JYP Entertainment Buys Shares In SM Entertainment's "Dear U" Subsidiary

According to a new statement from both companies, JYP Entertainment has now acquired a stake in SM Entertainment‘s subsidiary service, DEAR U.

DEAR U is a mobile application development and IT operations company under SM Entertainment’s new subsidiary, SM Studios—which also houses Mystic Story, SM C&C, and more. One of DEAR U’s first offerings was the LYSN fanclub app for SM Entertainment artists, but LYSN wasn’t initially received as well as intended. In fact, the application was soon dubbed “one of SM Entertainment’s biggest money-draining affiliates.”

Thankfully, DEAR U was able to find its way again in 2020 when the company launched the well-known DEAR U Bubble service, which allows fans to communicate directly with their idols through a private messaging system. While DEAR U Bubble was initially launched solely with SM Entertainment artists, the service has since expanded to multiple K-Pop agencies—including JYP Entertainment.

Now, JYP Entertainment is biting off a bigger slice of the DEAR U pie. The Financial Supervisory Service reports that JYP Entertainment has become the owner of a 23.3% share of DEAR U. JYP Entertainment bought 9.1% of the shares last month, purchasing the remaining 14.2% this week.

In total, the entire stake was purchased for ₩21.4 billion KRW (about $19.2 million USD).

JYP Entertainment’s CEO Jung Wook | *JYP Entertainment*

In the first quarter of 2021 alone, DEAR U has generated ₩8.90 billion KRW (about $7.97 million USD) in sales, accumulating an operating profit of ₩3.20 billion KRW (about $2.87 million USD).

While DEAR U reached ₩4.20 billion KRW (about $3.76 million USD) in sales back in the second quarter of 2020, this year marks the first time the service has generated a profit—and a substantial one at that.

SM Entertainment’s CEO Lee Sung Soo | *SM Entertainment*

As such, it’s no surprise that JYP Entertainment sees it as a worthwhile investment. TWICE, ITZY, Stray Kids, and more are currently all part of the DEAR U Bubble service. Now, an agency representative states, “JYP Entertainment will invest more in IT platforms that allow fans to become closer to our artists.”

This isn’t the first time JYP Entertainment has partnered up with SM Entertainment in recent years. Back in August 2020, the two companies launched the Beyond LIVE Corporation together—the first company specializing in online concerts. Beyond LIVE concerts are said to combine SM Entertainment’s producing skills with JYP Entertainment’s global network and augmented reality technology from Naver.