Big hit IPO: BTSA made its music label a huge success. But business is risky

But Big Hit Entertainment’s extreme reliance on BTS can be as much a liability as an asset.

According to data compiled by Delllog, the company raised about 63 963 billion (40,840 million) by selling shares in its initial public offering, making it South Korea’s largest IPO since July 2017.

The initial reception was very positive: the stock opened at 270,000 wins (23 236) on Thursday, above the IPO price of 135,000 wins (11 118) each. They last traded at 301,000 wins (3 263).

Before the trade began, the Big Hit was valued at 8. tr trillion won (૧ 1.1 billion), making it more valuable than the country’s three largest listed record labels. And that’s almost entirely thanks to the meteoric rise of BTS. The group accounted for 97% of Big Hit sales last year.

While the BTS has broken down in such a way that no other South Korean act has endangered anyone before this.

Relying on the constructive output of any celebrity talent ranges from a number of potential problems ranging from scams to unforeseen mishaps. But there is a unique complication in the BTS that could threaten the business: South Korea orders for more than a year of military service, and group members are approaching the deadline for registration.

The group that accelerated the rise of the Big Hit

Prior to their emergence, South Korea’s music industry was dominated by three music labels – JYP Entertainment, SM Entertainment and YG Entertainment, featuring K-P’s biggest acts, including Girls Generation, Saturn, GOT7, Big Bang and PSY.

But BTS, Sean Beyond Scene was an acronym Created by Big hit many small. The label was founded in 2005 by producer Bang Si-Huk, also known as “Hitman” Bang.

In the seven years since their inception, BTSA has broken records and become an undisputed force in the industry. They have sold more body albums in the United States this year than Harry Styles, Billy Ilish or Justin Bieber, and are the first group from South Korea to reach the U.S. Arena sold out and won the Billboard Music Award.
And their race to the top of the Billboard Hot 100 charts – they were the first South Korean act to do so – contributed an estimated 1.7 trillion won (billion 1.5 billion) to the South Korean economy, boosting tourism and increasing South demand. According to the Korean Ministry of Culture and Tourism, Korean products such as cosmetics and food Research Institute.

The success of the group has changed Big hit luck. Last year, Big Hit sales reported 587 billion won (5 512 million) – more than double last year’s total.

But it also highlights the need for big hits for diversity.

“Big Hit Entertainment has 90 percent of its revenue from BTS, so there is a risk,” said Park Ju-gun, a business analyst with corporate score firm CEO Score. “But it has begun to shift its revenue structure to a multilingual portfolio.”

Over the years, the company has acquired other music labels so that it can bring more action and enter with Boibtand TXT, or Kale X Tugier. Bing Hit also launched a platform called WeWor, in which fans can view only content and send messages to their favorite artists – a service that sets the company apart from other major labels, said Gin In-Hay, an analyst at Hunwa Securities firm.

How a South Korean boy band became the largest in the world

The changes have not been radical. According to the company’s IPO prospectus, released in September, BTSA has sold about 88% of sales in the first half of this year. And there is no guarantee that new groups will repeat the success of BTS.

“We don’t know if there will be any other group that can achieve the level of popularity of BTS,” said Cedarboof Saji, a University of Indiana Bloomington professor and K-pop expert.

Imminent military service and other hazards

The BTS, meanwhile, could soon face a major hurdle: compulsory military service.

In South Korea, almost all healthy men are required to enlist in the military and serve for 18 months. People may delay their service for reasons including higher education or special training until they reach the age of 28.

The oldest member of the BTS, Kim Seok-jin – also known as Jin – turns 28 in December, while rapper Suga, whose real name is Min Yoon-ji, turns 28 in March.

Big Hit has acknowledged that military duty is a risk for investors. But the company also hinted that the band still has some time left: Big Hit told CNN Business that Jin has enrolled in a graduate school program. That would allow him to delay his 29th birthday in 2021, according to South Korean law.

Whether BTS and other pop groups should complete their full term has become a matter of national debate. Unlike other artists, Classical musicians And sportspersons, top K-pop stars can’t get rid of full military service.

Why has the last decade seen the rise and rise of East Asian pop culture?

“The value of the Korea Wave and their contribution to our country cannot be overestimated,” said Noah Wong-re, a member of the ruling Democratic Party, at a meeting of the National Assembly earlier this month. “Now is the time for us to discuss how these proud young men can serve our country.” The country’s parliament is considering a bill that would delay K-PAP groups in military service for the next two years beyond the current deadline.

Written rules, however, can disrupt a group for years.

It is possible to have more solo projects – although the group works better as a unit.

Is BTS Incredibly enthusiastic Releasing eight studio albums in seven years with extensive music videos, candid vlogs, behind-the-scenes videos, mini-series, solo projects, mix tapes and television appearances.

Korean K-pop fans use their disappearing statues for military service, but these will be BJTS territories for international fans who were introduced in style by BTS. Indiana University professor Saiji said it could mean an “uncomfortable transition period”, although he is hopeful that fans will remain loyal to BTS in his absence.

Big Hit also noted the group’s reputation as a potential risk in filing.

Other labels are struggling with the scam. Last year, YG Entertainment’s stock plummeted after one of its members, Big Bang, was investigated for several charges, including violating South Korea’s prostitution laws. Member, Singri left the industry and was charged in January this year with prostitution and re-gambling. According to his former lawyer son Byang-ho, Singri has claimed that he is innocent except for one violation of foreign exchange trading law.

“There are some things that hurt the company from a depth, and we’ve seen that through YG Entertainment,” said Saiji.

Saiji added, “One should not invest in the creativity of the artists and their connection with the fans without realizing that something can happen there.” “This is not a get rich scheme.”

Members are also encouraged to avoid doing anything to endanger the group. Each of them received shares of Big Hit in Hit Gust which is now worth millions of dollars due to the IPO.

The best way to maintain stocks is to work and live as a group of seven members, Saiji said.

What does the future hold?

Despite the dangers, Big Hit has many reasons to be happy with its superstars.

Although the coronavirus epidemic forced BTS to cancel a world tour this year, the group has become even more popular.

In June, the band performed a live concert called Bang Bang Con, which drew more than 750,000 fans from around the world. The event earned him a new Guinness World Record title for most of the spectators of the live streaming concert.

“What they present in terms of positivity is so fully absorbed for the moment that we are living,” Saji said. Saji said.

The continued popularity of BTS has saved the bottom line of Big Hit during the epidemic. Jalsa’s revenue fell by almost 99% in the first half of 2020 compared to a year ago. But album sales increased by 80%. Compared to last year, the overall income has decreased by only 8%.

“If the company is now valued in the midst of an epidemic, there will be an opportunity to gain even more momentum after the epidemic next year,” said Park, a CEO score analyst.

– Joh Yunji, Yunzhang CO and Gawan Bae contributed reporting from Seoul.