April 20, 2024

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[THE INVESTOR] Korea, once famous for manufacturing, has become a surprising hit in the game and entertainment business. K-pop stars like Big Bang, Psy and EXO are in high demand, and games such as “PlayerUnknown’s Battlegrounds” and “Lineage” are popular worldwide.

In particular, two companies -- each in the arena of entertainment and games -- have shot to fame. One is Big Hit Entertainment, the company managing the seven-member K-pop sensation BTS that became the first Korean band to top the Billboard 200 chart in May. 

Another is Netmarble, whose brainchild is “Lineage II: Revolution.” In 2017, Netmarble was the world’s third-largest app publisher in terms of revenues, following China’s Tencent and NetEase, according to mobile app analysis firm App Annie. 

So what do these two have in common, aside from their fame and fortune? 

 

Big Hit Entertainment, the management company of BTS, is run by Bang Shi-hyuk, who is related to Bang Jun-hyuk, owner of Netmarble. 

Their relationship came under the spotlight earlier this year when Netmarble acquired a 25.71 percent stake in Big Hit Entertainment -- a deal that has made the game company the second-largest shareholder. Netmarble said at the time that the deal would maximize their synergies.

But industry insiders know just how hard to get Big Hit stocks were. Everyone wanted to get their hands on them, especially with an IPO in the cards next year. Analysts are putting the IPO value at over 2 trillion won (US$1.85 billion). 

Anyway, putting their brains together, the two Bangs will soon launch a game called “BTS World,” which is one of the 18 different BTS-related games that Netmarble will be using based on BTS’ musical and visual content. Successful collaboration will help both companies in boosting their bottom lines and take the next leap, according to analysts.

“In (‘BTS World’), BTS members are not featured simply as game characters, but are managed and developed by players. So the game is likely to attract BTS fans in Japan, the US, and other countries,” said Lee Chang-young, an analyst who covers the game industry for Yuanta Securities.

Netmarble is aiming for sales of 5 trillion won by 2020. In 2017, the game company logged a record high of 2.4 trillion won in sales. It is now hoping to go beyond games. “We need to join hands with movies, dramas and concerts to develop new genres,” Bang said when introducing BTS World. “‘BTS World’ will mark the starting point in our attempts to combine different cultural content with games.” 

For Big Hit, a successful partnership with Netmarble is important because it is eyeing a public listing. Its sales have already shown explosively growth, rising to 92.4 billion won last year from the previous year’s 35.2 billion. Net profit rose to 32.5 billion won, up from 10.4 billion won. 

Bang Jun-hyuk (left) and Bang Si-hyuk