The reputation of YG Entertainment (122870), which dominated the second and third generations of K-pop including Big Bang, 2NE1, and Blackpink, is not as good as it used to be. As the search for cash-cow artists to support the company slowed down and a gap in existing IP (intellectual property rights) was created, the company accepted a shocking report card of “11 billion deficit” in the second quarter of this year.
YG Entertainment (hereinafter YG) recorded sales of 90 billion won and operating losses of 11 billion won in the second quarter of this year on a consolidated basis. Sales decreased by 43.1% and operating profit decreased by 39.8%, turning into a loss.
What is causing the biggest blow is Blackpink’s vacancy. Last year, when Blackpink’s world tour was underway, YG achieved concert sales of KRW 111.5 billion. However, by the end of the first half of this year, concert sales amounted to only 9 billion won. In the end, they have to put all their effort into the second half of the year, but Blackpink’s comeback and world tour have been pushed to next year.
Accordingly, YG released the 2NE1 card. 2NE1, who is celebrating their 15th debut anniversary this year, will be holding the ‘WELCOME BACK IN SEOUL’ concert at the Olympic Hall in Seoul Olympic Park for three days from October 4 to 6.
Starting with the debut song ‘Fire’, ‘I Don’t Care’, ‘Lonely’, ‘Ugly’, ‘I’m the Best’, ‘Can’t Nobody’, as they are a representative K-pop girl group who has made many hits such as ‘Can’t Nobody’, their solo concert held for the first time in 10 years and 6 months was a huge success with all tickets sold out.
Currently, YG owns the trademark rights to 2NE1, so the collaboration with YG is essential for the members who left the company to continue as a full group under their current team name. After the performance in Seoul, 2NE1 plans to perform at the Kobe World Hall in Japan in late November and the Ariake Arena in Tokyo in early December, and then further expand the global tour schedule and continue into next year. Thanks to 2NE1’s performance, it is expected that YG can have a better second half than the first. Attention is being paid to whether the company can get out of the quagmire of poor performance.
However, it is difficult to view the situation optimistically. Although Blackpink’s comeback and world tour are scheduled for next year, both 2NE1 and Blackpink, who are trusted by YG, are not affiliated artists but “children who left home.” It is clear that this is a super intellectual property that will lead to a definite increase in sales, but there is great uncertainty about stable and stable activities. This means that the “full activity” itself is increasingly seen as an event.
In the end, discovering and developing new talents to build self-sufficiency is expected to be key from a long-term perspective. All entertainment companies are already focusing on nurturing new talents and there are many success stories in turning new talents into the main driving force of the company. YG said, “Please consider this year as the first year of investment to grow annual low-end IP to the top level,” but with Aespa, New Jeans, Rise, Eyelet and Tours at the forefront of the next-generation group, Baby Monster was launched as a newcomer.
Baby Monster, who debuted in November 2023, unusually changed their debut date as they seemed to be following the leading team. With the addition of Ahyeon, the debut date was changed to April 1 of this year. Afterwards, when controversy over the idols’ abilities arose, they received attention as a “talented group” and became a hot topic, but this also quickly calmed down while they were on an overseas fan meeting tour. Some point out that it was not a good strategy as Espa and New Jeans, as well as newcomers Kiss of Life, were gaining ground.
Competition with “younger groups” is expected to become even more intense. Thanks to Zero Base One’s high album sales and the popularity of Japanese localization groups JO1 and INI, CJ ENM’s music division, which saw a 16.4% sales increase in the second quarter compared to the same period last year, continued the momentum and launched Izuna, a girl group formed through ‘I-Land 2.’ Izuna is produced by YG’s leading producer Teddy.
Aside from this, Teddy is also making strides as a full-fledged producer at The Black Label, which he heads, by debuting with girl group Miyao in September. The driving force behind Big Bang and 2NE1’s success, Teddy has created most of Blackpink’s hit songs since he founded The Black Label in 2016. He has quietly been faithful to his role as a producer and has made a huge contribution to YG’s current level of fame, which is why he is attracting the attention of K-pop fans.
Black Label started as a label of YG, but currently YG does not participate in management and only has a general investment relationship. YG’s equity stake also decreased from 45% at the end of 2020 to 21.59% at the end of the first quarter of this year, and The Black Label moved out of the existing YG building and established a separate office building in Itaewon. Simply put, it is “independence.” Accordingly, YG’s general producer Yang Hyun-seok cannot avoid the burden of evaluation based on the structure of ‘YG girl group versus black girl group’ and ‘Yang Hyun-suk senior versus Teddy junior’.
First of all, YG also plans to speed up the process of discovering new talents. Executive producer Yang revealed his plans for next year and said that the tentative name ‘Next Monster’ is waiting. Baby Monster and Treasure’s world tour is also planned.
Lee Ki-hoon, a researcher at Hana Securities, said, “2025 will be a year in which both performance and momentum will be concentrated due to Blackpink’s comeback and world tour, Baby Monster’s first monetization, and the debut of a new boy group, but losses will continue in the short term,” he predicted.
He added, “Another deficit is expected in the third quarter due to the temporary recovery gap and the burden of amortization costs, and an annual operating loss of around 10 to 20 billion won is expected.”
Kim Hyun-yong, a researcher at Hyundai Motor Securities, also noted: “We recorded a large-scale earnings shock in the second quarter,” adding: “If we do not adjust costs, it will be difficult to escape the deficit at the current sales level.”
Kim Soo-young, Hankyung.com reporter Swimmingk@hankyung.com
