparation was not in an all the results of the fruits have been collected this year, and we're going to do that this year also step by step. And then we'll be able to make judgment on some of the trials and errors and the good and bad of our decisions and we are here to communicate with you. Well, so thank you so much for rooting for us last year and it's quite snowy outside. So be careful, be safe and I hope you have new year.

[Daniel Choi, executive]

Maybe I can also have a few last words. First of all, -- to the question that was raised earlier, Mr. Kim Dohyoung here, I think his intention behind -- of the question is not necessarily about what we answered, but it's about any reasons to hesitate. I think that may be the hidden intention of his question. So, if I can maybe elaborate on that part. So, it's not about hesitant. -- are being worried. It's just about unknown. It's an unknown and uncharted territory. So global simulcasting was something that had not been thought about by many of the streamers. And so we're knocking on the door and opening up this new opportunity. Are you willing to get on board? When a question like that is raised, most of the streamers have really shown their positive reaction to this.

So again, it's an uncharted territory. And it's not about being negative or having concerns. It's just about not knowing what -- where they're getting into. And some streamers are saying, I don't need this simulcasting on a global stage. Of course, there are people like that. But what I mentioned already, I think when it becomes more active, a lot more streamers will follow suit. And I think maybe this will be a better answer. So, I probably didn't understand the question very well in my first time, so I wanted to elaborate on that.

And just my few last words before we wrap up. I don't know how I appear, but I'm super nervous even now. So, maybe because of kind of being nervous, I might have not been very good in answering or I might have given a less polished answer. So, I hope that you'd be kind enough to understand that. But next time around, if I appear on this stage again, I will do better, more thorough preparations in advance. Thank you.

[Unknown Attendee]

Thank you very much. How about you, Isla.

[Kyunghee Jun, executive]

Yes. There have been the investors who have been with us for a very long time. And they're always saying you're doing a very good job with the business, but the question more was evolving really about how to enhance and broaden the community. So, I think that question had been answered to today's call. And I hope that our business models and our business plans actually for this year were enough to satisfy your questions. And as mentioned by 2 of them here, we do have great place and it's about how we execute them right. So, I hope to be able to come back with greater results next time.

[Unknown Attendee]

Yes. So Mr. Choi said he was very nervous, but I mean, I feel like a very young kid amongst experts. I'm always nervous. Now, 2024 was a great year and I hope to see even greater results this year around. Okay. So this wraps up our earnings call. Thank you all very much for tuning in. Thank you. Bye-bye.