[ADOPTION] Application - Binary Korea

1. Introduction

2. HYBE: Disrupting the Entertainment Industry

3. Why HYBE is Embracing New Challenges
3-1. Addressing stagnant growth in the entertainment business
3-2. The industry necessitates new growth strategies to maintain momentum

4. Exploring New Opportunities in Creator Community Platforms
4-1. The blurring line between artists and creators in the entertainment business
4-2. THEUS: Realizing an interactive playground for creators and fans

5. How Binary Korea Approaches Web3
5-1. Web2 First, Web3 Later
5-2. Benefits of Web3: Financialization of the creator economy and ccalability

6. Closing Thoughts

 

 

1. Introduction

On July 11th, the <Adoption 2024> conference took place in Seoul, featuring a diverse array of companies from both the Web2 and Web3 sectors, including HYBE, NEXPACE, and Circle. These industry leaders came together to share valuable insights and information about the evolving Web3 landscape. This article will specifically focus on Binary Korea, a subsidiary of HYBE and a prominent participant in the conference. HYBE has established itself as a pioneering force in transforming the Korean entertainment market. Through Binary Korea, HYBE is strategically positioning itself to enter the fan entertainment business and the Web3 market. What opportunities do HYBE and Binary Korea foresee in Web3, and how are they navigating this emerging market? Let’s delve into these questions in this article.

 

2. HYBE: Disrupting the Entertainment Industry

HYBE is a leading Korean entertainment company revolutionizing the music industry with its mission, "We believe in music." As of July 22, HYBE's market capitalization stood at approximately KRW 7.5 trillion, making it the largest entertainment company in Korea. HYBE's major artists include BTS, SEVENTEEN, Le Sserafim, and NewJeans.

HYBE's remarkable growth can be attributed to its innovative multi-label system and the launch of a fan platform. The multi-label system allows HYBE to operate multiple independent labels under one umbrella, fostering content diversity and mitigating risk without diluting the HYBE brand. This structure has enabled HYBE to produce a wide range of artists across various musical genres, contributing significantly to its growth. Additionally, the fan platform has been a crucial driver of HYBE's profitability, as detailed in section 3.

HYBE's vision is to "expand the music industry through technology convergence," leading to significant investments in and research on various technologies that can synergize with the music industry. In July 2022, HYBE established Binary Korea to conduct advanced research and development aligned with market and industry trends. Binary Korea is a wholly-owned subsidiary, with HYBE holding 100% of its shares.

Beyond Binary Korea, HYBE launched Momentica in October 2022, an NFT platform developed through Levels, a joint venture between Dunamu and HYBE. Momentica allows users to collect and exchange digital photocards of artists. In January 2023, HYBE acquired Supertone, an AI voice technology company, for 45 billion KRW. Currently, HYBE has a total of 20 subsidiaries, including Binary Korea, Supertone, and Weverse (a fan community platform).

 

3. Why HYBE is Embracing New Challenges

3-1. Addressing stagnant growth in the entertainment business

South Korea's entertainment industry, epitomized by K-pop, has experienced rapid growth over the past decade, largely driven by the Hallyu wave. HYBE, which boasts BTS as the first Korean artist to top the Billboard charts, has seen tremendous success. Subsequent idol groups from its affiliated labels have also achieved significant success, moving away from the traditional agency system reliant on the success of representative groups.

However, despite these efforts, HYBE anticipated a decline in performance as BTS members were expected to be enlisted. To mitigate this impact, HYBE decided to launch a fan community platform. Historically, fandom communities were limited, lacking sufficient interaction between fans and artists. Platforms like Daum and Naver offered basic fan cafe (a term commonly used in Korea, refer to online communities where fans of a particular artist or group gather to interact and share content) features but had limitations such as 1) limited content diversity and 2) lack of support for multiple languages, hindering global fan engagement. Recognizing these limitations, HYBE launched Weverse in 2019 to enhance fan engagement and revenue. Weverse aims to elevate fandom culture, increase per-fan spending, and establish a sustainable business model, independent of artists' comeback schedules.

