Let the bullet fly for a while.
Editor’s note: This article is from the micro-channel public number “Music Harbinger” (ID: nakedmusic), Author: Fan Zhihui.
Author | Man Ju Xiaohe Editor | Fan Zhihui
On April 2, HYBE issued multiple announcements on the electronic publicity system of the Korean Financial Supervisory Service. HYBE is about to merge HYBE 360 and HYBE IP; on the same day, it acquired the famous American music producer Scooter Braun through its subsidiary Big Hit America. Media holding company Ithaca Holdings (including SB Projects and Big Machine Label Group) 100% of the shares, the transaction price is 1.07 trillion won (about 6.25 billion yuan).
At the same time, according to the investment banking (IB) industry, Warner Bros. is distributing paid capital increase to HYBE through a third party to conduct final coordination work for the equity investment of hundreds of billions of won. South Korean financial circles estimate that the scale of this investment can reach up to 500 billion won.
On March 30th, Big Hit Entertainment’s proposal to change its name to HYBE was voted through at the shareholders meeting held in the morning.
According to the brand press conference uploaded on the official Youtube channel on the 19th, the company’s new name “HYBE” symbolizes connection, expansion, and relationship, and contains the vision of building a world-class music-based entertainment lifestyle platform; the company’s mission also has The changes have evolved from “Music & Artist for Healing” (Music & Artist for Healing) to a more concise “We Believe in Music” (We Believe in Music). With HYPER lemON as the accent color, HYBE also carried out a new brand visual image design.
It is very common for Korean entertainment companies to change their names, but this is the only one that has changed so thoroughly like Big Hit Entertainment.
Visual image design and mission before and after HYBE’s name change
From a business perspective, the new corporate positioning clarifies the trinity organizational structure of HYBE’s Label (brand), Solution (solution) and Platform (platform business). Among them, the label will include Big HitMusic, BELIFT LAB, PLEDIS Entertainment, KOZ ENTERTAINMENT and HYBE Labels Japan.
The “solutions” department will include HYBE Three Sixty, HYBE IP, HYBE Edu, Superb Corp., HYBE Solutions Japan, and HYBE T&D Japan; they are the business departments responsible for video content, IP, learning, and gaming, according to The creative output of each label creates secondary and tertiary businesses; Weverse is affiliated to the platform business and will serve as the hub for connecting and expanding all HYBE content and services.
Actually, with the launch of Big Hit Entertainment last year, the saying that “the three major Korean entertainment companies” in the early 2010s became a yellow flower yesterday. And if sorted by recent market capitalization, a new era of the juxtaposition of the new “Korean Entertainment Big Four” represented by the four listed companies of HYBE, JYP Entertainment, YG Entertainment, and SM Entertainment has begun.
As for how long the four major clubs will be able to dominate and how the industry structure will change, it is still difficult to make a final conclusion. However, we can still see a glimpse through the financial reports of each agency in 2020, the new plans for this year and the next two years, and the current cooperative relationship with intersecting interests. Clues.
The four major companies’ annual reports are freshly released: It seems that our company is really going to die?
2020 is a sudden epidemic, causing the global music industry to go through a difficult year, and the Korean music market is no exception.
In the past year, due to the impact of the epidemic, the public’s offline consumption has shrunk, offline concerts, which constitute the main income of the industry, have been severely blocked, and cross-border activities have not been carried out. For the Korean entertainment industry, which has a high proportion of overseas sales, the operating environment has never been so bad. Even for large-scale planning companies with relatively sufficient cash flow, sometimes I am afraid that Liu Zhimin’s out-of-the-box saying: “We The company seems to be over!”
Faced with the drastic changes in the market and audiences, the four major Korean entertainment companies have come up with a flawed answer—according to the audited annual report released in late March this year, the revenue data of the four major companies in 2020 coincides with their market value ranking first. One correspondence, HYBE data is eye-catching, JYP Entertainment has changed steadily, YG Entertainment has turned losses into profits, and SM’s deficit has expanded.
