K-Pop as a global business
South Korea is the entertainment capital of East Asia and the Korean entertainment industry brings home high profits from multiple channels, such as i) entertainment shows; ii) tv series and soap operas; iii) big budget movies and more. The biggest money makers in South Korea’s enormous entertainment business are the Korean Pop (K-Pop) artists and bands.
Image credit: Korea_KPOP_World_Festival_61 by Korea.net
The elaborate mix of teen idols, breath-taking choreography and modern groovy music makes K-Pop the most popular go-to music genre of East Asia. – The industry reported a revenue of 4.7b USD for 2017. Social media provides millions of listeners and clients of this form of entertainment from all over the world easy access to K-Pop, that benefits not only from ticket sales, but also from other forms of cross sales. From merchandise to product placements, and from commercial promotions to prime-time TV slots, the Korean entertainment industry is indeed an expert in exploiting the popularity of trending bands to enjoy an unparalleled return on investment.
The key industry leaders usually have flagship performers who are their biggest sources of profit, but as is the case with the top earning entertainment company, success can be replicated more than once. The undisputable proof that a company has attained the status of an entertainment mogul is its IPO. Most Korean industry leaders have concluded successful IPOs, with some dating back to 2003, highlighting the bankable status and opportunities the industry has to offer.
Below is a summarised version of the commercial journey of the top Korean entertainment companies for 2017.
- SM Entertainment – With popular flagship “brands” such as Super Junior, BoA and EXO, the industry leader has been gaining international attention and attracted a US$30m investment by Alibaba in 2016. The global reach of SM Entertainment can be easily confirmed from the popularity of their YouTube channel. With 90% international subscribers and serious commercial exposure, SM Entertainment’s net worth for 2017 is a whopping US$1.2billion. SM Entertainment went public on Nasdaq in late 2003 and is now aiming at an IPO in China.
- YG Entertainment – This company tries not only to dominate the Asian market, but also penetrate the lucrative and ever so popular US market. Backed by strong investments from both US and Chinese media giants, YG Entertainment is home to popular bands such as Big Bang, G-Dragon and CL. The company managed to bring just over US$900m in 2017, catching up rapidly with the market leader. In 2011 the company priced its shares lower prior to their IPO because of a drug scandal, however, due to its popularity and high consumer expectations the shares enjoyed strong purchase interest.
- Big Hit Entertainment – The company itself may not be the biggest name in the K-Pop business, but it manages the most popular Korean boy-band BTS.BTS has managed to dominate the Korean music scene with its authenticity, fresh and meaningful content, and the ability of the members to establish connections with their fans. This sort of personalized outreach is what has helped them top the international charts and establish themselves as a household name in K-Pop since 2013. As of 2017, BigHit reported over 170% rise in profits, and bagged a cross-industry investment of UD$190m from the Korean gaming giant Netmarble. With such a phenomenal record, the speculations of the company going public are at an all time high.
For an industry which started out in the 1990s and has continued to grow well into the 21st century, K-Pop is here to stay. Major Korean telecom players are involved in the entertainment industry, and in fact have undertaken the charge of creating K-Pop idols from scratch. This all means more opportunities for a variety of business activities, such as health and fitness, merchandising, media and publicity, talent development, event management, advertising, food and beverage, fashion, and so on.
The small size of the South Korean markets guarantees high incentives for expansion across the world which will continue for the foreseeable future. Considering the appeal and the popularity of everything K-Pop, especially amongst the millennial population, the industry is yet to reach its zenith and will continue to attract further foreign and national investment.