Aespa Shaken by Karina’s Dating News, Aiming for Spectacular Comeback

As major idols begin their ‘cherry blossom comebacks,’ major entertainment companies are expanding their activities after struggling for a while. Traditionally, the first quarter, which sees fewer album releases, is considered the industry’s offseason. However, within the second quarter, popular artists like aespa, NewJeans, and SEVENTEEN have scheduled relay album releases, and activities of rookie artists from each company are gaining attention. The early part of the year witnessed a depressed investment sentiment in the entertainment sector due to the slump in target stock prices. However, there has been a gradual recovery in investment sentiment.

According to the entertainment industry on the 9th, HYBE is resuming album activities with the 5-member boy group TOMORROW X TOGETHER (TXT) on the 1st, followed by boy group SEVENTEEN on April 29th, and girl group NewJeans on May 24th. According to Hana Financial Securities, HYBE’s operating profit for the first quarter is expected to decrease by 78% year-on-year to 11.5 billion won. This is because there were no significant activities apart from the comeback of Leserap and BTS’s J-Hope. However, the atmosphere is different in the second quarter. According to research by Hana Financial Securities’ Lee Ki-hoon, “This quarter, with the U.S. and Japan tours of TXT, SEVENTEEN, and ENHYPEN, is expected to attract 800,000 spectators,” and “earnings are expected to reach an all-time high operating profit of 93.7 billion won, a 15% increase year-on-year.”

SM Entertainment’s girl group aespa is in the midst of final preparations for their regular album comeback next month. The aftermath of member Karina’s public relationship, which was considered a major risk, is evaluated by the securities industry as potentially offsettable by new fandom inflows. SHINee, Red Velvet, and NCT Dream’s “The Dream Show” world tour recruitment next month are also anticipated factors. According to NH Investment & Securities, earnings are also expected to rebound from an operating profit of 24.4 billion won in the first quarter to 41.9 billion won in the second quarter.

YG Entertainment and JYP Entertainment are aiming for a recovery through rookies. YG Entertainment’s rookie girl group BABYMONSTER, which debuted on the 1st, sold over 400,000 albums in the first week. This is the highest record for a domestic girl group’s single album. With BLACKPINK members’ individual contract renewals falling through, YG Entertainment’s annual sales are expected to decrease by 15%, but it is considered an alternative for defending performance. Lee Hwa-jung, a researcher at NH Investment & Securities, said, “More than half of the initial sales come from China and Japan, and it is expected that the dependence on BLACKPINK will be eased.” JYP Entertainment is launching a Japanese-localized boy group ‘NEXZ’ in Japan. It is a 7-member group jointly established with Sony Music Japan, and it is evaluated that they already have fandom and purchasing power as they were born through audition programs.

The first quarter is traditionally considered the offseason of the entertainment industry, but the market view on the entertainment industry in early 2022 was particularly harsh. There were concerns that the profitability based on the Chinese “core fandom” had reached its limit, and as a result, stock prices fell by an average of 24.6% for the four companies. Concerns about a decrease in Chinese group buying sales were also significant. According to KB Securities, last month’s tentative album exports to China decreased by 92.5% compared to the previous year due to the impact of China’s entertainment industry “clean-up movement” (the Communist Party’s policy to limit digital music purchases). It is analyzed that the decrease in Chinese tourists also led to a decrease in album consumption through group buying.

“Light fandom” and expansion into the Japanese and North American markets are considered new alternatives. Unlike the “core fandom,” which has a high purchase frequency per capita driven by competition, the “light fandom” refers to fans who consume music lightly. HYBE, which has shown its presence on global streaming platforms like Spotify, is particularly focusing on expanding this strategy abroad. Their music revenue is 298 billion won, and 86% of it comes from overseas, mainly centered on North America and Japan. Recently, during a conference call, HYBE’s CFO Lee Kyung-joon emphasized, “As physical album sales decrease, we will create a new business model to increase the accessibility of light fandom.” Concert activities abroad are also intense. JYP Entertainment also recorded its highest album sales in Japan in five years, exceeding 2.99 million copies last year. Their goal is to expand local activities from the second quarter and collect 62% of the annual concert attendance (1.9 million people) in Japan.

The investment industry is also paying attention to the impact of changes in fandom. The stock prices of the four entertainment companies that declined in the first quarter have recently shown signs of recovery, with HYBE (+6.65%) and SM Entertainment (+2.77%) showing some recovery over the past month. An executive at a certain asset management company said, “It is a well-known fact that the annual performance of the entertainment industry, centered on the first and third quarters of this year, is not good. However, the only expectation is the second quarter with an increase in new album releases,” and “due to uncertainty about first-quarter performance, investors who have delayed buying are expected to confirm the ‘bottom’ of the results to be announced soon, leading to a phase of price recovery.”