Among them, the best performing company is HYBE, with total assets of 1924.4 billion won (note: 100 million won, about 585,000 yuan), which best reflects the company’s acquisition, listing, external investment and cooperation in 2020. , The main artist BTS’s total album sales of 9.33 million in 2020 is also the highest in history.
The consolidated statement of HYBE, which has 15 subsidiaries, once again set its highest performance last year-sales of 796.3 billion won, operating profit of 145.5 billion won, and current net profit of 87.1 billion won, a year-on-year increase of 36% respectively. , 47% and 19%.
The only hidden concern is that BTS’s sales share has not been announced. The industry has revealed that its performance contribution is estimated to be about 60% to 70%. For HYBE, which is highly dependent on the pillars, the BTS is really happy. Troubles.
Note: The consolidated statement is the performance of subsidiaries including subsidiaries
At the same time, the data of HYBE 360 and Pledis among the subsidiaries are very eye-catching. They have achieved sales of 101 billion won and 69.6 billion won, respectively, and net profits of 19.1 billion won and 11.5 billion won; Weverse Company also has a lot of attention Sales of 219.1 billion won and net profit of 8.2 billion won; thanks to increased sales in the fan community and external cooperation, the slowest growth rate of MD and authorized sales in 2020 will also increase by 54%. The only decline in each sales category was offline concerts, which dropped by 98%, but the content business to which online concerts belonged increased sales by 71%.
In contrast, SM Entertainment, which has 35 subsidiaries, is in deficit. Even though NCT is strong with 5.12 million album sales, the company’s total album sales surged to 9.21 million. In 2020, SM consolidated sales also fell slightly by 11.8%, and operating profit was significantly reduced to only 6.5 billion won (a decrease of 83.9 %), the net loss for the current period is as high as 80.3 billion won. Even if the tax expenditure of 20.2 billion won is removed, and the investment gains and losses of affiliated companies and joint enterprises of 13.3 billion won are excluded, SM still has a huge deficit.Household.
The income report officially disclosed by SM
According to SM’s separate statement, the parent company, which contributed 302.6 billion won in sales, also had a net loss of 30 billion won. Major subsidiaries SM Japan, Dream Maker, and SM C&C have all suffered losses to varying degrees. DearU, a subsidiary of Lysn and Bubble that develops and operates Lysn and Bubble’s subsidiary DearU, has a deficit of 2.2 billion won, which is not as profitable as the previous press release. Sales are also far from “friends”.
SM F&B Development, whose deficit is expanding, has also received “bad reviews” from external auditors. The only subsidiary with a good performance is Keyast, which turned losses into profits. However, the net profit of 8.7 billion won was just a drop in the bucket, not as high as the 12.9 billion won paid by the company to the LIKE project last year.
The continuous take-off of sales is the exclusive moment of HYBE. The other two companies have also experienced sales declines like SM, but the data of JYP and YG are also remarkable.
In terms of JYP, the company’s total album sales last year ranked third, and TWICE’s total sales of Japanese and Korean albums are still number one, with consolidated sales of 144.4 billion won, operating profit of 44.1 billion won, and net profit of 29.6 billion won, year-on-year In the previous year, it decreased by 7.1%, increased by 15.6%, and decreased by 5.1%.
The parent company’s separate financial and consolidated financial statements are very close. JYP Japan is the main force of consolidated subsidiaries, contributing 36.1 billion won in sales, occupying 25% of consolidated sales. NiziU, which officially debuted in the Japanese market at the end of last year Also contributed a lot to the fourth quarter earnings report.
Note: The separate report is the performance of the parent company
Interestingly, although SM resolutely said no to the LIKE project proposal of merging Li Xiuman Holdings, JYP Entertainment achieved holdings of JYP Publishing, which has been floating outside the corporate group, and the newly established JYP Publishing USA last year.For the first time, two companies responsible for copyright management of lyrics and music were merged into the report. Benefited from the company’s tendency to not expand easily, JYP is also the company with the highest operating profit margin among the four major companies.