Weverse provides a platform for fans worldwide to connect with artists. Through Weverse, fans can directly communicate with artists, access a variety of content, and engage within the fan community. Weverse offers features including LIVE broadcasts, exclusive media content, fan letters, and DMs with artists, facilitating an immersive fandom experience previously unavailable in other fandom communities. Additionally, the venue map feature allows users to see venue layouts, crowd sizes, wait times, operating hours, and restroom locations. Available in 15 languages, including Korean, Weverse is designed to cater to a global audience, enhancing fan engagement and showcasing HYBE's commitment to a diverse fan base.

Source: Weverse

As K-Pop fans flocked to the platform, Weverse expanded to include artists from other entertainment companies, such as Blackpink (YG Entertainment) and Aespa (SM Entertainment), alongside HYBE's artists. It also hosts fan communities for prominent models and actors and has recently onboarded international artists. Weverse is evolving into a platform for broader fandom culture, beyond just HYBE artists. As of June 13, Weverse had approximately 150 artists, with a rapidly growing user base. In Q3 2023, Weverse surpassed 10 million MAUs, and by Q1 2024, it had approximately 9 million MAUs.

3-2. The industry necessitates new growth strategies to maintain momentum

Traditional revenue sources in the K-Pop market—albums, paid content, and commerce—stem from dedicated fandom consumption. K-pop fans are known for their intense engagement and significant spending power, often purchasing multiple albums of their favorite artists. However, this consumption pattern is not common among a broader audience, leading to a stagnation in the expansion of K-pop fandom. Bang Si-hyuk, chairman of HYBE, noted, "K-Pop metrics have slowed down, which means we need to attract fans who engage without heavy spending to overcome this. Scalability is necessary to make K-Pop sustainable." The industry thus requires new growth engines to maintain its momentum.

 

4. Exploring New Opportunities in Creator Community Platforms

To generate new growth engines, HYBE has shifted its focus to YouTube and the content creation industry. This strategic expansion resulted in the establishment of Binary Korea, which aims to penetrate the creator community platform market with the launch of the creator platform THEUS this year. Several factors underpin Binary Korea's entry into this market.

4-1. The blurring line between artists and creators in the entertainment business

The rise of streaming services like YouTube, TikTok, and social media has lowered the barriers for individuals to gain media exposure. With the ease of creating and uploading videos, a diverse array of creators and influencers have emerged. Exploding Topic estimates the creator economy market to be worth $127.65 billion (KRW 177 trillion) in 2023, with projections to grow to $528.39 billion (KRW 734 trillion) by 2030.

Despite this growth, a dedicated community space for creators and fans remains lacking. While some creators interact with fans through features on YouTube and TikTok, these platforms offer limited fandom activities, akin to past DAUM and NAVER fan cafe communities. In response, Binary Korea decided to launch a creator fandom platform.

4-2. THEUS: Realizing an interactive playground for creators and fans

In June, Binary Korea launched "THEUS," a creator fan community platform designed to enhance fan engagement and interaction. Partnering with Sandbox Network, Korea's leading Multi-Channel Network (MCN) provider, THEUS initially onboarded 25 creators, including popular names such as Dotty, Yell sister, DDO_DDO Couple, Anunu, Angg Zzing, JONGJI BUBU, inssafamily, and jojaewon. THEUS offers users a unique space to access exclusive posts and content from their favorite creators, interact directly with them, organize and participate in events, and engage in various fandom activities. Despite being in its pre-launch phase, the platform has already attracted nearly 20,000 users, showcasing its strong potential and appeal. As the platform evolves, more creators will be added, and new features will be introduced based on feedback from both creators and users.

