December 8, 2023
SEOUL – It was a rough year for K-pop, with big firms’ shares taking a roller-coaster ride despite outstanding performances, hitting an annual peak in the summer and plummeting in recent months.
But the bumpy ride is set to settle down for the most part, with major risk factors being resolved and individual firms pushing through with their global business ventures for long-term qualitative growth, industry watchers say.
YG Entertainment finally came out of the shadows on Wednesday, when it announced a full-group contract renewal with its biggest profitmaker Blackpink. The company’s share price spiked up to 29 percent during the day, surpassing 60,000 won ($45) for the first time since mid-November, when it started to plunge sharply.
The veteran idol girl group is expected to lead YG’s performance next year, amid disappointing results from the agency’s younger artists Treasure and Babymonster. Blackpink will release an album and embark on a world tour next year.
Looming even larger over the industry had been BTS members’ mandatory military enlistment. The issue was also resolved recently after it was confirmed that the last four members to enlist — RM, V, Jimin and Jungkook — will begin their service this month. The move came after the septet agreed to extend their contracts with Hybe in September.
Hybe, which has been making vigorous efforts to diversify its business, successfully logged a solid performance this year despite BTS’ absence.
This uptrend is expected to continue, Daishin Securities analyst Lim Soo-jin said, projecting the anticipation for BTS’ resumption of group activities in 2025 to start showing in the market from next year.
“Record-high ‘revenge spending’ is expected from fans with the group’s comeback in three years, and the share price is expected to escalate starting in the second half of 2024,” the analyst explained.
Steering Hybe’s advancement this year has been an exponential increase in album sales. BTS member Jungkook’s solo album “Golden” garnered over 2.1 million sales on its first day of release, marking the highest sales by a K-pop soloist. Meanwhile, Seventeen’s “Seventeenth Heaven” became the first extended play album in history to top 5 million in preorders.
A stronger presence on the global streaming market is also set to boost Hybe’s overseas foray. The total number of monthly subscribers for Hybe artists on the world’s biggest music streaming platform Spotify in November reached 62 million, spiking by 90 percent on-year, a Yuanta Securities Korea report showed.
Digital streaming for K-pop overall soared this year, the report added. The total number of monthly listeners for artists affiliated with the four major K-pop music labels on Spotify surpassed 130 million in November, up by 47 percent on-year.
“(We can see from this that) K-pop’s global popularity among casual listeners escalated as much as the increase in the number of core fans this year,” Yuanta analyst Lee Hwan-wook said.
Experts urged local firms to reduce their dependence on CDs and turn to digital music in order to extend their favorite bands’ foray into the global market, where the streaming total is key to mainstream success.
“K-pop still is heavily reliant on physical album profits, which is the main reason behind its failure in appealing to general listeners in the West,” Lee Hwa-jeong of NH Investment & Securities said, adding that increased recognition among non-fandom listeners in the US, the world’s No. 1 music market, will be the core task for K-pop next year.
Hybe is expected to expedite its emergence into the global music scene next year, having aggressively expanded its business network over the past few years. This involved several mergers and acquisitions of US-based music labels, including Ithaca Holdings and QC Media Holdings, and the establishment of its Latin American subsidiary.
JYP Entertainment may be another strong player, with its artists Twice holding sold-out shows in stadium venues in the US and Stray Kids debuting on the Billboard Hot 100 singles chart. JYP also signed a partnership with Live Nation, the world’s biggest concert provider, to further boost its global live music business next year.
Concert revenue also spurred the industry’s performance this year, especially with the return of live music after the COVID-19 pandemic. This trend will continue, with surging demand for concerts worldwide and rising ticket prices.
New artists, especially those targeting an overseas audience, raise the industry’s prospects further. JYP plans to introduce new groups in the US, China, Japan and Korea, while Hybe will debut girl group Katseye in collaboration with Geffen Records. Meanwhile, SM Entertainment will launch a boy band audition show in Britain.
The success of new artists will be more important for SM in its return to normal under the new management of Kakao, which gained control over the K-pop juggernaut in March.
Amid a weekslong management feud, followed by allegations of stock price inflation by a Kakao executive, SM has struggled to excel in the market despite its record-setting turnover until the third quarter.
SM was shaken further by a recent drop in album sales in China. Despite the year seeing a record high in annual albums exports, sales to China dropped by 51 percent on-year. SM, whose artists have a wide fan base in China, was hit harder, leading to poorer-than-expected sales of its artists in the second half.
SM’s efforts to pivot to the West from China are coming into shape, with a significant increase in the number of streams for aespa’s songs for its latest album in the English-speaking market compared to the band’s previous releases.
The K-pop industry is going through a transitional period, in which it strives to go beyond its achievements to truly enter the mainstream and become a sustainably growing market. However, such efforts may take time to show results, observers said.
“Big names like BTS and Blackpink won’t be resuming their activities so soon, so a temporary shortfall may be inevitable — especially due to the higher base achieved this year,” Yuanta analyst Lee said. “But with profits from nascent businesses, such as fandom platforms and new artist debuts, the share prices (of entertainment companies) will likely gain momentum in the second half of 2024.”
