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Reasons why the K-pop industry should look at the recent “BTS situation” as a lesson

Global boy group BTS recently announced their hiatus from group activities and the aftermath was tremendous. Major foreign media outlets reported it in breaking news, proving BTS’s influence.

As rumors and speculations began to spread and intensified, BTS members and their agency HYBE hurriedly revealed their positions to put off the fire. They strongly denied rumors of BTS’s disbandment and emphasized “Group activities and individual activities will be carried out at the same time”. This means BTS will not only focus on individual promotions.

In this regard, people in the industry claimed “This is not the time for us to feel sad”.  With BTS announcing the temporary suspension of group activities, arguments saying the industry should analyze and respond to the impact of this decision are being weighed. This is because BTS are no longer just “famous singers”. BTS is currently the most valuable content in K-pop history with the power to dominate the entire K-pop market.

BTS

#HYBE without BTS’s activities, will they be able to continue their rapid growth?

On June 15th, one day after BTS announced their group activity hiatus, HYBE’s stock price plummeted. Their market capitalization of about 2 trillion won evaporated and they witnessed a 25% fall within a day.

The situation of HYBE’s stock price can be fully considered BTS’s impact. In addition, the fact that members Jin, J-Hope, and RM sold about 10 billion won of stocks at the end of last year was belatedly brought up and criticized. They still have shares in HYBE but the backlash from angry small investors was strong. 

However, we cannot just blame BTS for this. We can’t force BTS, who have complained of mental and physical suffering, to sacrifice more. Since the members emphasized their desire for individual activities more than “activity hiatus”, the possibility that they did not expect stock prices to fluctuate this much cannot be ruled out.

BTS

What’s more important is that we should consider the distribution of sales centering on BTS. BTS’s sales definitely account for the largest proportion among HYBE artists. In 2020, 87.7% of HYBE’s sales were achieved through BTS. Last year, HYBE’s sales increased from 790 million won to 1.25 trillion won, and BTS’s proportion decreased to 67% but the group was still the largest contributors. That’s why not only fans but the shareholders are also paying attention to every move of BTS.

However, analysts are sketching a “soon-to-come future”. If BTS members are not exempted from military service, the eldest member Jin must join the army at the end of this year. Given that BTS members enlist one after the other, it will take 7 members 5 years to complete their military service and reunite as a whole group. During that time, individual activities are inevitable. 

BTS’s hiatus announcement and HYBE’s stock price fluctuation hold huge implications for the entire Korean entertainment market. This is because most companies rely on the popularity of only a few of their stars. The company is not run by a system but humans are the content. While a company’s value soars when its artists gain popularity. This also means if unsavory events or accidents occur, the damage will be severe. Such companies are likely to be shunned by investors. In order for the K-pop market to become an engine and a sustainable industry to promote Korea in the future, the situation this time situation should be considered.

#Platform – an assignment for the stability of the K-pop industry

The platform industry is relatively stable since it’s like a basic structure. However, initial investment costs a lot. Only when the structure is established can content be loaded into it. So far, the K-pop market has not put much strength in building platforms.

Take the film industry as an example. Excluding the film development fund (3%) and value-added tax (10%) from the total sales, half of the remaining amount will be taken by theaters. In fact, the theaters contribute nothing until one film is produced. It is up to the theaters themselves whether to put a finished work on screen. Nevertheless, they still take half of the sales. It is because the film culture cannot establish itself without a platform called theater. The fact that the three major terrestrial broadcasting stations showed great influence and succeeded was thanks to their platform, which is the broadcasting transmission system.

BTS

Which K-pop agency worked the hardest to build this platform? Coincidentally, HYBE has been directly hit by this BTS situation. HYBE has declared a change to ‘IT company’ by creating ‘Weverse’. Through this community, fans can meet their stars, buy goods including albums. Weverse included singers from HYBE, such as BTS, Seventeen, and TXT, as well as other agencies. This is because it is a ‘platform’ that gathers various K-pop singers and encompasses the entire market. 

If the platform becomes solid, the industry can still withstand the instability of some K-pop singers. This is because one leak can be prevented through another K-pop singer. To compare it to the film industry again, even when the success of only two of the four major film distributors, CJ ENM, Lotte, Showbox, and NEW, is sluggish, but if the film made by two other companies is excellent, it will not be a big crisis for theaters to put all four on the screen. This is because every time they only need to put the content the public want on the platform. 

Of course, because BTS is so big, it is difficult to fill their gap with any kind of solution. However, if they attract more K-pop artists on Weverse and raise several other K-pop groups that have built huge fandom, they can minimize the damage. If that happens, the entire company will be less shaken just by the suspension of several K-pop singers.

As such, the BTS situation ironically led to the need to move away from the BTS-centered plan and reflect on the overall K-pop industry structure.

Source: Daum

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