 

5. How Binary Korea Approaches Web3

5-1. Web2 First, Web3 Later

Currently, THEUS is a Web2 service that does not use blockchain technology. So why did Binary Korea announce its business plans at the Web3 conference Xangle <Adoption 2024> and discuss Web3 initiatives? This is because Binary Korea follows a "Web2 First, Web3 Later" strategy. This approach considers the complexity of Web3 technology and the negative perceptions that have limited its adoption. Although Web3 aims for a decentralized network through blockchain, it remains unfamiliar and often difficult for many users, creating high entry barriers.

Binary Korea believes it's crucial to prove the quality of its service on Web2 before transitioning to Web3. By providing reliable and high-quality services on the Web2 platform, the company intends to build user trust. Web3 features will be gradually introduced to ensure a smooth transition. This strategy led to the early release of the Web2 version of THEUS, with plans for global expansions. At Adoption 2024, CEO Sungmin Kim stated, "Blockchain is a technology that specializes in easily implementing economic systems. We will introduce Web3-related technologies in stages in the upcoming THEUS Global."

This step-by-step approach aims to utilize Web3's full potential while maintaining a good user experience. By first succeeding on the Web2 platform, Binary Korea hopes to enhance user acquisition and reduce user churn, achieving long-term success.

Source: Xangle (Sungmin Kim, CEO of Binary Korea, presenting at Adoption 2024 Conference)

5-2. Benefits of Web3: Financialization of the creator economy and scalability

Once users are acquired through Web2 services, Web3 elements can provide significant benefits in the future global version of THEUS.

Financialization of the creator economy

One of the key elements of Web3 is the token rewards for participation in the ecosystem. This incentive structure has driven user engagement with Web3 services. In the case of creator fan platforms, there are three stakeholders: creators, content producers, and users who consume the content. The Web3 incentive structure can promote ecosystem participation by 1) rewarding content producers, and 2) rewarding user participation. This system provides a clear incentive for third-party creators to produce content, in contrast to the traditional one-way content flow from artists' labels to fans. It is also expected to attract creative and innovative creators to the platform, resulting in richer content production and more users consuming this content.

Expanding the ecosystem with a borderless blockchain

Blockchain technology is borderless, which applies not just to Bitcoin but also to blockchain-based content. NFT holders, for example, can use their assets across various games and services.

For creator fan platforms, blockchain-produced content can be integrated with multiple services, rather than being limited to the creator's fan content. Conversely, blockchain assets from other services can be used within fan platforms. For instance, Nike NFT holders could collaborate with a fan platform to use Nike shoes in minigames. This integration encourages creative content production and offers fans unique experiences beyond what existing Web2 platforms can provide. Adopting Web3 allows Binary Korea to establish THEUS as a leading creator-fan platform, supporting diverse content production and extensive user engagement. This strategy not only strengthens the platform's position but also provides fans with innovative and engaging experiences.

 

6. Closing Thoughts

This article has explored how HYBE and Binary Korea are attempting to innovate the creator fandom culture. HYBE has already enhanced fandom culture with Weverse and now seeks to expand from artists to creators with THEUS. Particularly, they aim to use Web3 technology to connect fans and creators more directly and offer an immersive fandom culture.

It is important to note Binary Korea's approach to Web3. Despite various applications being released for Web3 mass adoption, none have shown significant results. As discussed, this can be attributed to 1) the high entry barriers of Web3, 2) the reckless introduction of Web3, and 3) low service quality. To minimize these hindrances and provide a seamless user experience, Binary Korea is focusing on developing a Web2 platform first, under the strategy "Web2 First, Web3 Later."

Binary Korea's approach to Web3 lays a crucial foundation for the company's sustainable growth. By gradually introducing Web3 technology based on their success in Web2, they aim to maintain user trust and lower the entry barriers to new technologies. This strategy positions Binary Korea to secure a unique spot in the global market, not just as a fan community platform but also through collaborations across various industries.

While the specific application of Web3 technology in THEUS Global and the potential interactions between fans and creators have yet to be revealed, Binary Korea's strategy and vision for Web3 adoption are clear. We conclude with the hope that Binary Korea will make a significant impact on Web3 adoption.