[Special Report} A Game Featuring BTS in Pipeline

Bang brothers
Bang Jun-hyuk (left) and Bang Shi-hyuk

The partnership of Bang Jun-hyuk, the chairman of Netmarble and Bang Shi-hyuk, the CEO of Big Hit Entertainment, is drawing attention of the game and entertainment industry.

Netmarble recently announced that it would invest 201.4 billion won in Big Hit Entertainment, secure 25.71% (448,882 shares), and become the second largest shareholder. Netmarble is the top player in the domestic game industry, and Big Hit Entertainment is well-known as an entertainment agency that produced the sensational idol group, BTS.

What is the background of the two joining hands? For years, the two have been thinking about ways to launch new services using the intellectual property (IP) of games and K-pop music owned by both companies. For example, during his meeting with reporters in February, chairman Bang Jun-hyuk presented the realistic cinematic game “BTS World,” which utilizes the video images and pictures of BTS. It is a simulation game that allows users to raise the members of BTS.

"Netmarble is likely to use BTS World as an entertainment platform," said Kim Min-jeong, an analyst in HI investment & securities. "They will seek to enhance the marketing power at home and abroad based on the IP power of BTS."

Chairman Bang Jun-hyuk and CEO Bang Shi-hyuk are known as relatives, with the former 4 years older than the latter. Being relatives, their paths have been very different.

The difference starts from family background. Chairman Bang Jun-hyuk grew up in a poor family and ended up quitting high school. He worked for a small company to make money and then started running his own business to make his dream come true. After a couple of failure, he established Netmarble in 2000 with eight employees and 100 million won in capital.

On the other hand, CEO Bang Shi-hyuk, an esthetics major in Seoul National University, has been walking on the smooth path. He liked the British pop band Duran Duran as a child and started playing music in a band in middle school. In 1994 when he was a college student, he was awarded at Yoo Jae-ha Music Award, which discovers emotional folk music singer-songwriters. JYP Entertainment Producer Park Jin-young, who happened to listen to a demo tape recording of his songs, scouted Bang Shi-hyuk in 1997. Since then, he became a well-known music composer and producer in the pop music world. He has built a reputation as a popular composer with hit songs such as “Sky Blue Balloons” of god, “As I Have a Gun Shot” and “Candy in My Ears” of Baek Ji-young, and “‘Bad Guy” of Rain. After solidifying his position, he left JYP in 2005 and established Big Hit Entertainment.

Though their background was different, they had similarities. Both chairman Bang Jun-hyuk and CEO Bang Shi-hyuk overcame difficulties in the competitive game and entertainment industry and built representative companies in Korea.

After establishing Netmarble, Bang Jun-hyuk’s mind was complicated. As the internet became widespread and a lot of online games were released, he thought it would be hard to be competitive just with regular games. He eventually presented a new business model called online game publishing. It is a structure in which game development is done externally with Netmarble taking care of game distribution, marketing, and funding. Profits are shared among everyone involved. The chairman succeeded in publishing online games such as “Laghaim” and “Grand Chase” at that time. While improving the game distribution structure, the company tried charging for most of its online games. It could improve profitability and stabilize the company. It secured 10 million members in just one year.

After the continuous growth, Netmarble faced a stumbling block in 2004. It faced a recession. When CJ made a sudden takeover proposal, chairman Bang decided to sell most of his shares in Netmarble at 80 billion won. In 2006, he decided to retire CEO of Netmarble due to his deteriorating health. As soon as the room chair was out, Netmarble fell into trouble. More than 20 games developed over the five years from 2006 all failed. Lee Jae-hyun, chairman of CJ Group, urged Bang to take on Netmarble once more. Bang replied, "How can the father not visit his child (Netmarble) when the child is in the intensive care unit?" He made one promise. He said, "Netmarble will overcome the crisis within two years and grow from three years later. If this comes true, we will become independent.”

In 2012, Netmarble was in crisis, suffering an operating loss of 14.7 billion won, but the atmosphere has changed with the return of the chairman. He gathered all of his employees together and pledged to focus on mobile games. While competitors were concentrating on online games, they made a winning move with mobile games. Mobile game development and business organization were expanded. Fortunately, the results were OK. “Cha Cha Cha All Together” released in 2012 became a big hit. Since then, Netmarble produced a series of hits such as “Marvel of All,” “Taming Monsters,” “Seven Knights” and “Marvel Future Fight.”

The chairman's strategic judgment also played a part. In 2015, when Nexon and NCsoft were in a dispute over management right, Netmarble secured the IP of “Lineage 2” together with NCsoft's treasury stocks under a mutual investment agreement. By 2016, it could launch “Lineage 2 Revolution,” a mobile MMORPG (massive multiplayer online role playing game). The sales of the game reached more than 200 billion won in the first month of release, and it became a big hit. Thanks to this, Netmarble surpassed Nexon and became the number one domestic game company. Netmarble recorded sales of 2.42 trillion won last year, becoming the first domestic game company to join the 2 trillion won club.

CEO Bang Shi-hyuk built his entertainment company in 2005, five years later than chairman Bang Jun-hyuk. Among the strong players such as SM, YG, and JYP Entertainment dominating the market, his company was behind the scene for a while. CEO Bang produced the albums of Lim Jung-hee and the group Eight, and honed his skills.

In 2013, there was a great opportunity. He made a so-called big hit while debuting the idol group BTS. After their debut, BTS became a sensation at home and abroad. In November of last year, they became the first Korean singers to make their debut in the American Music Awards (AMA). BTS’ mini album “Love Youself” sold 1.58 million copies last year, recording the highest sales of a single album in Korea. After the release of the album, it ranked number one in iTunes' top album charts in 49 regions around the world. Thanks to that, Big Hit Entertainment's performance soared. The company recorded sales of 92.4 billion won and operating profit of 32.5 billion won last year, the highest level among Korean entertainment companies.

There was only one thing that Bang Si-hyuk requested from the members of BTS at the beginning of their career. "The music of BTS should come from the story inside BTS." He did not force their members to practice or control their lives. All things were left to autonomy, and members could make decisions voluntarily. The reason most of their songs in the beginning were about school life was the idea that it was important to sing about themselves. Experts also say the secret of the boy band’s success is that "BTS was created in the idol system, but they are completely autonomous. They succeeded in gaining artistry as they are autonomous idols who learn on their own." The K-pop star has been born as a result of the autonomous system, which has been emphasized by the CEO.

The dream of the Bang brothers is currently in progress.

Chairman Bang Jun-hyuk revealed his plan to focus on overseas markets with the investment in Bit Hit Entertainment. He said, “We will release 18 new games including BTS World and compete in the global market.” In addition to mobile games, it plans to enter the console (video) and PC game markets. It released “Seven Knights M” for Switch, the Nintendo game console, and decided to present games for STEAM, the online store of global PC games.

CEO Bang is not satisfied with the success of BTS. He was awarded at the Korean Contents Award late last year and said, “It shouldn’t be just the success of BTS. It shouldn’t end there. There should be another, still another BTS and I think it is possible.” The success story of Bang brothers attracts attention from the business circle.

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