Fan community services act as buffer for K-pop agencies

Industry

Published: 06 Apr. 2022, 18:20 Updated: 06 Apr. 2022, 20:24

Fan community services act as buffer for K-pop agencies

Jimin of BTS left a message on HYBE's Weverse fan community platform on March 14. [SCREEN CAPTURE]

Just like any other able-bodied man in Korea, the members of K-pop boy band BTS are obligated to serve 18 months in the military, and the one-and-a-half-year hiatus does not bode well for their agency, HYBE.

At the heart of every business in the K-pop industry is the artists themselves, so whenever an artist's career comes to a halt, their agencies are bound to take a hit.

Fan community services emerged as a possible solution to such a problem, and entertainment companies are jumping on the bandwagon to establish their own services.

These fan community services are essentially a special form of social media for fans of a certain group or artist that allows for e-commerce. Even when artists take a break from performing, agencies can attempt to fill the void by offering artist-related content or goods to fans through such services.

For example, J-Hope of BTS uploaded a post on HYBE’s fan community service Weverse on March 30, a week after he tested positive for Covid-19. The post, which read “I’m feeling better, after much resting and sleeping during the self-quarantine,” immediately got more than 20,000 comments from fans across the globe. Weverse automatically translates artists' posts for non-Korean-speaking fans.

Right below J-Hope’s post was an advertisement banner promoting a replay service for BTS’s 2017 concerts. By clicking the banner, the user gets redirected to the app store page to download the Weverse Shop application. E-commerce site Weverse Shop offers fans a range of goods such as a BTS music score set for 20,000 won ($16), a BTS-themed purple nail set for 16,800 won and a butter cookie box inspired by the band’s megahit “Butter” (2021) for 20,000 won.

HYBE owns 51 percent of Weverse Company, which runs Weverse and Weverse Shop, and Naver owns the remaining 49 percent.

A total of 41 group and solo acts at HYBE and YG Entertainment are currently active on Weverse. As of Wednesday, BTS alone had more than 14.9 million subscribers.

Social media such as Twitter and YouTube have contributed immensely to the rise of K-pop in the global market, and vice versa — K-pop artists churned out content more frequently than any other artists around the globe, and all the hits, likes and comments from global fans were all translated into profit for both social media platforms and the artists' agencies.

Now, entertainment agencies are trying to build their own channels.

The three major fan community services — Weverse, DearU bubble and Universe — are all operating on different business models.

Weverse Company separated its communication and e-commerce features into the separate Weverse and Weverse Shop.

Meanwhile, SM’s DearU bubble chatroom service is making a profit from communication itself. Fans can pay a monthly fee of 4,500 won per artist to receive messages from the artist in a private chatroom.

Universe, developed by NCSoft, offers gaming features and exclusive fan content with a monthly subscription fee of 3,500 won.

Among the three players, Weverse is ahead of the game, as it has both the biggest boy band and girl group: BTS and Blackpink. Global pop stars such as Justin Bieber and Ariana Grande are also set to join the platform following HYBE’s takeover of Ithaca Holdings.

The number of Weverse subscribers surpassed 38 million at the end of last year, more than double the previous year’s 18 million.

Sales also increased by twentyfold over the past three years to 259 billion won last year.

“There was an increase in the number of subscribers, and many goods were newly released as the artists returned to in-person concerts, which led to more people making purchases on Weverse,” said HYBE.

HYBE sent its shareholders its first annual letter on March 16, promising to upgrade its Weverse platform and “boost the fan engagement in gaming, storytelling and the non-fungible token [NFT] businesses.”

The company is planning to integrate its Weverse with Naver's livestreaming service application V Live to reveal the new version of Weverse — the Weverse 2.0 — sometime this year.

Chatroom service DearU bubble is operated by DearU, SM Entertainment’s software subsidiary. SM Entertainment owns the largest stake with 33.66 percent of the company, and JYP Entertainment comes in second with 19.5 percent of the stake.

SM Entertainment's chatroom service DearU bubble. [SCREEN CAPTURE]

There were 296 group or solo artists on DearU bubble as of March, and over 1.2 million fans were subscribed to the service as of the fourth quarter last year.

DearU, which made its debut on the Kosdaq last November, marked a turnaround last year with annual revenue of 40 billion won and 13.2 billion won in operating profit.

When a new subscriber signs up for the service, DearU bubble automatically starts counting subscription days and even celebrates users' milestones for how long they've been subscribed. The character limit for writing replies is extended for each milestone achieved by the user, which means that the longer you subscribe, the longer your message to an artist can be.

The service has seen an increase in overseas subscriptions, especially after JYP’s Japanese girl group NiziU got on board last June. Overseas subscribers made up 71 percent of the total in August, up by 21 percentage points from 2020, according to a Hi Investment & Securities report.

Game publisher NCSoft’s Universe is somewhere in between Weverse and DearU bubble in terms of business model, but with additional gaming features. The Universe app was downloaded about 21 million times by the end of last year, with 3.3 million monthly active users on average.

Fans can collect points on the app, to be used for in-app services, and also decorate the avatar version of their favorite artist. Universe has a weaker artists lineup compared to its rivals, but NCSoft’s technological capability as a game company is considered its strength.

Weverse seems to be the clear frontrunner so far, but SM Entertainment remains a strong contender.

Album sales are still one of the key profit drivers in the K-pop scene. However, more fans are growing concerned over the environmental impact of buying CDs that they won’t actually use.

Experts predict that fan community services may provide an alternative to CDs in the future, with NFTs or virtual goods.

“Fans are engaging in various activities such as content streaming, event participation, collecting goods, hanging out with other fans and sharing fan-made content on the community platforms,” said Hana Financial Investment researcher Lee Ki-hoon.

These companies will have even bigger growth potential, according to Lee, “when the fan community services incorporate metaverse technology.”

BY JEON YOUNG-SUN, KIM YEON-JOO [shin.hanee@joongang.co.kr]