Although the total sales of YG albums ranks last among the four clubs, BLACKPINK, which has made great strides, won first place in the comprehensive settlement of the Gaon chart for the first time. Their official albums released in the fourth quarter strongly boosted their performance.
Finally, the company’s consolidated sales were 255.3 billion won, operating profit was 10.7 billion won, and net profit was 3.2 billion won. Compared with 2019, the company has turned losses into profits, and the parent company’s individual finances have also slightly improved. The main subsidiary YG Plus accounted for 42% of sales. Its 7.5 billion won deficit was higher than the 2 billion won, 1.3 billion won and 800 million won of YG X, YG Studio Flex and YG Asia, which were also losing money.
Comprehensive settlement of the 2020 G-list women’s teams
At this point in time, YG’s deficit management is not as it is now, but YG established the North Korean Exorcist Co., Ltd. last year. At the beginning of this year, the Korean drama “The North Korean Exorcist” was suffering from excessive Chinese elements. Many Koreans resisted, and Shanghai Weiying, the third largest shareholder in the annual report in mid-March, took advantage of the high stock price and cashed out. I don’t know if YG will stop entering the film and television industry in the future and reduce the number of popular women’s groups in Weiying. The number of “appears” in the top search.
Why are the four major societies able to minimize the decline in sales in 2020 when performance income plummets?
From the results, the albums, sound sources and online performances of the three clubs other than SM are highly substitutes for offline concerts that are missing under the epidemic. There are many reasons for this result, which can be summarized in three points: First, , The continued globalization of K-POP has led to an increase in overseas sales, and the reduction in performances has caused consumers to “remove the east wall and make up the west wall”. Therefore, the album sales of the four companies and the entire industry have soared, which can partially make up for the income from the performance. ; Secondly, the sales process was quickly online due to the impact of the epidemic. Weverse, Beyond LIVE, etc. expanded the income channels of brokerage companies. Fans are also willing to consume and experience on fresh online platforms out of trust and love; finally, cost control and a child’s career Ministry management and rational investment have also improved the company’s performance. YG, JYP and SM have also taken some actions to do this relatively well.
The new group is the only criterion to test whether the company is dead
In 2020, HYBE, JYP Entertainment, YG Entertainment, and SM Entertainment launched Enhypen, NiziU, Treasure, and Aespa respectively. Among them, NiziU and Treasure are large groups with a large number of people, and Enhypen and Aespa are small and medium-sized groups with a small number of people. .
The four major clubs will debut groups in 2020
Enhypen was built by Belift Lab, a joint venture between CJ ENM and HYBE. Among the seven, there is one Japanese member and one American member. NiziU is all Japanese. It is a collaboration between JYP and Sony Music Japan, and is mainly active in the Japanese market. Four of Treasure’s 12 members are Japanese. Due to the epidemic restrictions, although regular Japanese albums have been released, the main activity market is still in South Korea. The Aespa four have a Japanese member and a Chinese member, in addition to virtual members.
From the fact that the number of Japanese idols that debuted last year is far greater than that of the members of China and the United States, it is enough to see the importance of the Japanese market to the K-POP industry. The fourth quarter sales of NiziU in the industry contributed about 5 billion won. The projection of operating profit of 1.5 billion won is also proof.
However, China and North America are still the top priorities of Korean idol groups going overseas. This is not difficult to observe from the new group plans of the four major clubs this year and next. In terms of quantity, the number of new groups planned by HYBE and JYP is larger, and the former is the most.
