HYBE saw a revenue increase of 3.1% to 640.5 billion won, but its operating profit fell sharply by 37.4% to 50.9 billion won compared to last year. JYP Entertainment’s revenue reached 95.7 billion won, yet its operating profit dropped by 79.5% to 9.3 billion won.
YG Entertainment‘s revenue was 90 billion won, but it experienced an operating loss of 11 billion won. SM Entertainment‘s revenue increased by 6% to 253.9 billion won, though its operating profit decreased by 31% to 24.7 billion won.
This financial downturn is largely attributed to a decline in overseas performance. K-Pop album exports, which had been growing steadily since 2015, fell by 2% in the first half of this year to 130.32 million USD. Additionally, Circle Chart reported a 14.9% decrease in K-Pop album sales within the top 400 rankings during the same period.
Analysts are divided on the causes. Some suggest this downturn is a natural correction after a period of rapid growth, while others believe the temporary absence of major artists like BTS and BLACKPINK might be a factor, with hopes that their return will boost the market.
The industry’s reliance on a few high-profile artists raises concerns about long-term sustainability, especially with no new mega IPs emerging to replace BTS and BLACKPINK. Critics argue that the focus on short-term gains through inflated sales and aggressive marketing tactics may alienate fans and undermine the industry’s future.
Further complicating matters are scandals and controversies. HYBE has faced issues including a public dispute involving its subsidiary ADOR, Chairman Bang Si Hyuk’s personal controversy and BTS Suga’s DUI incident, all of which have impacted its stock price. SM Entertainment is under investigation for alleged price manipulation during its acquisition by Kakao.
In response, securities firms have lowered their target stock prices for these entertainment companies. Target prices for HYBE have been reduced by 5-13%, setting it at 240,000-300,000 won. SM Entertainment’s target prices have been lowered by six firms, with the lowest at 96,000 won, while YG Entertainment’s target price averages 47,750 won. JYP Entertainment also saw its target price downgraded to around 70,000 won.
Experts stress the need for the K-Pop market to focus on discovering new mega IPs to succeed BTS and BLACKPINK, and to reconsider marketing strategies that prioritize commercial success over artistic integrity. As one insider noted, “Marketing that loses sight of its core essence will eventually be rejected. In a market where fan loyalty is increasingly fickle, causing fatigue and financial strain could lead to the collapse of the K-Pop fanbase.”
