SM Entertainment Co-CEOs Daniel Jang and Dmitry YJ Tak have announced a new growth strategy called ‘SM NEXT 3.0’ as the company marks its 30th anniversary. The strategy focuses on expanding the company’s presence in the music industry through mergers and acquisitions (M&A) and integrating artificial intelligence (AI) technology.
The company aims to transition from its existing ‘SM 3.0’ system to a ‘Multi-Creative’ structure, enhancing its intellectual property (IP) strategy and global expansion efforts. Jang stated that SM will pursue M&A opportunities within the music sector more actively than in the past three years and increase capital investment to accelerate growth.
As part of the ‘NEXT 3.0’ strategy, SM plans to establish Asia’s largest and most respected publishing company through its Kreation Music Rights (KMR) subsidiary, which currently manages over 7,000 songs and has agreements with more than 370 composers worldwide.
SM also intends to upgrade its A&R systems using AI to analyze its extensive catalog of songs, helping to recommend tracks suited for individual artists and enhancing music discovery for fans. The company sees potential for synergy between the evolving K-pop landscape and AI, leveraging the technological capabilities of majority shareholder Kakao.
In terms of global strategy, SM is strengthening its presence in key markets through local partnerships, including collaborations with Tencent Music Entertainment in China, True in Thailand, and discussions with multiple partners in Japan.
Additionally, SM is introducing an enhanced Multi-Creative structure that places artists at the core of the creative process, aiming for flexible project-optimized creative teams to support artist transformation.
SM’s business and investment strategies are also adapting to changing fan consumption patterns, particularly regarding merchandise and live performances. The company reported a 261.6% year-over-year increase in operating profit for Q3 2025, driven by successful album releases, rising concert revenue, and growth at the fan platform DearU, which has been integrated as an affiliated subsidiary.
Kakao Entertainment, which holds a 40.28% stake in SM Entertainment, also owns several major K-pop agencies and the music streaming service Melon.
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