[News Inside Companies] How Did 'Mini Teukgongdae' Break Through China's Hanhanryeong?

SAMG Entertainment, Growing as an Overseas Joint Venture and Subcontractor
Efforts to Secure Own IP with 'Mini Force'

Children's animation 'Mini Force' produced by content company SAMG / Photo by SAMG

[Asia Economy Reporter Lim Juhyung] Since the 2016 Hanhanryeong (限韓令·Korean Wave Restriction Order), the K-content industry in China has struggled, but there is a domestic company that succeeded in opening Chinese consumers' wallets with just one children's animation. On the 6th, the 3D animation specialist production company 'SAMG Entertainment' entered the KOSDAQ market. Having grown as an export company by co-producing content with domestic and overseas studios, SAMG Entertainment is now knocking on the Chinese market with its own native intellectual property (IP).

SAMG Entertainment is a children's animation specialist production company founded in 2000 by CEO Kim Suhoon. In its early days, it grew through co-production and subcontracting with overseas companies such as 'Odd Family of Extraordinary Weather (2006, co-produced with France's TF1)' and 'Alien Boom (2010, co-produced with France3)'. However, it rose to become a reputable content company by securing its own IP with the 'Mini Force' series aired on EBS in 2014.

Mini Force depicted animal characters expressed through 3D graphics who call upon transforming robots whenever they face a crisis. By combining animal characters targeting children aged 3 to 5 and robots targeting children aged 7 and above, it secured a broad audience and received favorable reviews. However, Mini Force truly shone when it entered the Chinese market in 2019.

At that time, SAMG Entertainment started broadcasting in China by forming a business partnership with 'Wowtati', China's largest media group. In just three years, it released 1,000 types of merchandise and achieved sales of 16 million toy products. The total revenue generated by the single IP Mini Force approached 180 billion KRW.

The potential of Mini Force in the Chinese market was observed even before its official import. In 2017, Mini Force had already achieved 3.5 billion cumulative views through VOD (Video On Demand) services on Chinese platforms such as Tencent. Notably, this was during a period of severe friction with China following the deployment of THAAD (Terminal High Altitude Area Defense) on the Korean Peninsula and the imposition of Hanhanryeong. In China, there were boycotts of Korean products, and domestic cultural content products such as cosmetics, games, dramas, and K-pop were shunned by Chinese consumers or denied licensing, facing a harsh winter. In this environment, SAMG Entertainment captured the hearts of Chinese young viewers with purely native IP.

Turned profitable last year... IPO to invest in global MD business

Riding on its success in the Chinese market, SAMG Entertainment has been experiencing explosive growth every year. Its sales on a separate basis were 16.5 billion KRW (2019), 23.6 billion KRW (2020), and 38.4 billion KRW (2021), and it accumulated 32 billion KRW in sales in the first half of this year alone. Accordingly, operating profit recorded losses of -1.1 billion KRW (2019) and -1 billion KRW (2020) but turned profitable last year with 3.4 billion KRW. As of the first half of this year, operating profit was 3 billion KRW, matching the operating profit earned throughout the previous year.

SAMG's new IP 'Super Dino' aired on SBS last March / Photo by SAMG

Another competitive edge of SAMG Entertainment is that it possesses a large number of creative personnel capable of producing 'independent IP', including its own studio, writers, and producers. According to SAMG Entertainment, creative personnel account for nearly 67% of the total employees, establishing a system that can stably produce and distribute new works every year. The core animation IPs of SAMG Entertainment include Mini Force, Catch Tinyping, and Ladybug (co-produced with France), all targeting young children aged 5 to 7. Its own YouTube channel alone has 40 million subscribers, and the total cumulative video views approach 50 billion.

Although SAMG Entertainment is an animation company, the proportion of sales from MD (merchandiser) is greater than that from content sales. The strategy is to secure a fan base as much as possible with owned IP and then collaborate with toy manufacturers and others to create and sell various products. In fact, about 64% of last year's sales of 38.4 billion KRW, or 24.7 billion KRW, came from the MD business.

SAMG Entertainment's listing on the KOSDAQ today is also a move to attract investment funds to expand new IP based on its global fan base. Earlier, SAMG Entertainment conducted a pre-IPO investment round in July, receiving a corporate valuation of 120 billion KRW, and held a general subscription on the 25th and 26th of last month. On this day, SAMG Entertainment's opening price was set at 18,050 KRW, 6.18% higher than the public offering price (17,000 KRW).