EYES ON IMPACT OF KAKAO’S SM TAKEOVER

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With Kakao winning SM Entertainment's managerial rights, which first led the success of K-POP, attention is now being drawn to what changes this will bring to the K-POP market. Pundits are saying this will likely heat up competition between Kakao and HYBE, another industry leader. We look into some of the changes and challenges they face.

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Lee Soo-man, founder and former chief producer of SM Entertainment, is dubbed the father of K-pop. His dominant grip on corporate management came to an end, following Kakao's takeover. It is predicted that a multi-label system guaranteeing artists their own production autonomy will become a new norm of the industry. Kakao has promised to ensure SM's independence.

[Soundbite] Han Soo-kyung(Kakao Entertainment) : "Kakao will respect SM’s tradition and ensure its autonomous and independent management and its artists’ ongoing activities."

SM is now faced with challenges of resolving remaining issues left by the takeover battle and proving its production capability without Lee Soo-man. The agency has announced plans to debut three bands within this year. Eyes will be on whether SM will be able to maintain its unique style. Competition between industry leaders HYBE and SM is a double-edged sword for the K-pop industry's growth. Amid their rivalry, competition of scale will likely heat up and it could be harder for artists from smaller agencies to create a sensation.

[Soundbite] Kim Hern-sik(Pop-culture critic) : "It’s necessary to secure diversity with everything centered on content and fans. It’s possible they will collapse together if they only pursue to compete in scale and make profit."

HYBE and Kakao are expected to team up only on platform business projects using fandom. Eyes are on whether the K-pop industry will be able to find a solution to boost its stagnant growth.