Kakao Entertainment to strengthen content, game businesses

Kakao Entertainment on Friday revealed its plan to enhance its platform, content and game businesses by creating synergy with SM Entertainment. The company's takeover of the major K-pop entertainment company recently received conditional approval from the Fair Trade Commission.

Kakao Entertainment is particularly interested in expanding the music business internationally by utilizing the intellectual properties of SM artists like EXO, aespa, NCT and Riize.

“Based on our joint venture with SM Entertainment in North America established last August, we are focusing not only on supporting our musicians' activities on the global stage, but also investing in planning and developing IPs suitable for local tastes,” a Kakao Entertainment official said.

Last September, SM and Kakao Entertainment America signed a partnership with RCA Records, an American record label owned by Sony Music Entertainment, to manage SM Entertainment’s rookie boy band Riize’s global album distribution and promotion activities in the US.

The joint venture is also creating a boy band in the UK in collaboration with British producer Moon & Back Media. The boy group will comprise local members, and a six-part TV series on their debut story will air in the second half of this year.

Content and game businesses are other lucrative sectors that Kakao and SM Entertainment are eyeing.

Kakao recently released a web novel based on a reinterpreted message of Riize’s new single “Impossible” on the social media of Kakao Friends – the character brand of the country’s leading mobile messenger Kakao Talk.

Kakao Games revealed its plan to sign an IP license agreement with SM Entertainment to produce mobile games that star SM artists.

“Kakao Entertainment’s strength lies in music and album distribution as well as its multi-label system, while SM owns global IPs and the know-how in developing them. We are currently looking into advancing into global markets including the US, Europe and Asia,” a Kakao Entertainment official said.

An industry insider said it is part of Kakao Entertainment's effort to develop a new business market and attract new consumers.

"Kakao is promoting various collaborations with SM Entertainment to show that the acquisition is bearing some fruit. However, it may take some time and it can be difficult to obtain notable results instantly. Hybe also failed to profit in the game business by using BTS' IP. The way fans consume K-pop bands and the way game players consume 'idol' groups are different," said Lee Jong-im, a professor at Seoul National University of Science & Technology, Friday.

On Thursday, FTC approved Kakao’s acquisition of a 39.87 percent stake in SM Entertainment, allowing the IT giant to become the largest shareholder of the iconic K-pop agency.