[Exclusive] Kakao Challenges Weverse... Launching Global Fandom Platform Backed by SM

Kakao Entertainment Aims to Launch 'Berries' in First Half of This Year
Securing Artists Through Subsidiary Entertainment and Management Companies
'Last Gamble' to Achieve 'Beyond Korea'

Kakao is challenging Weverse, the largest fandom platform in South Korea. The company plans to create a service where global fans can consume and interact with K-culture artists' content. This move is seen as a final gambit to achieve the 'Beyond Korea' vision, which aims to generate 30% of its revenue from overseas markets. While SM Entertainment, a powerful K-content company, is also involved, making competition in the fandom platform space plausible, unresolved legal risks remain a variable.

According to the IT industry on the 6th, Kakao Entertainment recently conducted internal testing for its global fandom platform 'Berriz.' After forming a fandom platform business task force (TF) in the second half of last year, the company is developing the platform with a goal to launch in the first half of this year. Kakao Entertainment co-CEOs Kwon Ki-soo and Jang Yoon-joong are directly leading the TF as a subordinate organization. Last month, they applied for trademark rights related to Berriz with the Korean and U.S. patent offices.

A fandom platform is an online space where fans can enjoy artists' content and engage in fan activities. Berriz also promotes a service where artists can share live broadcasts, concert videos, posts, and communicate with fans. It is expected to include commerce functions such as selling products using artists' intellectual property (IP). A Kakao Entertainment official stated, "We are preparing the service, but specific directions or release schedules have not been decided."

Interest in this move is growing because it creates a new competitive landscape in the fandom platform market. Currently, Weverse is virtually dominating the market. Operated by HYBE's subsidiary (Weverse Company), Weverse surpassed 10 million monthly visitors in 2023. Its revenue grew rapidly from 78.2 billion KRW in its launch year 2019 to 337.9 billion KRW in 2023. The only service considered capable of challenging Weverse is 'Bubble.' Bubble, operated by DearU, an affiliate of SM Entertainment, focuses on one-on-one messaging between artists and fans. By the end of 2023, it secured 2.3 million paid subscribers and generated 75.7 billion KRW in revenue, but the gap remains significant.

Kakao Entertainment's strength lies in its ability to actively utilize artists from its group subsidiaries. Through subsidiaries such as SM Entertainment (aespa, NCT, etc.), Starship Entertainment (IVE, etc.), and EDAM Entertainment (IU, etc.), it can secure K-pop star content. It also has actor management companies like SOOP Entertainment and BH Entertainment, which manage actors such as Gong Yoo and Lee Byung-hun, as well as Ready Entertainment, an advertising model agency.

Especially as it expands its overseas network in the music business, it can broaden its scope to include foreign artists. Last year, Kakao Entertainment formed partnerships with major U.S. record labels Columbia Records and RCA Records, as well as Chinese music streaming platforms QQ Music and NetEase Music under Tencent Music. It is preparing the global debut of a British boy group in collaboration with U.S. entertainment company Gamma, which works with pop stars Snoop Dogg and Usher, and U.K. entertainment company Moon and Back.

Berriz aims to be a global service. It plans to offer services in various languages besides Korean and English and will include an automatic translation feature. Since over 90% of Weverse's users are overseas, Berriz is targeting the international market from the start.

This is also Kakao's strategic move. Kim Beom-su, Kakao's founder and chairman of the management innovation committee, announced the 'Beyond Korea' strategy in 2022, aiming to raise overseas revenue to 30% by 2025. However, due to internal and external difficulties, the overseas revenue ratio was only 21.6% as of the third quarter of last year. Analysts suggest that Kakao is rushing the launch of Berriz to meet this target.

The global fandom platform market has significant growth potential. IBK Investment & Securities estimated the fandom economy size at 7.9 trillion KRW in 2020, when BTS first entered the Billboard Hot 100. The industry believes the market has grown even larger five years later. The target audience for K-pop global fandoms has expanded from a few groups to include rookies, and related spending has increased. The K-content boom, including Squid Game, has broadened the fandom base to actors and models.

However, market growth does not guarantee service success. The IT industry, which entered the fandom business, has seen successive withdrawals due to poor service performance. Naver transferred 'V Live' to Weverse in 2022, and NCSoft sold 'Universe' to DearU in 2023. Neowiz also disposed of its fandom business subsidiary last year. Growth of existing services has recently slowed; Weverse's users dropped to around 9 million last year, and Bubble has stagnated at about 2 million users.

For Kakao, legal risks related to SM Entertainment, with whom collaboration is necessary to secure artists, could be a hindrance. An industry insider said, "The global fandom market is still growing and expanding across K-culture overall. Ultimately, the ability to continuously recruit artists and differentiate services is necessary."