Naver, a Korean online giant, has invested 100 billion won ($83.8 million) in SM Entertainment’s subsidiaries SMEJ Plus and Mystic Story in a move to boost its streaming platform content and to expand fan-based services to the global audience.

SMEJ Plus is a concert and fan club service provider. Mystic Story houses a diverse portfolio of artists ranging from singers, webtoon (digital comics) artists, songwriters, and more.

The details on how much stake Naver has acquired remains undisclosed, but the hefty investment is likely to push the company to be the second-largest shareholder in SM.

The two companies will work to create fresh content for V Live, Naver’s video streaming service, as well as Fanship, the platform company’s fan-targeted membership platform which uses big data to connect celebrities and fans. SM will integrate its fan club services with Fanship to expand and boost global fan-based activities. Also, the two companies will collaborate to create content for Beyond Live, a streaming concert platform jointly launched by SM and Naver through a strategic partnership earlier in April.

Earlier in July, Korean Investors reported that Naver was in talks with SM to discuss investment opportunities. The global coronavirus pandemic had prompted online platform companies to further expand non-contact business such as online performances, streaming content, among others.

Fanship is a new entertainment-based business model set up by Naver which focuses on the Korean Wave (hallyu: global popularity of Korean culture). It offers premium features such as offline event invitations, exclusive videos, and early bird ticket sales for concerts, and more.

“Naver has advanced technology when it comes to online performances as well as a paid business model based on big-data. We have a competitive edge in the non-contact digital performance market and we are excited to work closely with SM Entertainment to create innovative content,” said Han Seong-sook, the chief executive officer of Naver.

Going forward, Naver will work to boost Fanship’s presence in the global market and work with SM to set up a fund dedicated to next-generation video content.

SM Entertainment CEO Lee Sung-soo said, “We plan to write a new chapter in the entertainment industry by providing unique content targeting global fans.”

It makes sense for Naver to partner up with SM which has pioneered the hallyu period with artists such as BoA, Super Junior, EXO, Red Velvet, and many more.

“The recent global pandemic has raised the footing for non-contact performances. Naver has an optimized platform and SM Entertainment is rich in content which makes the partnership convenient for both parties,” said a source from the IT industry.

Naver’s foray into the entertainment industry is not new. In 2017, Naver invested 100 billion won in YG Entertainment, one of the top three Korean entertainments in charge of Big Bang, BlackPink, and iKON among others. The IT giant is the second-largest shareholder with a 9.13% stake.

SM Entertainment, founded in 1995, is one of the largest entertainment companies in Korea. It manages popular singers including BoA, Red Velvet, Super Junior, EXO, Girls’ Generation, and NCT as well as actors, athletes, and models. In 2019, the company posted 657.8 billion won in turnover and 40.3 billion won in operating profits.

By Joo-Wan Kim

kjwan@hankyung.com

<Edited by Danbee Lee>