SmartStudy


SmartStudy, is a South Korean educational entertainment company established in 2010, a subsidiary of Samsung Publishing Co Ltd. It develops mobile applications for children and owns intellectual property rights for its popular animated characters, including Pinkfong and Baby Shark, whose mobile app was reported in November 2018 to have been downloaded by 150 million people in 112 countries. In 2016, the company released their first game, "Monster Super League".

History

Company formation

Parent company and founders

SmartStudy was founded in June 2010, by three former game developers, CEO Kim Min-seok, CFO Lee Ryan Seung-kyu and VP Park Hyun-woo.
Kim, who was around thirty-years-old at the time, was a publisher and the oldest son at his family's business, Samsung Publishing Company Ltd., SmartSudy's parent company, with his father, CEO Kim Jin-yong, and his grandfather, the company's founder, Kim Bong-kyu. The company, established on July 3, 2002, has no relation to the Samsung Group, and mainly published books for children and magazines for computer users, with another division operating food courts in highway service areas and a subsidiary operation that marketed stationery products. Kim joined the company, in preparation as successor, in 2008, and, while there, he helped launch a self-directed program "Samsung English", and worked on content digitization and app development. He studied to be an information specialist at Yonsei University and worked at the game company Nexon while in college. After graduation, he was a developer and project manager at Hangame and also, worked at NHN.
With Samsung Publishing as its first investor, the media startup company SmartStudy was formed by Kim, his close friend Park, who also worked at NHN, and Lee, who he met at Nexon. Lee had begun his career as an online community developer at Freechal.

Startup develops a strategy

While brainstorming ideas for the company, the thought of making video games was quickly dropped, because, as Lee said, “At that point, we were all tired of making games". The final choices were education and medicine, but as they had no expertise in medicine, they focused on education. With more ideas from Samsung Publishing, they decided to focus on the children's education market by making and uploading four music videos for Samsung Publishing's children's songs on their apps. The international response was good. “It was then that we realized that instead of making what we want, we should create content based on what the market wants,” Lee said.
Discussing what market they would focus on, Kim said reaching out to global customers was more viable, as potential customers were limited in South Korea, where the birthrate per year was around 400,000. They further planned to target pre-kindergarten or 2-year-old to kindergarten, looking to open offices in China and the U.S. to make local content geared for each of those markets. According to Lee, the U.S. users favored "interactive, actionable content such as writing letters on the tablet or taking pictures with the character", while Asian users preferred "one-way streaming video content". Based on results in South Korea and China, they focused on creating content in English and Spanish for the U.S. market, and started producing videos with its characters in several languages, including English, Chinese, Spanish and Russian; and operating its own mobile app providing content directly to viewers. Many of the creators at the company were from children's book publishing and many of the apps were based on chant melodies to attract children's attention.
They also added mobile VOD, comics, and finally, games. As the company grew, they continued their debate on games and entertainment versus education. "Education combined with entertainment, edutainment, is hard to achieve. If it’s too much focused on games, it has less educational value, and if it’s too much focused on education, it will need sugar-coating with game features", Lee said. Consequently, they returned to their forte in September, 2016, when they released a mobile game called “Monster Super League”. Kim said he understood the importance of child education, but thought about the expertise of team members who were prior game developers at Nexon or NCSoft, and who were also fathers.
They realized their market with international growth through Google and Apple app stores and expanded to IPTV in late 2013. They felt their willingness to understand subtle cultural differences instead of just enhancing language aspects benefited them. In particular, for Chinese marketing, they created new work using old Chinese fables and texts that Chinese children would know from kindergarten, and uploading on native platforms like Youku, iQiyi and Tencent Video in China, where YouTube is banned.

Work atmosphere and locations

Journalist Kwon Oh-seong of The Hankyoreh visited the company for interviews in April 2015 and described a unique organizational culture that emphasized autonomous work. His visit coincided with a customary monthly birthday rooftop celebration, presently the one for 34-year-old CEO Kim. The employees, with an average age of thirty, called each other by nicknames like "Radio", and "Patriarch" for Kim, and detailed a flexible work atmosphere, with periods of self-imposed hard work, along with chimaek breaks and unlimited vacation rewards. Kim said the structure is based on the teachings of his father, who allowed him freedom to grow and create on his own.
By 2017, the company had branches in Los Angeles and Shanghai. In 2017, CEO Bin Jeong, of Pinkfong's U.S. branch, which opened in 2016 with a couple of employees, said SmartStudy had about 150 employees, and writing about women in STEM jobs, she said about 60 percent were women. In January 2019, they had 200 employees in their three locations.

Success with Pinkfong and "Baby Shark"

In August 2015, their big breakthrough occurred on YouTube with their popular character and brand Pinkfong, a magenta-colored animated fox, which was used in a "Baby Shark" song and dance video. It was launched in late 2015, and started going viral on YouTube in 2016, becoming the company's most popular series with 800 million views by September 2018. By 2018, the company reported 150 million people in 112 countries had downloaded its app.

Finance and sales

By 2014, the parent company, Samsung Publishing, was seeing an increased net profit from its new subsidiary SmartStudy, and in 2017, Samsung Publishing sales were approximately $160 million. In 2015, SmartStudy's sales were 9.5 billion won. In 2016, SmartStudy's sales increased 80 percent, due to revenue from YouTube and apps sales, to 17.5 billion won, with overseas sales accounting for 65 percent. In 2017, SmartStudy sales were 27.2 billion won with an operating profit of 1.9 billion won.
In September 2018, Samsung Publishing's stocks "soared" by more than 76 percent after Pinkfong's "Baby Shark" song charted on the UK Top 40 at number 37. In November 2018, industry sources were predicting that SmartStudy was preparing to go public in 2020, with CEO Kim the biggest shareholder with 23.1 percent stake and Samsung Publishing which owns 20.8 percent.