China’s internet giant Tencent Holding Ltd. and Weiying Technology announced on Tuesday the establishment of a joint venture with YG Entertainment, which oversees some of the industry’s top names, including Psy, BigBang, and 2NE1.
The announcement follows a recent $85 million USD injection of funding into the South Korea-based entertainment company. Weiying Technology and Tencent invested $55 million USD and $30 million USD, and now hold 8.2% and 4.5% stakes in YG Entertainment, respectively.
The round makes Weiyang and Tencent the third and fourth largest shareholders of the company following the founder and the top shareholder of YG Entertainment, Hyunsuk Yang, and L Capital Asia. Weiying Technology operates the mobile ticketing application called WePiao, which runs on Tencent’s platforms QQ and WeChat.
The joint venture aims to nurture local Chinese artists and serve as a launching ground for YG’s artists, actors, and actresses on the mainland.
“This move is to meet the huge appetite in China for Korean entertainment such as music, concerts and variety shows,” commented a spokesperson from Tencent in a press release.
YG Entertainment already serves as a content provider for Tencent. Tencent’s QQ Music previously signed an exclusive content partnership with the company. When YG’s artist BigBang held a concert in Macau, China, Tencent monetized viewers through Tencent Video’s concert live streaming function. More than 120,000 users paid for the online access to the concert, and were able to purchase virtual gifts and merchandise items on Tencent’s streaming page. On the QQ Music site, BigBang’s 2015 albums sold over 4 million copies in China through digital sales alone.
The joint venture will also work on a reality show called ‘The Collaboration’, which will feature two artists from YG and be broadcasted on Tencent Video. The two companies are also preparing other reality shows covering Korean fashion trends and beauty content.
South Korean content providers on Chinese multimedia platforms have established themselves as lucrative businesses in recent years. This year, Korean military romance drama Descendants of the Sun (太阳的后裔) was partly funded by Chinese investors and exclusively broadcasted on iQiyi, with 440 million views recorded on the video streaming site.
The patents for South Korean reality shows like Running Man (奔跑吧兄弟) and Where Are We Going, Dad? (爸爸去哪儿) have been sold to Chinese production houses, where local celebrities are cast in the Korean shows to draw the national fandom toward homemade spin-off episodes. Where Are We Going, Dad?‘s spin-off version saw an advertising revenue of 28 million yuan ($4.57 million USD) in its first season in China, along with sponsor fees surging tenfold to 310 million yuan ($47 million USD).
Image Credit: YG Entertainment