[theqoo][EXCLUSIVE] "IDOL AVATARS AREN'T CUTE"... SM'S SUBSIDIARY ENTANGLED IN A LAWSUIT OVER 'UNILATERAL CONTRACT TERMINATION'

It was belatedly revealed that DearU, a subsidiary of SM Entertainment, was ordered by the court to pay damages after unilaterally terminating a contract without payment to a partnering company.

DearU operates the app "Bubble," which enables direct communication between fans and over 600 idols from 157 agencies, and has around 2 million paid subscribers worldwide.

As the company prepared to launch a new service called "My Home," featuring 3D avatars and personal spaces, it commissioned the software development to a firm named Seerslab. However, after claiming the avatars were "not cute enough," DearU sought to terminate the contract leading to a legal dispute.

According to industry sources on the 12th, the Civil Division 30 of the Seoul Central District Court ruled partially in favor of SeersLab in a damages lawsuit filed against DearU this past February.
The court stated, “DearU unilaterally terminated the contract without just cause, and therefore bears responsibility for the resulting damages. It must pay SeersLab 284.66 million won (~205K USD) for development costs, including labor.”

"My Home" is a metaverse-based service that allows fans to interact with avatars of celebrities. During its IPO at the end of 2021, DearU had presented My Home as a future core revenue driver.

A contract drafted in early 2022 outlined that DearU would plan all of the content for My Home, while SeersLab would develop both paid and free services accordingly and deliver them. The agreed revenue split was 70% to SeersLab and 30% to DearU.
An industry insider noted, “There was already internal controversy at DearU about the partner company receiving 70% of the profits.”

However, collaboration between the two companies ceased in November of that year. A DearU representative stated at the time that the contract was terminated because “SeersLab failed to meet the agreed development timeline, and the final product was of such poor quality that commercialization was not feasible.”

But the court disagreed, ruling that “Delays occurred due to DearU’s requests for additional work, making them unavoidable,” and added, “Regarding quality, DearU merely offered subjective opinions such as ‘it’s not cute’ or ‘it doesn’t meet user expectations.’ These alone do not justify claiming the product was unfit to continue the contract.”

The court also pointed out that DearU failed to properly compensate for development costs.
Initially, SeersLab claimed an additional 126 million won for the extra work. DearU pushed back, saying it was excessive. SeersLab then reduced the claim to 70 million won, but still received nothing.
The court said, “DearU had the option to negotiate the costs. Terminating the contract in response to the quote cannot be considered a legitimate exercise of cancellation rights.”

A SeersLab representative commented, “We had 70 people working on this full-time for a year and suffered major losses.”
They added, “We have filed an appeal against the initial ruling in hopes of recovering the expected profits and license fees.”

source: https://n.news.naver.com/article/277/0005607227?sid=105

original post: here

1. Wow... They really made them look bad though

2. The designs do suck but... At least pay them

3. Wait, did they really sign the contract without even reviewing the mockups? ㅋㅋㅋㅋㅋ Who are the people saying it’s not good? If SM signed off after seeing those, isn’t that on them for having poor judgment? ㅋㅋㅋ Why are they blaming the contractor?"

4. Pay them. They should at least get paid for their work

5. The avatar looks way too puffy. Seriously, no one can match SM's sense of aesthetics

6. It's true that they're not cute but it's also true that you should way them

7. Their power trip is insane

8. This sucks, what is this?

9. ? It may suck but they still deserve to get paid?

10. They should pay what the contract told them to pay

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