South Korea: Music agency ventures into NFT market

Hybe, the K-pop powerhouse behind BTS, said on Nov. 4 that it has teamed up with South Korea’s top cryptocurrency exchange operator to establish a joint venture to branch out into the nonfungible token marketplace.

The music agency is poised to acquire a 2.48% stake in Dunamu for 500 billion won ($423.7 million), as the operator of cryptocurrency exchange Upbit plans to issue 861,004 ordinary shares for third-party rights, offering to invite Hybe as a new shareholder.

Dunamu also looks to buy some 2.3 million ordinary shares of the K-pop agency for about 700 billion won, which would make it a minority shareholder of Hybe with 5.57% ownership. The payment is set to be completed on Nov. 24, officials said.

The move will see plans to jointly push ahead with a new business using NFT, a unit of blockchain data that represents ownership of a unique digital item, as part of efforts to roll out the unique goods for fans around the world.

During an online corporate briefing on Nov. 4, Hybe founder and Chairman Bang Si-hyuk demonstrated how NFT-based products can be made by using artists’ photo cards as an example. The NFT would enable the company to create digital photo cards with various contents including moving images and using the voices of the artists, Bang explained.

“We are under talks to shape up a detailed action plan with Dunamu on how to provide secure photo card ownership and allow fans to possess them permanently. They will enjoy diverse experiences by collecting, exchanging and displaying the cards through global fan communities such as Weverse, instead of having a single photo,” Bang said.

The agency also said it will feature its artists in creating original content for web-based comics, novels and gaming.

Under the plan, Hybe will have its artists as main characters in web comics, animated content and novels in collaboration with other pop artists fields.

The list of Hybe’s idol groups also includes Enhypen, Seventeen and Tomorrow X Together.

BTS will be featured in a computer game set to be released in the first half of next year, the company said, adding that the boy band will participate in the production of the project.

Hybe earlier had denied rumors of a partnership with Dunamu for the NFT business and issuance of 400 billion-won worth of convertible bonds. Instead, the two companies refused to provide any details besides saying that “nothing has been decided yet.”

With NFTs exploding in popularity, market observers have painted a rosy outlook for Hybe, forecasting that the new NFT business will likely play a role as a mid- to long-term growth engine.

“The NFT business is expected to maximize the company’s intellectual properties. Investors are recommended to focus on the entertainment agency creating innovative and differentiated values by combining its existing entertainment business with information technology,” said Lee Hwan-wook, an analyst at IBK Securities.

As the K-pop powerhouse unveiled its new business plan, shares of Hybe advanced 2.89% to 356,500 won at the closing bell. The stock reached 372,500 won in late morning trade, the highest level since its market debut on Oct. 15 last year.