SM Faces Financial Challenges with 38% Sales Decline, HYBE Maintains Strong Performance Despite BTS Enlistment
SM’s financial results for the fourth quarter of 2023 are expected to fall below market expectations. On the other hand, HYBE, which lost to Kakao in the SM acquisition battle, is anticipated to achieve strong results despite the setback of all BTS members’ military service.
According to the entertainment industry on February 6th, among the Big 4 (HYBE, YG, SM, JYP), SM will be the first to announce its financial results on February 7th, with HYBE scheduled for February 26th.
Experts predict that SM will record sales and operating profits of KRW 2,276 billion and KRW 178 billion, respectively, for the fourth quarter of 2023. This represents a 12% and 21% decrease compared to the previous year, especially with operating profit significantly below the market expectation of KRW 336 billion.
SM’s decline in revenue is attributed to the impact of negative factors from China. Particularly, the album sales of aespa, a group with a significant Chinese fandom, fell below expectations due to a decrease in Chinese bulk purchasing.
Both album and concert sales were sluggish. While NCT 127 and aespa recorded sales of over 1 million for their albums in Q4, the total sales of new albums for the quarter reached only 5.57 million, with concerts held only 20 times. These figures represent a decrease of 38% and 57%, respectively, compared to the previous quarter.
The slow growth of SM is also causing headaches for its parent company, Kakao. Despite successfully acquiring SM amid fierce competition with HYBE, SM’s stock price has not shown signs of recovery due to poor financial performance.
On the other hand, HYBE is expected to solidify their position as Korea’s leading entertainment company. HYBE is estimated to see a 20.%, 72% increase in sales and operating profit for Q4, reaching KRW 6,402 billion and KRW 875 billion, respectively.
Considering that HYBE’s main contributor, BTS, is currently in military service, this performance is considered quite impressive.
The strategy of sequentially enlisting members to minimize the impact during BTS’s military hiatus has been effective. The diversification effects of top groups such as NewJeans, SEVENTEEN, and TOMORROW X TOGETHER have also played a significant role.
For JYP, it is projected that the sales and operating profit for Q4 will increase by 32.20% and 80.16% to KRW 1,523 billion and KRW 463 billion, respectively, thanks to the success of ITZY and Stray Kids.
YG is estimated to experience a 19.04% and 46.50% decrease in sales and operating profit for Q4, reaching KRW 1,012 billion and KRW 84 billion, respectively.
The failure to renew individual contracts for BLACKPINK members and the absence of major artist activities other than BLACKPINK have significantly impacted the company.
Source: daum
