South Korea's industry rushes to the Metaverse: launching Metaverse Fund, virtual influencers, and forming the Metaverse Alliance

Author | Chenglin Pua (Malaysia) Editor | Yu Baicheng Layout | Wang Jilongyan <br />Original title: "South Korean industry rushes to the Metaverse: launching the Metaverse Fund, virtual internet celebrities, and forming the Metaverse Alliance"

The Metaverse has set off a wave of craze in 2021. Many well-known international companies have laid out their plans for the Metaverse, hoping to get a piece of this big pie. Among them, Meta is the most active company, which plans to transform into a Metaverse company and expand its Metaverse business in the future. Nvidia hopes to take advantage of the increased demand for chips in the construction of the Metaverse. Domestic giants also have different degrees of layout.

In South Korea, both the government and the enterprise have taken a positive attitude towards the Metaverse. 01 Blockchain has previously reviewed that the Seoul government has introduced policies and formulated plans, announcing that it will build the Seoul Metaverse Platform within five years. The South Korean government has even established the "Metaverse Alliance".

At the corporate level, the layout of the Metaverse and related applications are at the forefront of the world. Korean companies actively invest in Metaverse-related platforms or cooperate with them. Korean companies have launched many Metaverse-related funds in the capital market, allowing ordinary people to participate in Metaverse investment. Traditional industries such as furniture stores use the Metaverse as a means of display, and telecommunications companies also regard the Metaverse as the next business growth point. Korean entertainment companies have even launched idol groups composed of real people and virtual people.

Korean companies actively invest in the Metaverse

On October 26, 2021, Kakao Entertainment, the entertainment subsidiary of South Korean technology giant Kakao, announced a strategic investment of 12 billion won (US$10.2 million, approximately RMB 65.02 million) in Metaverse Entertainment, a subsidiary of game developer Netmarble, and Metaverse Entertainment signed a strategic partnership agreement with Kakao Entertainment.

According to the agreement, in addition to investing 12 billion won in Metaverse Entertainment through paid capital increase, Kakao Entertainment and Metaverse Entertainment will cooperate based on Netmarble F&C's Metaverse technology and Kakao Entertainment's experience in artist planning. The first Metaverse cooperation project is a Korean virtual idol. The virtual idol plans to debut next year and enter the global market. In addition, in future content cooperation, Kakao Entertainment will also share its online comics and online novel IP resources, and Netmarble F&C will give full play to its game IP advantages.

Netmarble is a company that develops and publishes video games. It was founded in 2000 and is headquartered in Seoul, South Korea. It currently has more than 5,000 employees. Netmarble has launched many popular games, such as "Lineage 2: Revolution", "MARVEL Future Fight", "STAR WARS™: Force Arena", "LINE Travel Tycoon" and "The Seven Deadly Sins". In April 2018, it invested 20.14 billion won (about 1 billion yuan) to become the second largest shareholder of Big Hit Entertainment (the agency of BTS), and now holds 28.84% of Big Hit Entertainment's shares.

In addition, the developer of PlayerUnknown's Battlegrounds, South Korean game company Krafton Inc., invested 5 billion won (about 26.96 million yuan) in the South Korean metaverse platform Zepeto in July 2021 to enter the metaverse field. Zepeto is a virtual social platform under the South Korean Internet giant Naver.

The Zepeto platform was launched in August 2018 and has about 240 million registered users from around the world. In Zepeto, the software allows users to play games, communicate with others using 3D avatars, etc. The platform is popular among young users, especially those of Generation Z. Top K-pop idols such as Blackpink have held fan meetings on Zepeto. Global luxury brands such as Gucci and DIOR have also released virtual clothing lines on Zepeto.

Zepeto 3D avatar of K-pop girl group Blackpink

Krafton Chief Financial Officer Bae Dong-geun said in an earnings call that the metaverse is a source of growth for the company's future development.

Launch of Metaverse-related funds

In June 2021, Samsung Group launched a metaverse fund called Samsung Global Metaverse Fund. The fund became very popular as soon as it was launched, with about 1-2 billion won (about 5.55 million to 11.1 million yuan) flowing in every day. Samsung Group plans to raise 100 billion won (about 555 million yuan) by the end of 2021.

In this regard, Choi Byung-geun, deputy general manager of asset management at Samsung, said that since the outbreak of the COVID-19 pandemic, people have gradually adapted to remote work, and naturally their interest in the Metaverse has increased greatly. As global large-scale technology companies such as Meta, Nvidia, and Microsoft push their business direction towards the Metaverse, the Metaverse industry will develop rapidly and bring more wealth.

In addition to Samsung Group, Mirae Asset of South Korea also launched Mirae Asset TIGER Fn Metaverse ETF on October 15, 2021. As of December 17, the fund closed at 12,150 won (about 65.21 yuan), with an increase of 15.11% since its listing.

MiraeAsset TIGER Fn Metaverse ETF Historical Trends

Source: Market Watch

KB Asset Management also launched the KB KBSTAR iSelect METAVERSE ETF, which officially began trading on October 15. As of December 17, 2021, the closing price of the ETF was 11,635 won (about 62.44 yuan).

KBKBSTAR iSelect METAVERSE ETF Historical Performance

Source: Yahoo Finance

The NH-Amundi HANARO K-Metaverse MZ ETF launched by NH Amundi Asset Management officially began trading on October 15, 2021. As of December 17, 2021, the fund closed at 11,675 won (about 62.66 yuan), an increase of 10.51% since its listing.

