October 28, 2021


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K-Pop and Korean stars are ready for a shakeup through the sale of SM Entertainment

3 min read

A few months ago Lee Soo-man appeared on stage at the 2021 World Cultural Arts Forum and took pride in his constructive role in the Korean pop industry. “K-Pop started with SM Entertainment,” he announced. But already K-Pop Ferment is getting ready for the new king.

SM Entertainment has officially put 20% of the shares up for sale, including Lee’s own 18% holding. Major organizations are preparing to take on the mantle in order to take themselves and K-Pop further on the world stage.

Lee and his SM Entertainment were actually early pioneers with first generation K-pop performances including HOT, TVXQ, BoA and Girls Generation. Along with rival companies YG Entertainment and JYP Entertainment, K-Pop emerged in the late 1990s and enjoyed export success in Japan.

After enduring the crisis in the early 2000s, the industry embraced YouTube, enjoyed widespread international success, and settled into a familiar pattern of three-way domination by agencies that were strictly prepared, strictly regulated, and closely associated with their creations. YG has enjoyed success with the Big Bang and 2NE1. JYP has won with Wonder Girls and 2PM.

With the advent of BTS in 2016, three Fifdom became four. The band’s global success has changed the fortunes of former JYP executive Bang C-Huck and his Big Hit Entertainment (recently renamed Highbe Corporation), which has been in relative obscurity since the 200’s.

Hybe has already used its BTS-powered momentum to acquire small music labels, create its own Weavers digital platform (and monetize) for fans, and manage a hugely popular IPO by the end of 2020.

The company went one step further than the Korean artist management firm and made a huge leap abroad, buying Scooter Brown’s Ithaca Holdings for 1 billion. It brings English-language stars Ariana Grande, Justin Bieber and Demi Lovato into her universe, and further expands the scope of Korean activities like Seventeen and Nuest.

Hybe has expanded its digital capabilities by attracting $ 363 million in investment in its beNX digital development unit from Korean internet giant Navarre. It has forged a partnership with Universal Music. And, in another sign of the changing times, Hybe has signed a partnership agreement with YG Plus (formerly Phoenix Holdings), a music distributor and talent company under YG Entertainment.

Like Hibe, SM Entertainment has tried to evolve. And doing so can take YG and JYP forward.

SM Entertainment has leaned towards TV Originals, founded SM Studios in collaboration with MGM and Mark Burnett in collaboration with “K-Pop Goes Hollywood” and unveiled plans to create more AR and VR-integrated content. It’s Dear You Bubble, a live fan-to-artist messaging app, is available in subscriptions and boasts more than 150 artists, including a few from JYP, a direct competitor to Hibes Weavers.

These make SM Entertainment an exciting victory for wealthy new entrants into the inner circle of the K-pop state.

Korean media, citing finance industry sources, have identified other Korean internet giants Kakao Corp and diverse media group CJ CNM as front-runners. Hybe could be one more step back.

The choices are sharply opposite.

CJ, the producer and TV owner of Oscar-winning “Parasite” and owner of the TV production powerhouse Studio Dragon, has deep roots in film and TV, but Pop has only a small footprint (it controls broadcaster Mnet and tvN and an annual music awards show) and management Over the months, CJ has made ambitious plans to surpass Netflix in Korean drama production, displacing Netflix as Korea’s No. 1 video streamer for its TVing and becoming a global content hub, equal to the new monarchy of the streaming era. A part of SM Entertainment can help them – or diversify.

Kakao Corporation has reached out to the media and entertainment by dominating the Korean messaging scene through its Kakao Talk app. Its Kakao Entertainment division was formed this year from a combination of multiple ingredients that have been acquired or grown biologically. It includes a large web cartoon business, eight talent management assistants, four music labels and drama, film and performance production companies. The owner of a portion of SM Entertainment may provide killer content which some commenters suggest is still lacking in Kakao Entertainment.

Prominent Korean media reported that CJ and his mentor, Vice Chairwoman Mickey Lee, were the first runners. But the KKW55 trillion ($ 47 billion) worth of kakao probably has deep pockets.

Lee So-man can no longer be king, but he can still be king-maker.

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