SM 3.0
SM 3.0 is the latest business strategy and development plan of the South Korean entertainment company SM Entertainment. Announced in February 2023, it would focus on integrating various aspects of the company's operations, including music production, content creation, and global distribution, into a cohesive system. The plan would aim to expand the company's market presence and enhance its offerings to provide a more comprehensive experience for fans. The implementation of SM 3.0 would involve the development of an intellectual property, business, overseas, and investment system, as well as a multi-production center and label system. These systems were designed to support the company's efforts to optimize its operations and increase its competitiveness in the entertainment industry, particularly in terms of producing content and expanding its market reach.
History
With the "success" of H.O.T., who debuted in 1996, SM Entertainment became a "pioneer" in the genre of K-pop, led by the company's founder Lee Soo-man, and considered SM 1.0 until 2010, when artists such as H.O.T., BoA, TVXQ, Super Junior, Girls' Generation, and Shinee debuted. Until 2022, Lee made a significant contribution to SM as an executive producer through a contract with the company and created Exo, Red Velvet, NCT, and Aespa, with the company having several people with producing capabilities was described as SM 2.0. Throughout that particular generation, the system was under the governance of the company's general manager Kim Young-min. Additionally, Tak Young-jun stated that during the SM 1.0 and 2.0 systems, SM produced intellectual property of its artists under the sole leadership of the company's chief producer Lee. The start of SM 3.0 was announced on February 3, 2023.Development
In September 2022, Lee Soo-man stepped down from the company and only became a major shareholder of SM Entertainment because of the sentiments expressed by the minority shareholders for him to retire. On February 3, 2023, SM announced the SM 3.0: IP Strategy - Multi 'Production Center/Label' System through its official YouTube channel and homepage. The "strategic" vision of SM 3.0 was considered a "practical" plan for SM, which had declared to enhance shareholder value and improve governance after it terminated the production contract with Lee and commenced a reorganization of the members of the board of directors. SM 3.0 would be promoted based on the intellectual property, business, overseas, and investment system, which would be the future growth engine of the company. The four strategies are detailed as follows:- Production of "high-quality" IP, which is SM's entertainment business core;
- Business monetization through IP;
- Expansion of IP beyond the local market and internationally;
- Based on the financial performance monetized through IP, investing in new businesses such as global music publishing business, label acquisition, fandom economy business, and the metaverse.
- Secure business sustainability through capacity distribution and systematization;
- Strengthen IP creation by guaranteeing independent decision-making;
- Expand music diversity through respect for autonomy;
- Establish a foundation for "long-term" mutual growth between artists and companies.
In the multi-production center, a separate music selection council called the Artists and Repertoire Committee would be created to help produce "quality" music that would fulfill SM's standards. The committee is a consultative body composed of A&R managers from each production center and professionals from organizations under the A&R Headquarters. It would maintain the SM music standard through the joint intelligence of music experts. An IP Committee would also be established separately from the production center to discuss management with its main agenda for concept planning of new artists, which is the phase before being assigned to the production center or label independence for mature artists. The consultative body would consist of production center leaders, a chief financial officer, and a consulting group composed of "specialized" external organizations, prioritizing IP planning and operation and understanding the market and fans rather than a few company executives and employees.
SM announced it would launch three new groups and a virtual solo artist in 2023, with plans to debut a new girl group in the first quarter, a virtual artist in the second quarter, NCT Tokyo in the third quarter, and a new boy group in the fourth quarter. Lee Sung-soo, Tak Young-jun, and inside director Park Joon-young will each lead the debut project. The company is also anticipated to release more than 40 albums, a 30% increase compared to 2022, and record sales of more than 18 million copies. Furthermore, the company would expand its musical spectrum and strengthen its musical influence by acquiring labels of various genres that SM does not focus on, such as ballad, R&B, and hip-hop. SM also predicted that it would be possible for more than two groups to debut in a year instead of just one group debuting every three-point-five years.
The company has delayed the majority of its debuts planned for 2023. On May 24, 2023, SM released a video titled "SM 3.0: NEW IP 2023" on their official YouTube Channel, in which the CEO Jang Chul-hyuck announced the company's plans for the year. This includes the creation of a new NCT sub-unit consisting 2 new trainees of Japanese and Korean nationalities, marking an end to the group's limitless concept. On July 31, 2023, the company that a boy group named 'Riize,' consisting of former NCT members Sungchan and Shotaro were set to debut for early September.
On August 2, 2023, SM published its sales and operating profit data for the 2nd quarter of 2023. It reported that total sales increased by 30% compared to the same quarter in 2022, while operating profit increased 84%. The company also reported that a new girl group and virtual IP 'Naevis' are planned to debut in the first half of 2024.
Production Center
As one of main plan of SM 3.0 to diversify artist management with multiple production centers instead of being managed by a single individual production team, previously led by Lee Soo-man, SM officially announced their 'Production Center' through their earnings release in the second quarter of 2023, which seen the label divide their artists into six production centers as;| Center | Production manager | Artist |
| Center 1 | Choi Sung-woo Jo Woo-cheol | Girls' Generation Aespa |
| Center 2 | Bang Jin-wook Kim Wook | Shinee WayV Hearts2Hearts |
| Center 3 | Kim Joo-young Kwon Yun-jung | TVXQ Red Velvet |
| Center 4 | Kang Byung-jun Chae Jung-hee | NCT |
| Center 5 | Kim Hyeong-guk Lee Sang-min | Kangta Super Junior Exo Riize |
| Virtual IP | Park Jun-young | Naevis |