Tencent Holding’s latest weapon to expand its online entertainment business in China: “Gangnam Style” singer Psy.
The Internet giant said Tuesday that it has signed an agreement with YG Entertainment, a South Korean artist management powerhouse whose roster includes Psy, boy band Big Bang and girl group 2NE1.
Financial terms of the deal weren’t disclose but under the agreement, Tencent, whose online games and social networks have hundreds of millions of users, will become YG’s exclusive online distributor in China. While YG’s songs and music videos are currently available on multiple online platforms in China, those contracts will expire by the end of the year and Tencent will be the sole online partner from Jan. 1, according to the Chinese company.
In China, young consumers have a huge appetite for Korean pop music and TV shows, creating an incentive for Tencent to team up with YG. While “Gangnam Style” remains popular in China, teenagers closely follow Korean boy bands and girl bands. Korean romantic comedy TV series “My Love From the Star” became a major hit in China this year. As consumers also pay attention to Korean stars’ fashion and makeup, YG has launched clothing and cosmetics brands over the past few months and is looking to market its products in China.
Tencent will use its own online and mobile platforms, such as QQ Music and Tencent Video, to distribute YG’s offerings. Tencent’s games can also use YG’s music as part of their alliance.
Tencent’s partnership with YG is the company’s latest attempt to move ahead of rivals in online entertainment, a major battlefield for China’s technology firms. Last week, Tencent announced a deal with Time Warner Inc.’s HBO to distribute its TV dramas and movies through the Chinese company’s online video site. That followed another entertainment deal last month with Warner Music Group, which chose Tencent as its Chinese online distribution partner.
In China’s Internet sector, Tencent competes with e-commerce company Alibaba Group Holding and search provider Baidu. Both Alibaba and Baidu have been trying to increase their presence in online entertainment through new investments and alliances.
The latest deal follows other moves by YG’s K-Pop competitors that are also trying to expand in China. Earlier this year, SM Entertainment, a major Korean agency behind girl band Girls’ Generation, teamed up with Hong Kong’s Media Asia and Taiwan’s Fubon Group to set up an investment fund with $20 million in seed money to support film and TV projects, focusing on China and other Chinese-speaking markets.