The MBW Evaluate is the place we goal our microscope in direction of a few of the music biz’s greatest latest goings-on. This time, we delve into what BTS’s information of a hiatus means for HYBE’s traders. The MBW Evaluate is supported by Instrumental.
BTS shared some shock information this week that spooked traders in HYBE, the publicly-traded Ok-pop firm behind the group.
Yesterday (June 14), the Ok-Pop superstars revealed a ‘BTS Dinner Social gathering’ video on their official YouTube channel to their 67.9 million subscribers.
Over dinner, the band mentioned challenges they’re going through – and revealed that they might be taking a break to pursue solo tasks.
At the moment (June 15), in an official press launch, HYBE-owned label BIGHIT MUSIC confirmed that the group shall be specializing in solo tasks going ahead, however added that they may also stay “lively as a gaggle”.
In an announcement, BIGHIT stated: “BTS now begins a brand new chapter with new solo tasks in addition to group tasks.
“BTS now begins a brand new chapter with new solo tasks in addition to group tasks.”
BIGHIT MUSIC
“Members will take this time to realize private progress via varied new actions, and we anticipate it to additional strengthen the inspiration for the group‘s long-run as a staff.
“BIGHIT MUSIC will actively assist the artists.”
BTS member J-Hope is the primary of the group to formally kick off his solo profession with an upcoming album.
Information of a BTS ‘hiatus’ brought on HYBE’s shares to fall by practically 25% to 145,000 South Korea Received on Wednesday (June 15), wiping round $1.5 billion from the Ok-pop large’s market cap worth.
Buyers have good cause to be involved.
As HYBE’s flagship group, BTS are a key income driver on the firm, though the band’s share of HYBE’s revenues has been lessening in recent times.
Almost 90% of HYBE’s (then Massive Hit’s) revenues within the first half of 2020 had been BTS-related.
(The group was additionally a key contributor to the corporate’s 191 billion South Korea Received (approx $147m) revenues generated from concert events in 2019, and has been every year since.)
However in accordance with HYBE’s FY 2021 outcomes, BTS was liable for practically a 3rd of the corporate’s album gross sales (and AES streams) within the US market final 12 months.
That, after all, was the identical 12 months it acquired Scooter Braun’s Ithaca Holdings (in a billion-dollar deal), together with SB Initiatives and Massive Machine Label Group.
BTS’s dominance amongst HYBE’s roster of different Ok-pop artists can be attention-grabbing to ponder.
In response to HYBE’s investor filings, the agency’s 4 biggest-selling Korean artists in 2021 had been BTS, Seventeen, TXT, and Enhypen.
BTS accounted for 49% of a collective 15.1 million albums bought by these acts in 2021 (see above).
BTS’s share of this metric declined from 70% in 2020, and 78% in 2019.
Whereas the music enterprise continues to take a position about what this information means for HYBE’s share worth long run, one thing shareholders ought to perceive a few BTS hiatus is that it might supercharge the corporate’s enterprise.
Right here’s a couple of the reason why that might be true…
1. BTS taking a break as a gaggle might imply that HYBE beneficial properties seven celebrity solo stars…
Musical historical past is affected by examples of celebrity pop teams producing celebrity solo artists with lengthy and profitable careers.
The Supremes gave us Diana Ross. From The Beatles, got here Paul McCartney.
Extra not too long ago, within the US, Justin Timberlake emerged from boy band NSYNC as a megastar in his personal proper, proving as a lot along with his latest catalog sale to Hipgnosis, in a deal the Wall Avenue Journal reported to be value $100 million.
“Within the US, Justin Timberlake emerged from boy band NSYNC as a megastar in his personal proper.”
Over within the UK, since pop band One Path disbanded, Harry Types has additionally morphed into a worldwide pop phenomenon, breaking the first-week vinyl gross sales file within the US along with his newest LP, Harry’s Home.
In response to BTS and HYBE, on the root of this week’s announcement is that the band’s members wish to pursue solo tasks.
What, then, if even two or three particular person artists that comprise BTS go on to get pleasure from solo careers as profitable because the likes of Justin Timberlake or Harry Types?
It will be nice information for them, nice information for HYBE, and nice information for HYBE’s traders.
Every of the seven members have already got their very own respective Spotify artist profiles with vital month-to-month listener counts, plus giant particular person social media profiles after launching their respective Instagram accounts in December.
BTS’s huge fanbase, mixed with the powerhouse backing from HYBE, might see traders’ Ok-pop fortunes a number of seven-fold in years to come back.
2. HYBE’s ‘artist oblique’ enterprise line was its predominant income driver for the previous two consecutive years…
HYBE’s traders ought to bear in mind these three phrases: “Oblique Artist Involvement” – revenue-generating tasks that use an artist’s model/likeness, with out the precise artist needing to be concerned.
