The performance of major domestic corporations in the entertainment industry is expected to be sluggish in 2024. This is due to the absence of 'mega intellectual properties (IPs)' like BTS and BLACKPINK in their entirety, leading to a slowdown in album sales. However, since these major artists responsible for the corporations' performance are forecasted to return to the stage in the latter half of this year, analysis suggests that performance will bottom out and improve.
According to financial information provider FnGuide on the 21st, HYBE, which broke the 2 trillion won revenue mark for the first time in 2023, is expected to achieve revenue of 2.1961 trillion won in 2024, surpassing its all-time high. This figure represents a 0.8% increase from the previous year. However, operating profit is projected to decline by 31% from 295.6 billion won to 203.7 billion won.
SME's situation is similar. The revenue outlook for SME in 2024 is estimated to be 976 billion won, which is a 1.6% increase from the previous year's 961.1 billion won; however, operating profit is expected to decrease by 33.4% to 75.6 billion won. JYP Entertainment, which has felt relatively less impact, is expected to have revenue similar to the previous year at 564.8 billion won, while its operating profit is forecasted to decrease by 24.5% to 127.9 billion won.
YG Entertainment, which has failed to produce an artist to replace BLACKPINK, is projected to have the most disappointing performance among entertainment corporations. Revenue, which was at 569.2 billion won in 2023, is expected to return to 368.3 billion won, reverting to 2022 levels, and it is anticipated to incur an operating loss of 22.6 billion won, marking a transition to a deficit.
The reason for the poor performance of the entertainment corporations can be attributed to the disappointing album sales. After Chinese authorities cracked down on supporting celebrities through large donations, the movement for joint album purchases among K-pop fandoms diminished, impacting sales.
The prolonged conflict between former Ador CEO Min Hee-jin and HYBE executives surrounding NewJeans, which began last year, has also been interpreted as having some impact on album sales. Excessive marketing competition, such as 'album pushing,' has been mentioned as an issue, which has led to restraint in these practices.
According to the Circle Chart of the Korea Music Content Association, K-pop physical album sales decreased by 17.7% last year to 98.9 million copies, compared to the previous year’s 120.2 million copies. In particular, Seventeen's album sales halved from 16 million copies to 8.96 million copies, and the number of teams selling more than 3 million copies has dropped from 11 to 7, while no teams have sold over 5 million copies.
As each entertainment corporation increases investment in nurturing new groups to discover the next K-pop stars, expenses have increased, leading to a deterioration in profitability. YG Entertainment has debuted the multinational girl group 'Baby Monster', and SME has introduced the British boy group 'Dear Alice', indicating incurring initial investment costs. HYBE has also invested in a localized group 'CAT'S EYE' that produces and promotes under the K-pop system, debuting and operating in the United States.
Experts have projected that the performance of the entertainment corporations will improve this year. This is because activities featuring BTS and BLACKPINK in their entirety are anticipated from the second half of the year. The expectation that newcomers who debuted in 2023-2024, such as RAY (from the HYBE label 'Belift Lab'), TWS (from the HYBE label 'Pledis Entertainment'), and NCT Dream (from SME), will enter a revenue-generating phase is also a positive factor. The securities industry estimates that the combined revenue of the four major entertainment corporations will increase by 16.4% year-on-year to 4.8 trillion won in 2025, with operating profit expected to rise by 60.6% to 661.3 billion won.
YG Entertainment, which is expected to suffer the most and tarnish its reputation among the four major entertainment companies, recently announced it will cease its actor management business to focus on its core music operations. The 24 actors currently under contract will leave YG sequentially as their contracts expire.
After selling a 60% stake in the drama production company Studio Plex last year and transferring management rights, YG also dissolved its dance management label YGX. YG aims to solidify its leadership in the music industry and improve its performance through this restructuring, marking 2025 as the year for business reorganization.
Experts diagnose that K-pop must continuously produce innovative products (artists) like 'the second BTS' for long-term growth to be feasible.
Lee Jang-woo, a professor at Kyungpook National University’s Business School, noted that 'for K-pop to evolve, new concepts of trainees must continuously emerge, but investment costs are rising, and methods for recouping these costs have become difficult with the standard contract revisions limiting it to seven years.' He pointed out that 'BTS emerged from Big Hit Entertainment, a small-scale production company (now HYBE). It is essential to have regulatory reforms and incentives so that not only large enterprises but also small companies can bring forth such artists at any time.'