Overview of the new delegations of the four major clubs in 2021-2022
HYBE has five new groups under planning. In 2021, the focus is on the women’s groups. First of all, Source Music’s new girls’ group. It is worth observing what role Min Hee-jin, who is born in SM, will play in the planning of the new girls’ group; It is the female version of Enhypen, which is cooperating with CJ. However, Mnet’s focus this year is on the Chinese, Japanese and Korean girl group selected through “Girls Planet 999”. The debut time of the Belift girl group is likely to be postponed to the first half of next year. This is followed by 2 men’s teams and 1 women’s team in 2022, respectivelyIt is the junior group of Big Hit Music’s TXT, the new boy group for the global market cooperating with HYBE and Universal Music, and the new girl group planned by HYBE Labels Japan.
JYP Entertainment has also begun to attack outside the local market. In the first half of this year, it will launch a new boy group cooperating with Uncle Bird. Except for the group that sticks to the local area, the remaining three groups are all overseas. They will be launched in the second half of this year. Project C focuses on the Chinese market. It is possible to start activities through its subsidiary Beijing Jieweipin or Panling Culture. Later, in 2022, it will launch the male version of Nizi Project and the new American women’s group that the founder Park Jinying is thinking of.
Summary of JYP New Mission Project
Unlike HYBE and JYP, which have full firepower, there are not many new groups from SM and YG. YG may launch a medium-sized girl group with a slightly larger number than BLACKPINK. The company has applied for patents including Baby Monster and its abbreviation. It is rumored that this will also be the first new girl with Chinese members since YG debut. group. SM has launched a new girl group Aespa last year. Therefore, apart from the girl group of its subsidiary Mystic Story, only one boy group is planned. It is reported that the script obtained by the new boy group is a new project outside the NCT system.
Judging from the above-mentioned new regiment plan, Park Jinying, Fang Si Hyuk and others still very much approve of Lee Soo Man’s “Three Steps of the Korean Wave” strategy.
Before 2020, only SM, JYP and Tencent Entertainment will conduct preliminary “testing” through NCT and Boy Story. Last year, NiziU, which was specifically targeted at the Japanese market by JYP, is expected to become the “second TWICE”, allowing the four major companies to see the realization. The hope of this strategy, HYBE and JYP are accelerating the implementation of this strategy, especially HYBE, which has the most cash flow among the Big Four.
In addition, SM’s NCT was also fine-tuned in the middle of last year. The NCT Dream’s temporary departure has strengthened the NCT system’s regional concept. Perhaps the Thai team and the Indonesian team that the author has not mentioned will have news in the next two years. Came out.
The four major clubs and IT giants have joined forces to reorganize. Is the Korean entertainment idol industry going to change?
In recent years, South Korean Internet platforms are accelerating their intrusion into the Korean entertainment circle.
By NThe large Korean conglomerates represented by aver and Kakao no longer regard the content industry as a sideline business that can be easily ignored or strategically abandoned, but as an important component of the group’s business, and it is even a contested area in certain subdivisions.
CJ, which was the first to lay out the industry and integrate the industrial chain, regards the entertainment media business as one of the four major business groups of the group. As early as 2011, CJ integrated a number of companies into CJ E&M, but at that time and earlier it paid more attention to the film and television industry. At the beginning of 2018, it decided to merge CJ E&M and CJ O Shopping into the current CJ ENM. The “entertainment lifestyle” platform-level enterprise that HYBE is now practicing was first proposed by CJ ENM three years ago.
The four major businesses of CJ Group
At the end of last year, half of the 600 billion won share swaps completed by Naver and CJ Group involved the entertainment industry. It is not difficult to see that the area where Naver and Kakao directly compete is the neighboring film and television industry of K-POP, that is, how to integrate their own platforms. Net text and net comic IP are developed into movies and TV series.
As far as the music industry is concerned, the two Korean Internet giants have different entry ideas and depths. Naver, who came later, tends to form alliances with leading companies, while Kakao is formed through the merger of Kakao Page and Kakao M through Kakao Entertainment. Build a closed-loop ecology.
At present, Naver plays the role of industry infrastructure in the K-Pop industry. It does not directly participate in the creation of idols itself, but as a technical supporter to help YG Plus carry out music distribution, Weverse and other content circulation. For the “marriage” of HYBE and YG Entertainment through YG Plus, Naver may also play a role as a matchmaker.
