South Korea-based entertainment giant SM Entertainment reported a 30% year-over-year jump in second-quarter revenues to 239.8 billion South Korean won (approx. USD $183.8 million).
SM, whose roster of artists include K-Pop stars like SUPER JUNIOR, Girls’ Generation, SHINee, EXO, Red Velvet, KANGTA, BoA, TVXQ!, NCT and aespa, attributed the growth to its increased concert lineups at home and overseas, which offset the double-digit drop in its revenue from album and digital music sales.
That’s according to investor filings published by the company last week (August 2).
In the quarter ended June 30, SM’s revenue from concerts surged 252.3% YoY to 20 billion won ($15 million) from 5.7 billion won ($4m) a year earlier. It comes as the company continued to benefit from the resumption of live events post-pandemic.
During the quarter, 60 concerts were staged by SM artists, versus 6 in the second quarter of 2022. Of these concerts, NCT DREAM had 17 concerts, Red Velvet had 11 and TVXQ had 12.
The company’s artists have at least 50 concerts lined up for July to October, including NCT DREAM’s The Dream Show 2: In Your Dream in Brazil, Chile, Peru and Mexico, as well as other concerts by Taeyeon, Yesung, aespa, Chen, SMTOWN and SHINee.
‘Concerts’ were SM’s joint third-largest source of revenue behind ‘Album/Digital Music’, ‘MD/Licensing’, tying with ‘Appearance’ for TVs, advertisements and events.
SM’s revenue from its MD/Licensing unit jumped 74.8% YoY to 42.3 billion won ($32m), versus 24.2 billion won ($19m) in Q2 2022, boosted by increased sales from pop-up stores related to album releases.
However, revenue from the Album/Digital Music division slumped 18.5% YoY to 54.4 billion won ($42m) from 66.8 billion won even as aespa’s new album sold more than 2 million copies.
Also during the quarter, NCT DoJaeJung, the fifth sub-unit of South Korean boy band NCT, sold 670,000 copies in its first week, ranking first in the K-pop group unit album sales, SM Entertainment CEO Jang Cheol Hyuk said in an investor presentation.
In July, EXO released their seventh album, selling 1.56 million copies in the first week. NCT DREAM also dropped their third album, recording 3.65 million copies in the first week.
Meanwhile, SM’s revenue from TV, ad and events appearances edged up 54.5% to 20.7 billion won ($16) from 13.4 billion won ($10.3m) last year.
Overall, the company’s OP margin shrank to 14.9% from 10.5%. Its operating profit surged 84% YoY to 35.7 billion won ($27m) from 19.4 billion won ($15m), with net income rising 11.6% to 28.3 billion won ($22m) from 25.4 billion won ($19.5m).
This marked a recovery from the first quarter when SM’s operating profit tumbled 21.2% YoY and net income fell 9.7%.
SM also provided the financial performance of its various subsidiaries including live entertainment unit Dream Maker, which reported a 791% YoY jump in Q2 revenue to 34.8 billion won ($27m), still owing to the resumption of offline concerts.
Looking ahead, CEO Jang Cheol Hyuk said the company will launch the first new IP under its new business strategy, SM 3.0, in the third quarter.
“We will strive to enhance profitability through the debut of new IPs and expanding overseas business in the second half of the year,” the executive said.
Jang Cheol Hyuk added that SM is pursuing various projects with Kakao Corp. The company is now controlled by Kakao, which acquired a 39.9% stake in SM Entertainment in March following a lengthy takeover battle against HYBE.
Last week (August 1), SM and Kakao disclosed plans to merge their units in North America to create an integrated North American division, combining SM’s global intellectual property (IP) and production capabilities with Kakao’s music distribution network and multi-label system.
Jang Cheol Hyuk further elaborated on the new partnership, saying the newly merged business in North America will focus on setting an independent sales channel and managing artists’ activities in the US.
“By establishing US dedicated production center, in the mid-to longterm, our US corporation will conduct various monetization activities, from IP production to management, album release, and concert organization.”
“Since this June, we are collaborating with Kakao Entertainment for album and digital music distributions. We are also reviewing other business plans for expanding content development and fan platform, and we will share the updated process to our investors going forward,” the executive added.
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