SM’s financial results for the fourth quarter of 2023 are expected to be lower than market expectations. On the other hand, HYBE, who lost to Kakao in the SM acquisition battle, is expected to perform well despite the setback of all BTS members’ military service.
According to Entertainment Industry on February 6th, among the big four (HYBE, YG, SM, JYP), SM will be the first to release 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% year-over-year decline, especially with an operating profit significantly lower than the previous year. market expectations of KRW 336 billion.
SM’s revenue decline is attributed to the impact of negative factors from China. In particular, album sales of aespa, a group with a significant Chinese fandom, fell short of expectations due to a decline in Chinese bulk purchases.
Album and concert sales were slow. While NCT 127 and aespa recorded sales of over 1 million albums in the fourth quarter, total new album sales for the quarter only reached 5.57 million, with concerts held only 20 times. These figures represent a decrease of 38% and 57%, respectively, compared to the previous quarter.
SM’s slow growth is also causing headaches for parent company Kakao. Despite the successful acquisition of SM in fierce competition with HYBE, SM’s share price has shown no signs of recovery due to poor economic performance.
On the other hand, HYBE is expected to consolidate its position as Korea’s leading entertainment company. HYBE is expected to see a 20.% and 72% increase in sales and operating profit in the fourth quarter, reaching KRW 6.402 billion and KRW 875 billion, respectively.
Considering that HYBE’s main contributor, BTS, is currently in military service, this feat is considered quite impressive.
The strategy of sequentially enlisting members to minimize the impact during BTS’s military hiatus was effective. The diversification effects of large groups such as NewJeans, SEVENTEEN and TOMORROW X TOGETHER also played an important role.
For JYP, sales and operating profit for the fourth quarter are expected to increase by 32.20% and 80.16% to KRW 1.523 billion and KRW 463 billion, respectively, driven by the success of ITZY and Stray Kids.
YG is expected to see a 19.04% and 46.50% drop in sales and operating profit in the fourth quarter, reaching KRW 1.012 billion and KRW 84 billion, respectively.
The non-renewal of BLACKPINK members’ individual contracts and the lack of major artistic activities outside of BLACKPINK had a significant impact on the company.
Source: Daum
