Cousins unite as Netmarble buys stake in Big Hit

Netmarble Games announced Wednesday it bought 201.4 billion won (＄189.3 million) worth of shares from Big Hit Entertainment, producer of boy group BTS. Netmarble Chairman Bang Jun-hyuk, left, and Big Hit CEO Bang Si-hyuk are cousins. [JOONGANG ILBO]

Korea’s biggest game maker Netmarble Games announced Wednesday it will acquire a 25.7 percent stake in Big Hit Entertainment, the producer of mega-hit boy band BTS.

The collaboration between these two industry giants, whose founders are cousins, promises to present a formidable force in the domestic entertainment world.

Netmarble announced Wednesday that it will buy 201.4 billion won (＄189.3 million) worth of shares of Big Hit, which will make it the agency’s second largest shareholder after Big Hit CEO Bang Si-hyuk himself. The game maker is scheduled to receive the stocks on June 4.

“We invested the funds to utilize synergy between Netmarble and Big Hit, as influential players in the gaming and music industry,” Netmarble said in a statement.

“Big Hit will now operate with even more stability, working together with an investor who is both strategically and financially capable,” Big Hit reported regarding the acquisition.

Netmarble Chairman Bang Jun-hyuk has been dropping hints about close cooperation with his cousin’s company since as early as February, during Netmarble’s annual press conference.

There, the Netmarble head unveiled his plan to launch “BTS World” in June, a mobile simulation game that will allow users to manage and train the group. Thousands of images and videos of the members will be integrated into the gameplay.

“Game makers have to pioneer a new genre by collaborating with film and drama creators,” Bang said during the conference. “Through BTS World, we will test out combining cultural content with gaming.”

Since Netmarble began trading on the Kospi last May, Bang has been searching for ambitious projects to invest in, both at home and abroad, with the extra capital at his disposal.

In the annual general meeting of shareholders last month, Netmarble added artificial intelligence, virtual reality and augmented reality to its business objectives.

Now a billionaire with 3.79 trillion won worth of Netmarble stocks in personal holdings, the 50-year-old game developer has a remarkable rags-to-riches story.

Before establishing Netmarble in 2000 with eight employees and 100 million won in capital, Bang was a high school dropout who already had two unsuccessful businesses under his belt.

By 2010, he had become the creator of mobile hits like Everybody’s Marble and Seven Knights that each had millions of users. In 2017, Netmarble boasted 2.42 trillion won in sales and 509.6 billion won in operating profits, becoming the first Korean game company to record over 2 trillion won in sales. Its total market capitalization now exceeds 13 trillion won.

Big Hit’s CEO not only shares his cousin’s surname, but a similar success story that led him to become one of the biggest names in the music industry. Bang Si-hyuk, 46, began working for JYP Entertainment as a composer in 1997 after majoring in aesthetics at Seoul National University.

He built his reputation by writing chart-topping hits for artists like g.o.d., Baek Ji-young and Rain, then left JYP in 2005 to create Big Hit Entertainment.

Big Hit’s BTS, who debuted in 2013, recently made history as the first Korean group to perform at the American Music Awards last November, one of the biggest stages in the global music industry.

Their album “Love Yourself” sold 1.58 million copies last year, the highest recorded sales for a Korean EP. Riding on BTS’ popularity, Big Hit earned 32.5 billion won in operating profits in 2017, the highest among domestic entertainment agencies, while raising 92.4 billion won in sales.

Despite being the leading players in their respective industries, the collaboration between Netmarble and Big Hit is in part a response to the rising trend of major entertainment agencies and IT companies coming together to increase competitiveness by drawing on each other’s strengths.

Last July, SK Telecom and SM Entertainment agreed to buy stocks in each other’s company.

The mobile carrier bought 65 billion won worth of shares in SM Culture and Contents, a subsidiary of the agency, while SM invested 40 billion won in iRiver, SK’s music streaming device maker.

This January, SK Telecom also partnered with SM, JYP and Big Hit Entertainment ahead of launching a new music streaming platform.

YG Entertainment is working with Naver through subsidiary YG Plus. Last October, the country’s biggest portal reported the two companies will work together to create a “mega” music database for Naver’s music streaming platform Naver Music, equipped with Naver’s leading AI technology.

Earlier last March, Naver invested 100 billion won in the agency.

BY HA SUN-YOUNG [kim.eunjin1@joongang.co.kr]