한국은 매력적인 시장이다 – Korea is an interesting market!

At the end of November, Yle Innovations travelled to Seoul in South Korea to meet companies representing media, entertainment and technology to better understand why South Korea is considered an interesting growing market.

Especially in the technology and entertainment business.

We were particularly interested in metaverse companies, NFT technology, various AI experiments and K-pop management companies. In this article, I will dive deeper into the Korean media ecosystem and present a few of the most interesting observations about our trip.

The most interesting thing for me was getting to meet representatives of K-pop management companies and hear about their determination and long-term approach for building up future idol groups and fandoms and how to involve fans in content production. The contributions made by ordinary fans – often funny edited clips and versions of original content, marketing without marketing – support the management companies’ meticulous promotion strategies.

Observation 1: In Korea, chart shows attract viewers in person, broadcasted and in social media

To our delight, a part of our team had the opportunity to attend KBS’s live Music Bank broadcast that airs every Friday. It was eye-opening to see how much a public service media house is investing in an “old-fashioned” music broadcast programme that reaches viewers in 54 countries through KBS World. Music Bank content is also available as clips on several different social media platforms.

Teenage fans, an audience demographic that is so sought-after among media houses, queue week after week at KSB premises to get tickets and to be able to cheer for trainees and star idols live and do their fan chants for them. The production value of Music Bank is very high, using interesting 8K technology that could also be applicable to other contexts. KBS uses this technology to produce FanCams that follow a certain idol for each performance – which is something that could be used in panel and election discussions as well.

Example of a FanCam/ Music Bank. Mingyu, Seventeen

Observation 2: NFT is an investment in the future that is being allowed to mature in peace

In autumn 2022, the joint venture of HYBE Entertainment, Levvels Inc, launched their NFT platform Momentica. The launch included handing out NFT “fan cards” for free to the winners of a fan competition. Some fans of popular HYBE groups (like BTS, Enhypen, Seventeen, TXT, Le Sserafim) have been somewhat sceptical about the new product. Why? Maybe because physical merchandise and collectibles like fan cards hold great value in the fandom – they have emotional value and are also used for trading – so it takes time to get used to a digital version.

When listening to the Levvels presentation, I tried to imagine the timeline of NFT fan merchandise becoming as lucrative a business as physical merchandise. It is commonplace for artists to release three different versions of their albums with a different cover, fan cards and concept, and true fans will naturally want to get them all – creating valuable return customers.

Levvels have set their sights far into the future.

They understand that, in 2022, a 16-year-old fan who has been collecting physical cards for years may not be very interested in NFT cards, but in ten years’ time, a future fan who is now 6 years old who is growing in the world of Roblox and metaverse, will find this kind of digital fan asset as natural as physical collectibles are today.

All the management companies we met (HYBE/Levvels, SM Entertainment, CUBE Entertainment and Klap/Universe) said that they are conducting NFT experiments or planning them, and each one emphasised that the NFT platform has to be easy for the fans to use and not require getting a crypto wallet or becoming immersed in the world of blockchains and cryptocurrency. They clearly highlighted the “benefit perspective” – fans need to feel that they are being offered added value through the NFT. It could be a chance to meet their idol, getting tickets to a sold- out concert or some other NFT VIP treatment.

The Korean media ecosystem is worth exploring further

The media ecosystem in South Korea is characterised by strong broadcasting media houses and a newspaper sector that is struggling to adapt to digitalisation and paywalls. Compared to many other countries, Koreans prefer to read their news from super apps rather than directly from the website or app of a media house that produces the news and, for this reason, “relations between publishers and platforms are strained”.

Korea particularly differs from Western ecosystems in that they have a huge number of popular web portals, social media platforms and messaging applications that are owned by Koreans. They have developed their own digital giants alongside Google, Apple, Facebook and Amazon. They have their own “googles” Naver and Daum, their ”WhatsAppp” Kakao Talk (installed on 97% of Korean phones), and even music streaming services such as Melon, Genie and Flo.

As a Korean specialty, there are also super apps like LINE with instant messaging, wallet, news feed, medical services, music and AI assistant all in one! It’s normal to use one of these super apps for everything from to music and banking to buying gifts. The Kakao super app was down in late November, which wreaked havoc in many people’s lives:

https://www.nytimes.com/2022/10/19/world/asia/korea-kakao-ceo.html

Koreans use about 34.1 apps on their phones. Us Finns have thought of ourselves as an online, mobile-phone-forward nation, but Korea is far ahead of us. Internet coverage in Korea is 96% and mobile device penetration 97.4% (2022). In Finland, mobile phone penetration was “only” 88% in 2021. South Korea was also the first country to open a commercial 5G connection in spring 2019.

And one more K angle: the Korean wave and K-pop’s value for the national economy

Korea has an active and economically valuable gaming scene and an internationally esteemed K-drama sector. Together with the music industry, mainly K-pop, they create a global effect called Hallyu.

Measuring K-pop’s value to the Korean national economy is somewhat challenging because there are many measurement methods whose indirect links are difficult to calculate (travel, accommodation, meals, etc.), but some data is of course available. It is estimated that K-pop generates about $10 billion per year for the Korean economy (source: ​Sosioecolabs). Music exports from Korea had reached their peak just before Covid, totalling at USD 762 million in 2019.

What could we learn from the Korean entertainment industry and K-pop?

The value of K-pop to the Korean economy is much more than just the turnover of the five largest management companies. It also includes concerts that get people travelling internationally. Popular online concerts were also launched during Covid, selling large quantities of tickets costing around €50. Nearly every group has a dedicated webtoon and fanfiction that are consumed on social media platforms. There are partnerships that puff Korean cosmetics and fashion. There are all kinds of stuff and junk, plus official merchandise and street sales of idol cards and phone covers, dolls and stuffed toys – you name it!

And the international image. The fact that BTS is the first Korean group to be nominated in the Grammys for the third consecutive year and performing at the Grammys opening ceremony in 2022 is probably a great mental boost for the entire nation and its music industry. Korea is gaining visibility in the West and shoving its foot in the door of the music business in the US, which offers more potential and things to reach for. Every time BTS, BlackPink or another group beats a record (the premiere of the Butter video was viewed more than 100 million times in one day), it is covered with big international stories, further growing their reputation.

There really is no price tag on this kind of boost to national self-esteem and innovation.