NH-AmundiHANARO K-Metaverse MZ ETF Historical Trends

Source: Market Watch

According to Bloomberg, the four Metaverse ETFs issued by South Korea have raised $278 million (about 330 billion won, about 1.8 billion yuan) so far. It is worth noting that most of the funds are driven by retail investors. Bloomberg predicts that by the end of 2021, the asset size of the Korean Metaverse ETF may exceed $600 million (about 3.825 billion yuan), and retail investors will contribute 90% of it.

Traditional industry giants are entering the Metaverse

In July 2021, SK Telecom, South Korea's largest mobile operator, launched the virtual world software "ifland". Users can host and participate in meetings through anime characters in the virtual world. In this regard, SK Telecom said that due to the outbreak of the new crown epidemic, social trends are increasingly turning to non-face-to-face methods, which has also led to a significant increase in the market demand for virtual world (or metaverse) services.

Ifland, like many similar products, allows users to create their own avatars and communicate in 18 different virtual spaces, including meeting rooms and outdoor venues. At the same time, a virtual space can accommodate up to 130 people. According to SK Telecom, it is currently available for Android and iOS, and an Oculus Quest version will be released in the future.

Ifland Virtual World

On December 13, 2021, Huh Seok-joon, executive vice president of SK Telecom, said that in November, the investment department SK Square had been split into an independent investment company to prepare for the metaverse. SK Group is one of the oldest conglomerates in South Korea, and this foray into the metaverse is very rare for traditional Korean chaebols.

Huh Seok joon said that because the metaverse has only recently emerged, it may take several years for investments in the metaverse to pay off. In an interview with Bloomberg, Huh Seok joon said: SK Group's business needs to develop into the metaverse, and the way of communicating with customers in the future will shift from mobile phones to the metaverse.

Other traditional industries are also actively expanding the metaverse market using VR. For example, Samsung Electronics opened the Samsung VR Store, a comprehensive shopping service, in October 2021. The Samsung VR Store is not limited by space and can simulate a virtual store from product experience to purchase. Consumers can connect to the Samsung VR Store through a computer or mobile device to experience products, consult, and purchase in the same environment as the actual store.

Samsung Electronics said that the launch of the VR store by Samsung Electronics reflects changes in market consumption and the overall environment. As the COVID-19 pandemic rages, Samsung Electronics looks forward to providing consumers with a safe and convenient shopping experience in an environment where space is not restricted.

In addition to Samsung Electronics, another traditional South Korean giant, LG Electronics, adjusted its official website in South Korea in April 2021 and introduced AR services, allowing buyers to virtually configure LG electronic products in their own homes.

Launching Virtual Influencers

Aespa is a girl group launched by South Korea's SM Entertainment in 2020. Unlike general virtual idol groups, Aespa focuses on the fusion of virtual and real, and is composed of four real members from China, Japan and South Korea and four virtual members modeled 1:1 based on real members, forming an "eight-member girl idol group".

Aespa Group

Since its debut, there have been constant controversies related to it, and at the same time, its popularity has remained high. At a time when Korean idol girl groups are fighting each other, the birth and popularity of Aespa have continuously broken the traditional impression of fans and the market on girl groups. Moreover, unlike the pure and sexy style that most Korean girl groups use, Aespa's music style, dance, and makeup all focus on a futuristic sense of technology that has rarely appeared in the Korean Wave before. Aespa is like an experiment by SM Entertainment to explore the future form of idols.

SM Entertainment once revealed a greater ambition, which is to build SMCU (SM Cultural Universe), and in 2016, SM Entertainment's chief producer Lee Soo-man proposed the CT (Culture Technology) operation strategy. This operation strategy is mainly divided into three stages:

1. Culture Creation of artists and content;

2. Culture Development, which develops artists and content into industries;

3. Culture Expansion: using core resources and know-how to expand into other businesses.

Aespa is regarded by Lee Soo Man as the starting point for the construction of SMCU. Lee Soo Man also believes that robots supported by big data will play an important role in the future entertainment market. Virtual idols have many advantages over real idols. The first is that there will be no contractual problems. Some artists will strive to maximize their profits, which puts the agency in a passive state, but robots will not have this problem. Secondly, robots can produce content 24 hours a day without rest. Finally, there will be no problem of personality collapse. Many scandals have recently broken out in the entertainment industry, destroying the personality image of many artists. Robots will not have this problem and will not cause the company to suffer related losses.

Formation of the Korean Metaverse Alliance

In May 2021, the South Korean government launched the Metaverse Alliance in hopes of playing a leading role in the Metaverse industry and supporting the development of Metaverse technology and ecosystems. The Metaverse Alliance initially consisted of 17 companies, including major wireless operator SK Telecom and automotive giant Hyundai Motor Company, as well as eight industry groups such as the Korea Mobile Internet Business Association. As the South Korean government vigorously promotes Metaverse-related projects, the alliance now includes more than 500 companies and institutions, including Samsung and KT (South Korean telecom giant).

The alliance will include companies and industry groups that will share metaverse trends and technologies, form an advisory group on ethical and cultural issues related to the metaverse market, and undertake joint metaverse development projects. The Ministry of Science and ICT said it will provide support to the alliance, especially in helping companies build open metaverse platforms.

An official from the South Korean Ministry of Science and Technology said that the South Korean government hopes to play a leading role in the metaverse industry. The South Korean government announced its 2022 fiscal budget last week. Of the total budget of 604.4 trillion won (about 3.23 trillion yuan), the government plans to allocate 9.3 trillion won (about 51.6 billion yuan) to accelerate digital transformation and cultivate new industries such as the metaverse.

Cho Kyung-Sik, Deputy Minister of Science and Technology of South Korea, expressed the hope that through cooperation between the government and industry, the new metaverse economy can be supported so that this future social platform will not be monopolized by a single enterprise, but will become an open metaverse platform.