K-pop agency SM Entertainment has acquired an additional 11.42% stake in fan platform operator DearU Co. for 135.6 billion won ($92 million) as the company joins a growing list of South Korean entertainment companies banking on direct-to-fan and superfan platforms.
The company behind K-pop acts Girls’ Generation, Red Velvet, aespa, NCT, and Riize disclosed the transaction in a Korea Exchange filing on Friday (March 28).
The filing shows that SM bought 2,711,351 shares in DearU for KRW 50,000 ($34) apiece from JYP Entertainment, another K-pop agency, DearU CEO Jong-Oh Ahn, and two other investors on March 24.
The purchase price represented a 25% premium to DearU’s closing price of KRW 39,900 ($27) on March 24.
The deal raises SM’s stake in DearU to 45.1% as SM already held a 33.7% stake in the company via its subsidiaries SM Studios, SM Japan, and Everysing Japan prior to the latest transaction.
Established in July 2017 as Everysing, DearU operates Bubble, a subscription-based platform where fans pay a monthly fee of about KRW 4,500 to exchange private messages with K-pop artists and watch artists’ livestreams. Bubble, launched in February 2020, reportedly had around 2.3 million subscribers as of the second half of 2023.
In addition to Bubble, DearU also operates mobile karaoke app Everysing.
As Bubble grew, DearU acquired Universe, a mobile fan platform created by video game developer NCSoft and launched in January 2021. Following the 2023 acquisition, DearU transferred Universe’s users to Bubble.
In 2024, DearU’s profit fell to KRW 25.4 billion from KRW 28.6 billion in 2023. Revenue last year also declined to KRW 74.9 billion from KRW 75.7 billion.
The latest transaction comes as major Korean entertainment companies sharpen their focus on fan engagement in addition to their traditional artist management businesses.
Kakao Entertainment, which together with its parent Kakao Corp., holds a 40.28% stake in SM Entertainment, recently entered this space with the launch of an app called Berriz.
It describes the app as “a cutting-edge global fan platform designed to revolutionize the user experience.” In addition to music artists and creators, Kakao’s Berriz will also cater to fans of drama, film, webtoons and musicals.
Meanwhile, the most dominant superfan platform in Korea, Weverse, is operated by HYBE, which owned a 9.38% stake in SM Entertainment as of June 30, 2024. Weverse helped push revenue for HYBE’s “artist-indirect” segment up by 14.5% YoY to KRW 809.29 billion ($593.56 million) in 2024.
As of the end of 2024, Weverse counted 9.4 million monthly active users and hit the milestone of 150 million cumulative global downloads, with the number of artist communities on the platform growing 30% YoY to 162 last year. Weverse has previously said that around 90% of the artists on the platform are signed to labels other than HYBE.
In July 2023, Goldman Sachs estimated the addressable market opportunity for superfan monetization at $4.2 billion. The bank upgraded its estimate to $4.5 billion in 2024.
Music Business Worldwide