SM Entertainment kicks off SM 3.0 era in earnest with aespa’s successful comeback
The girl group aespa announced a successful start for SM 3.0 era.
Released under SM 3.0’s ‘multi-production center system’, aespa’s third mini album “MY WORLD” exceeded 1.8 million pre-orders and surpassed 2 million copies within only two weeks. Compared to aespa’s previous promotions, the sales were 394% and 121% higher than the record of the first mini-album “Savage” (510 copies) and the second mini-album “Girls” (1.65 million copies).
aespa’s achievements are evident in various aspects, such as being the top-selling K-pop girl group on the first day of album release, achieving the highest first-week sales among girl groups, ranking first on major domestic and international album and music charts and winning four music show trophies. Introducing a new concept and music style, aespa received explosive reactions from not only their core fandom but also domestic and international K-pop fans.
Following their album promotional activities, aespa has been actively engaged in various events, such as being the first K-pop group to attend the Cannes Film Festival and holding a global concert tour in the U.S., Europe, and Asia. According to ‘SM 3.0’ strategy’s “expanding global fandom” category, aespa is planning to carry out more active activities, such as album releases and promotions, targeting the North American market in the second half of this year.
Successfully opening the SM 3.0 era starting with aespa’s grand comeback, SM Entertainment released a public announcement on May 26th, pointing out the five key strategies as core investment points. The strategy includes establishing its advanced corporate governance structure, introducing a multi-production center system, maximizing IP value through business collaboration with Kakao, investing in publishing business & label acquisitions, and introducing a shareholders’ return policy based on optimal capital structure. Through the notice, SM expressed their confidence in the SM 3.0 strategy as well as their strong will to pursue it.
Regarding the establishment of an advanced corporate governance structure, it is based on the operation of various committees, such as the Compensation Committee, Outside Director Recommendation Committee, Internal Transactions Committee, and Governance Committee, with outside directors serving as the chairpersons of all committees, in parallel with the Board of Directors. The goal is to establish an evolved corporate governance structure to manage the company as a “global entertainment company that focuses on the interests of artists, fans, shareholders, and employees.”
The introduction of a multi-production center system is the key element of the SM 3.0 strategy. Through five newly established production centers, continuous business performance will be ensured, and measures will be taken to maximize IP profitability. In this process, through the business collaboration with Kakao, both companies will complement each other’s strengths and weaknesses in the IP business to enhance the value of IPs as well as create new business opportunities.
In addition, SM Entertainment plans to expand its IP production capabilities through the acquisition of external labels and the establishment of specialized music publishing subsidiaries. SM is also expected to manage capital structure by utilizing sequential deposits at 0.5~1 times separate operating income, implementing an investment policy based on the target required rate of return that proceeds with investments when the expected shareholder return rate exceeds the target required rate of return as well as setting a target financial structure and utilizing excess cash for shareholder returns.
These five key factors of the SM 3.0 strategy aim to faithfully fulfill SM’s vision of taking a big leap towards becoming a “global entertainment company centered around fans and shareholders.”
SM Entertainment’s CEO Jang Chul Hyuk said, “The SM 3.0 strategy is not merely focused on expanding profitability but also aims to pursue an advanced corporate governance structure, making it the most exemplary growth strategy in the entertainment industry”, adding “Through the synergy created by the IP & IT collaboration with Kakao, we will demonstrate SM initiatives that lead the development of the entertainment industry.”