Naver’s album and sound source distribution business is directly carried out by YG Plus. Currently, HYBE’s music circulation is also shifting to YG Plus. In terms of emerging fan communities and online performance platforms, Naver bet on HYBE and SM respectively. Naver’s V Live platform, which went online in 2015, also safely merged with Weverse, a fan community developed by HYBE subsidiary Benx. The combined Weverse Company holds only 49% of the shares.
As for the strategic cooperation and investment target SM Entertainment in 2020, Naver did not cooperate with BeyOnd Live Corp. achieves a controlling stake, but holds 7.5% of the shares of Stream Media, the largest shareholder of BLC. In addition, the three agencies other than SM have also invested in Naver Z, a developer that owns the avatar APP Zepeto, and some artists have also appeared on Naver NOW.
According to statistics, in the past four years, the equity exchange and investment scale between NAVER and YG Entertainment, SM Entertainment, HYBE, CJ ENM, and Studio Dragon totaled 900 billion won.
Compared with Naver, which is like the leader of the four major K-POP agencies, Kakao, which directly controls many planning agencies, has a strong desire to control. It is a direct competitor of the four major agencies, and its small and medium-sized planning agencies such as Starship and PlayM. It is also operating existing groups and planning new groups. In the past two years, Starship’s performance has also been good, and it is expected to be the same as RBW, CUBE and other companies, and it is likely to occupy a place in the next generation of Korean group competition.
In addition to the music distribution business with the largest market share, Kakao has also begun to attach importance to the creation of music-derived content and the construction of fan community ecology. Following the establishment of Kakao Entertainment on March 1, Kakao recently decided to spin off Melon Compay in the middle of this year to strengthen the distribution of video and image content. In addition, NCsoft, one of the three largest game companies in South Korea, launched the fan community Universe at the beginning of the year, and its executives also include Shen Shilan, an executive of Starship Entertainment, a subsidiary of Kakao Entertainment. Public information shows that NCsoft’s shareholding ratio in Universe development company Klap is 66.7%.
Including the spin-off of Melon Company, Kakao’s hastily reorganization of the entertainment business organization was greatly influenced by its biggest competitor, NAVER. A relevant person in the industry said: “Recently, the entertainment united front centered on NAVER has been established, and the most urgent place may be Kakao.”
Naver GIO Lee Hae Jin and Kakao Chairman Kim Beom Soo
Under such a general background, the K-POP industry has initially formed an industry pattern of music distribution, fan community and online performance platform competition. Even the four major clubs that themselves stand in Naver, there are also “small hills” inside. head”.
As a battleground for warlords, the big change in music distribution is that Dreamus Company, backed by the largest shareholder SKT and the second largest shareholder SM, just lost HYBE’s distribution business at the beginning of this year. It should be noted that the sales volume of BTS’ albums is higher than that of SM. The agency, which has the largest market share in 2020, may lose its position as the number one album release this year.
The brokerage estimated that after Dreamus Company switched to YG Plus, the music circulation of HYBE artists will bring real revenue improvement room to publisher YG Plus. Perhaps YG Plus’s deficit in 2021 will be greatly reduced or even turned into profit.
KakaoM, which owns Melon, the number one music platform in the Korean market, will continue to use Kakao Entertainment’s new face with the Melon Company established on June 1, 2001 to maintain Melon’s dominant position with its subsidiaries and many copyright partnerships. And continue to expand its influence.
South Korean entertainment industry pattern
In addition to traditional music production and distribution, the competition between the dedicated K-POP fan community and the online performance platform is also fierce.
Currently, the fan community is showing a three-way scuffle between HYBE’s Weverse, NCsoft’s Universe, SM’s Lysn, and Bubble. Following SM’s first online performance platform Beyond LIVE in May last year and bringing in JYP, Venew LIVE launched by KBYK Live, which HYBE holds 59.1% of, also chose to join hands with YG at the beginning of this year, contacting JYP also using SM’s Bubble, SM and JYP , HYBE and YG are really warming up the group.
