South Korea’s four major entertainment companies, HYBE, JYP, SM, and YG, recorded their highest-ever performance last year, but there are growing concerns about reaching a performance peak. Album sales, a critical source of revenue, have declined, and this year marks a pause in activities from leading artists such as BTS and Blackpink, who have significantly contributed to sales. With all members having enlisted in the military, BTS is poised for a complete group comeback by June next year. The specifics of Blackpink’s group activities remain undefined.
In response, the entertainment companies are strategizing to launch multiple artists, including big rookies. They are also focusing on generating outcomes based on intellectual property (IP) through albums and digital music, performances, merchandise, and fan platforms.
Since the beginning of this year, the stock prices of the big four have fallen by double-digit percentages. This decline is attributed to a slowdown in the album market growth since the end of last year, leading to lower earnings forecasts for this year and deteriorating investor sentiment. According to Circle Chart, annual sales of the top 400 k-pop albums surpassed 100 million copies last year, yet last December sales plummeted by 73% to 4,113,499 from 15,166,889 the previous month.
“The explosive increase in album sales during the pandemic was because albums were the only way to express fan sentiment,” said Choi Min-ha, a researcher at Samsung Securities. “With the increase in offline concerts and the release of various merchandise products after COVID-19, fans are diversifying their spending.”
Entertainment companies are focusing on creating a stable revenue structure by introducing various artists. YG Entertainment, which relied on Blackpink for 80% of its sales (according to Daishin Securities), is preparing for the official debut and activity of its new group, Baby Monster, in April. In its fourth year since debut, the boy group Treasure plans to release a new album in the second quarter and expand its activities to Japan and Southeast Asia.
HYBE, having adopted a multi-label system early on to diversify its artists, has also begun debuting new groups, starting with the January tour of its boy group TWS, followed by girl groups ILLIT and Katseye. Existing artists like Seventeen, Enhypen, and NewJeans are set to begin full activities in the second quarter. JYP Entertainment’s American girl group VCHA has released its debut single. SM Entertainment’s new group, NCT Wish, has also started its activities.
“Last year’s debut of the virtual five-member boy group PLAVE has been popular, and changes such as the expansion of intense K-pop to more ‘easy listening’ genres are evident,” said an entertainment industry insider. “The entertainment market, once dominated by mega IPs, will transition to multiple IPs to cater to the diverse tastes of fans.”
