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SM Entertainment<\/a> Co-CEOs Daniel Jang and Dmitry YJ Tak are betting big on AI, and plan to ramp up M&A activity within music as they chart a new course for the South Korean K-pop giant.<\/p>\n The pair have unveiled a blueprint for the company\u2019s growth in the wake of its 30th anniversary last year, including its IP strategy, business and global expansion ambitions, plus management and investment strategies.<\/p>\n Speaking alongside Chief A&R Officer (CAO) Chris Lee on SM\u2019s official YouTube<\/a> channel, Jang and Tak said \u201cSM NEXT 3.0\u201d represented \u201cthe borderless expansion of K-pop\u201d as the firm \u2013 known for acts such as NCT 127, EXO, Riize, and aespa \u2013 evolves from its existing \u201cSM 3.0\u201d system into a \u201cMulti-Creative\u201d structure.<\/p>\n SM also shared plans to \u201cmore actively\u201d pursue M&A opportunities<\/strong> through music.<\/p>\n \u201cWe will pursue M&A opportunities within music and related industries more actively than in the past three years, and increase capital investment to accelerate growth,\u201d said Jang.<\/p>\n Elsewhere, as part of the new SM NEXT 3.0 Strategy, the company aims to build Asia\u2019s \u201clargest and most respected publishing company\u201d via its Kreation Music Rights (KMR) subsidiary.<\/a><\/span><\/p>\n \u201cThrough KMR, our goal within the next five years is to build Asia\u2019s largest and most respected publishing company\u201d<\/p>\n CHRIS LEE, SM Entertainment<\/span><\/p>\n<\/blockquote>\n \u201cKMR has established a strong foundation for a global repertoire by expanding from Korea and Europe into the United States in 2025,\u201d said Lee. \u201cToday, it maintains exclusive or sub-publishing agreements with more than 370 composers worldwide and manages a core K-pop catalog of over 7,000 songs.<\/p>\n \u201cThrough KMR, our goal within the next five years is to build Asia\u2019s largest and most respected publishing company, and on that foundation, to grow further as a hub for intellectual property (IP) and a leader shaping the future of the music market.\u201d<\/p>\n He also outlined plans to further upgrade SM\u2019s A&R systems<\/strong> through artificial intelligence, noting that AI could be used to analyse tens of thousands of songs accumulated over SM\u2019s 30-year history to recommend tracks with a high level of suitability for each artist, helping fans discover music that better aligns with their individual tastes.<\/p>\n Addressing AI as a key future growth driver, Jang stated that SM had a \u201cdistinct advantage\u201d in being able to leverage the AI technological capabilities of majority shareholder Kakao.<\/a><\/p>\n \u201cWe see strong potential for meaningful synergy at the intersection of a rapidly evolving K-pop landscape and AI,\u201d he said.<\/p>\n Further detailing SM\u2019s global localized IP strategy, Tak said the company was strengthening its presence in key markets through local partnerships.<\/p>\n He continued: \u201cIn China, we are working with Tencent Music Entertainment<\/a>; in Thailand, with True; and in Japan, we are currently in discussions with multiple partners. Our focus is on creating locally resonant IP while maintaining SM\u2019s creative identity.\u201d<\/p>\n SM also announced the introduction of what it calls an enhanced Multi-Creative structure, designed to place artists \u201cat the core of the creative process\u201d.<\/p>\n \u201cSM is positioning merchandise not merely as products, but as a medium through which fans can experience an artist\u2019s universe\u201d<\/p>\n Daniel Jang, SM entertainment<\/span><\/p>\n<\/blockquote>\n \u201cBy placing artists at the center and flexibly assigning the most optimal creative teams, we aim to achieve growth and transformation simultaneously,\u201d said Tak.<\/p>\n \u201cAs each artist\u2019s universe evolves, it calls for new artistic languages. Rather than operating within a fixed production hierarchy, we will build flexible, project-optimized creative lineups that allow every artist\u2019s transformation to be realized with the highest level of precision and quality.\u201d<\/p>\n In addition, SM discussed its business and investment strategies in response to evolving fan consumption patterns \u2013 particularly around merchandise and concerts<\/p>\n Jang said: \u201cLive performances play a critical role in the evolving K-pop industry, and we are focused on delivering concert experiences optimized for fan communities in each region.\u201d<\/p>\n He added: \u201cAs artist IP\u2013based secondary businesses continue to grow, SM is positioning merchandise not merely as products, but as a medium through which fans can experience an artist\u2019s universe. We are leading new trends in this space and plan to expand further into lifestyle merchandise going forward.\u201d<\/p>\n In addition, SM noted that it has brought DearU<\/a>, operator of superfan platform Bubble, into its group as an affiliated subsidiary, and will continue to collaborate with global platforms to deliver K-content experiences to fans worldwide.<\/p>\n \u201cThrough disciplined, sustainable growth alongside bold, forward-looking investments, we will continue to shape the future of the global entertainment market,\u201d concluded Jang and Tak.<\/p>\n In its most recent financial results<\/a>, the company reported a 261.6%<\/strong> <\/span>year-over-year increase in operating profit for Q3 2025, to 48.2 billion<\/strong>\u00a0won, or\u00a0USD $34.8 million<\/strong> at the average exchange for the quarter. That growth was driven by a streak of hit albums, rising concert revenue, and growth at fan platform DearU.<\/p>\n Kakao Entertainment, together with its parent\u00a0Kakao Corp.,<\/strong>\u00a0holds<\/a>\u00a0a\u00a040.28%<\/strong>\u00a0stake in HYBE rival\u00a0SM Entertainment<\/a><\/strong>\u00a0and owns several major K-pop agencies including\u00a0Starship Entertainment,<\/strong>\u00a0EDAM<\/strong>\u00a0Entertainment<\/strong>, and\u00a0Antenna<\/strong><\/p>\n\n
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