After successively joining popular singers and FNC entertainment artists under Universal Music, YG officially announced that Treasure will enter the Weverse community on March 29. Based on the previous year, a total of 328 billion won of products and contents were settled through Weverse, which exceeded 40% of HYBE’s total sales.It is expected that with the addition of YG, FNC and UMG artists and the merger of V Live services, the sales of Weverse settlement will increase further.
SM’s most troublesome thing is that we can’t compete with Lysn of Univese. There are not many companies joining the BUBBLE service, which features one-on-one chats between fans and artists, only SM, JYP, FNC, and Jellyfish. At the beginning of this year, the “Happy Korean New Year” turmoil occurred, which aroused a lot of disgust within the fan circle and public opinion. According to the MAU data in February, Lysn’s market share of 11.66% is not as high as that of Weverse (not counting V live) of 36.85%, and the Universe, which has been complained without a new launch, is as high as 19.8%.
Lysn speech controversy
From the perspective of the artist lineup, if SM’s Lysn is tentative, it is only gradually adjusted and perfected by the artists of the company and close companies. After absorbing V Live, Weverse of HYBE will focus on the company and YG, and focus on the four major clubs. In order to attract as many artists from small and medium companies as possible, the Universe launched by NCsoft at the beginning of this year focuses on small and medium planning agencies. IZ*ONE, (G)I-DLE, AB6IX, The Boyz, Jiang Daniel, etc. have already settled in.
At the beginning of this year, the content platform cooperation business agreement signed by CJ ENM and NCsoft also mentioned that Universe will serve as the official operating platform of “Girls Planet 999”. In addition to global voting for the selection of debut channels, it will also operate more Kind of digital content and services for fans around the world.
However, according to current feedback, excessive commercialization may also have negative effects. The Private Call voice of Universe’s paid service and idols is unnatural. Some fans think that this kind of machine-synthesized voice is unpleasant and belongs to “no idols.” Idol content”. South Korean popular culture critic Kim Hyun-sik pointed out that fans like stars from their hearts rather than fake feelings. They are longing for real characters. AI cannot fully reproduce the characters, but destroys the image of the characters.
As the epidemic continues for a long time, it is difficult for artists to communicate with fans at close range. Fan communities and online performance platforms that can help enhance the relationship between fans and artists are crucial. Nowadays, big companies join hands in head entertainmentThe company’s vigorous entry into the fan market is inevitable. With the continuous expansion of global fans, the online platform that distributes K-POP content to fans around the world will surely become a fierce battlefield for the TOP of the 4th generation Korean group.
All major entertainment companies want to decide on their own business to determine the circulation of content. As the four major companies and IT giants jointly promote industry restructuring, the “gap between rich and poor” under the new K-POP map has gradually widened, and capital strength is weak. Where do small and medium-sized companies stand?
Conclusion
Last year, the total income of the four major Korean entertainment agencies was nearly 1.8 trillion won. In addition to traditional income such as albums and music sources that are not low in proportion, the epidemic accelerated their production and circulation of idol-derived content. With the idea that platforms such as fan communities can create more revenue, the four major societies have made a lot of investment. From the perspective of replacing fan meetings and concerts before the epidemic, this idea is highly feasible.
However, the results of 2020 are in the past. Who can build a new group comparable to BTS, TWICE and BLACKPINK, including the four major companies, is the driving force for K-POP to move forward. The four major companies and small and medium-sized companies agree on this Know well.
In the next two years, will the new plans of the four major Korean entertainment companies draw cakes to alleviate hunger, or will they gradually prove the success of the Korean Wave localization strategy? Let the bullet fly for a while. There are still many uncertain factors in the direction of the K-POP industry in the future. Even in the four major societies, no one can guarantee that they will be the one who has the last laugh.