While Wattpad isn’t currently run as a commercial enterprise the potential, and the global scale and reach, mean that if we are surprised by the $500 million price tag it should be because the figure is so low.
Speculation continues in the Canadian media about the future of the online reading giant Wattpad, with one source suggesting a deal could be concluded this month, with a half billion dollar price tag.
Wattpad has lent some credence to the report by responding without a denial, saying simply,
We don’t have any news to share at this time.
Rumours surfaced last autumn that a US tech company was interested in buying Wattpad, and if unconfirmed reports are to be believed the Wattpad management has since been soliciting offers.
Via The Logic.
Might Amazon have been the original instigator? On the one hand that seems likely. Dropping a half billion bucks on Wattpad would be like raiding the loose change jar to Amazon.
Maybe Wattpad management were excited by the cash offer but felt uncomfortable with Amazon as the prospective buyer and what Amazon might do with the operation in the future, and so solicited other bids.
On the other hand, while Wattpad has its fair share of interest in the existing Amazon markets, much of Wattpad happens in the emerging markets Amazon has thus far shown very little interest in.
That might make Amazon wary of taking on what, by Amazon standards, would be low ROI challenges in far flung lands. As we’ve seen with the Kindle store roll-out grinding to a halt in 2014, books and reading are not Amazon’s priority anymore.
But balancing that, and why other companies might be interested, is the sheer scale of the Wattpad operation.
Wattpad starts this year with over 90 million monthly users who spend 23 billion minutes each month on the platform.
Assuming Amazon was the initial bidder that sparked the solicitation for offers (which other US tech companies would have that much money to throw about, combined with a historical interest in the reading industry?) the bigger question is which other players might now be negotiating with Wattpad and which might, if the latest rumour proves true, be closest to striking a deal?
One name jumps out: Tencent.
Back in October 2017, when Wattpad had a mere 60 million monthly users (meaning Wattpad has been adding ten million new users each year). Tencent dropped $40 million into the Wattpad kitty,
From that TNPS post:
Earlier this month Variety reported Wattpad had signed a deal with Entertainment One to develop Wattpad stories for film, TV and virtual reality, looking to turn Wattpad stories into global properties.
In August Wattpad launched its video storytelling app Raccoon, and the month before had launched its chat fiction app Tap.
These in turn followed the launch of Wattpad Studios in 2016.
In March of this year Wattpad entered into an audiobook partnership with Hachette, and in July partnered with Hachette again, this time with its French books division.
Just what the Tencent investment will bring remains to be seen, but my guess is Wattpad content access to the China market and Tencent content reaching Wattpad’s consumers will be just the start.
With access to Wattpad’s statistics Tencent will be able to identify promising new e-reading territories currently off the radar of the big western ebook players – in Africa, for example – and we might just see Tencent and Wattpad target the more internet-advanced African countries like Nigeria, Kenya, Ghana, Rwanda, Cote d’Ivoire and Senegal.
Fast forward to 2021 and Wattpad has been doing more of the same, on steroids. The list of Wattpad activities and partnerships since then would need a book-length post to explore (but watch out for a summary soon).
Here just to say Wattpad has its fingers in media pies many tech companies, like Amazon and Tencent, would be keen to get a share of. Wattpad works closely with major publishers, film studios, TV companies, etc, as well as producing and publishing its own content.
While Wattpad isn’t currently run as a commercial enterprise the potential, and the global scale and reach, mean that if we are surprised by the $500 million price tag it should be because the figure is so low.
But if Tencent is the frontrunner, we might not see that game play out this year, given the current tensions in China between the government and the big tech companies, with the Chinese administration thinking the tech companies wield too much influence (a similar story playing out in the US too, of course).
Absent any further leaks about the negotiations we’ll have to be patient and wait to see if the latest speculation about Wattpad’s future is solid and which company is seriously interested.
