South Korea’s internet giant Naver is seeking to buy stakes in a subsidiary of SM Entertainment to secure global stars and produce and distribute competitive video content. 

According to industry sources on July 22, Naver and SM Entertainment are discussing equity investment as a follow-up measure to the memorandum of understanding (MOU) they signed in April to push for joint global projects to strengthen their global entertainment competitiveness. 

“We are discussing ways to receive investment from Naver in one of our subsidiaries,” a source at SM Entertainment said. 

Although the target and size of investment have not yet been fixed, market watchers think that the reason Naver is showing interest in the entertainment company is to strengthen its global entertainment business. 

In fact, signing the MOU, the two companies promised to jointly strengthen cooperation in various fields to secure differentiated partnerships in the global entertainment market and strengthen their competitiveness. 

They also decided to collaborate to expand the global market for the “Fanship” platform, a global membership community that allows stars and fans to meet in real time, with the mixture of SM Entertainment’s expertise in discovering and producing global artists and Naver’s technology. On the “Fanship” stars can not only design their own membership for fans based on big data but  they also can provide premium content such as reservation of concert tickets, special live videos and invitations to offline events. 

Among SM Entertainment’s subsidiaries, Dream Maker Entertainment and SM Culture & Contents are being mentioned as potential candidates to receive Naver’s investment.  

Dream Maker, in which SM Entertainment has a 59.93% stake, is an entertainment company that manages about 200 performances both domestically and internationally every year. It is now producing Beyond Live, a new video concert that shows artists’ performances using cutting-edge technologies such as artificial intelligence, holograms, virtual reality and augmented reality.

SM C&C is an advertising, production, travel and talent company, whose stake SM Entertainment and SK Telecom own 30.05% and 23.43% respectively. It not only has made contracts with a number of famous MCs such as Kang Ho Dong, Shin Dong-yup, and Jun Hyun-moo, but also engages in production businesses for video advertisements, dramas and entertainment programs. (Reporting by Choonghee Won)