This enterprise line is the primary cause why HYBE thrived throughout the pandemic, turning into the corporate’s major income driver in 2020 within the absence of stay reveals throughout this era.
“This ‘Artist Oblique-Involvement’ enterprise was HYBE’s predominant income driver in each quarter of 2021.”
In FY 2021, a 12 months during which HYBE revenues surpassed $1 billion in revenues for the primary time, the corporate’s greatest natural income driver was, as soon as once more, its “Artist Oblique” enterprise, accounting for greater than 60% of the corporate’s revenues. These “Artist Oblique” enterprise actions generated 733 billion KRW ($640m) final 12 months – up 72.8% YoY (see beneath).
This ‘Artist Oblique-Involvement’ enterprise was HYBE’s predominant income driver in each quarter of 2021, together with Q1 (ending March 31), Q2 (the three months to the tip of June), Q3 (the three months to the tip of September) and This fall (ending December 31). It was solely overtaken by the corporate’s ‘Artist Direct Involvement’ enterprise line in Q1 2022.
An instance of one among Massive Hit’s Artist Oblique companies is ‘TinyTAN’ – cartoon character variations of the seven BTS members used for licensed merchandise and model partnerships with the likes of Korean Material Softener model Downy. The Tiny Tan model has a big following of its personal, with 3.9 million followers on Twitter alone.
3. might Hybe hypothetically launch BTS music with out their lively participation?
This subsequent level is only speculative. However primarily based on Spotify’s latest acquisition of an organization that created an AI audio mannequin primarily based on Val Kilmer’s voice for Prime Gun Maverick, it’s not fully out of the realm of chance.
What if HYBE continued to launch BTS music (or at the least BTS content material), even with out the band actively contributing vocals to that music?
In early 2021, HYBE (then-Massive Hit Leisure) invested 4 billion KRW (roughly $3.6m) right into a Korea-based Synthetic Intelligence firm known as Supertone.
Supertone claims that its AI tech can create “a hyper-realistic and expressive voice [not] distinguishable from actual people”.
The corporate additionally claims that its Singing Voice Synthesis (SVS) expertise can be taught songs in a selected model after which mimic what it’s realized, even over new compositions.
“Supertone claims that its AI tech can create ‘a hyper-realistic and expressive voice [not] distinguishable from actual people’.”
You may recall that Supertone made headlines final 12 months for utilizing its SVS expertise to “resurrect” the singing voice of South Korean people celebrity Kim Kwang-seok, with the resultant cloned voice debuted on Korean tv present Competitors of the Century: AI vs Human.
Chatting with CNN in January 2021 – a month previous to Massive Hit’s funding – Supertone COO Choi Hee-doo defined that one other hypothetical use for its SVS tech might be BTS-related
“BTS is actually busy today, and it’d be unlucky if they’ll’t take part in content material as a result of lack of time,” Choi Hee-doo stated.
“So, if BTS makes use of our expertise when making video games or audiobooks or dubbing an animation, as an example, they wouldn’t essentially should file [their vocals] in particular person.”
In different phrases, Supertone’s voice cloning AI might theoretically be taught to ‘sing’ BTS’s complete catalog, after which replicate every of the person members’ voices for future recordings.
4. HYBE has been making ready to be much less reliant on BTS.
HYBE has been laying down the groundwork for a post-BTS enterprise for a while.
The corporate’s $1 billion acquisition of Scooter Braun’s Ithaca Holdings final 12 months hints at a diversification technique past a BTS-driven enterprise.
In response to HYBE’s FY 2021 outcomes, US album gross sales for Ithaca artists totalled 12.3 million, with SB Initiatives and Massive Machine Label Group accounting for 7.5 million and 4.8 million respectively (see beneath).
As well as, BTS’s declining share of world album gross sales amongst HYBE’s 4 biggest-selling Korean artists (49% in 2021 versus 70% in 2020) highlights a attainable altering tide on the firm as its different artists turn out to be extra in style.
SEVENTEEN, for instance, not too long ago scored their highest Billboard 200 debut (No.7) with their fourth studio album Face the Solar (PLEDIS Leisure/Geffen Information), their first in partnership with Geffen.
HYBE says that SEVENTEEN additionally grew to become the second artist in Ok-pop historical past, after BTS, to rack up over 2 million first-week album gross sales for the alum (launched Might 27).
With 2.06 million models bought, HYBE says that Face the Solar additionally scored the biggest first-week gross sales tally for any album launched in Korea in 2022 up to now.
Music Enterprise Worldwide
