[비즈한국] YG Entertainment122870 announced on the 7th that it recorded 173.1 billion won in revenue and 31.1 billion won in operating profit for the third quarter of this year. Compared to the same period last year, when it posted 83.5 billion won in revenue and an operating loss of 3.6 billion won, this is a significant improvement. Nevertheless, voices of disappointment are emerging from the securities industry. Considering the numerous positive factors in the third quarter, such as Blackpink's world tour and BabyMonster's North American tour, the performance is being evaluated as falling short of expectations.
Following the third-quarter earnings announcement, securities firms simultaneously lowered their target stock prices for YG Entertainment. IBK Securities adjusted its target from 120,000 won to 100,000 won, while Kiwoom Securities lowered its target from 120,000 won to 105,000 won. The main reason cited for these downward adjustments is sluggish MD (merchandise) sales. When the popularity of an artist wanes, fans naturally purchase less merchandise. Unlike actors, once an idol group's popularity declines, it is not easy to regain their former status.
Kim Yu-hyuk, an analyst at IBK Securities, assessed, "YG Entertainment's third-quarter results fell below market expectations," adding, "The rise in production costs for performances and MD sales coming in lower than initial estimates were the primary factors for missing market expectations." Im Soo-jin, an analyst at Kiwoom Securities, analyzed, "In the case of BabyMonster, they far exceeded expectations when considering that only the 'Hot Sauce Pop-up' was held, but Blackpink significantly underperformed," and added, "It appears that the lack of promotions for Blackpink and uncertainties regarding future activities have weakened the purchasing power of the fandom."
Under their current contracts, Blackpink members carry out only group activities through YG Entertainment after 2024, while pursuing individual activities through their own respective agencies. While Blackpink continues group activities—such as releasing the new song "DDAE" and holding tours in July of this year—the increasing frequency of members' individual activities has created an atmosphere of uncertainty among the fandom regarding the future of the group.
Of course, YG Entertainment does not solely rely on Blackpink. Boy group Treasure and girl group BabyMonster debuted in the 2020s. While Treasure and BabyMonster are gaining popularity in their own right, it is still difficult for them to replace Blackpink. Aside from Treasure and BabyMonster, there are not many notable major idol groups.
There are also reasons to look forward to next year. 2026 marks the 20th anniversary of the debut of the idol group Big Bang. The entertainment industry expects YG Entertainment to hold a concert to commemorate Big Bang's 20th anniversary next year. Analyst Im Soo-jin forecasted, "2026 marks YG Entertainment's 30th anniversary and Big Bang's 20th anniversary, and it is expected that a Big Bang world tour will begin during the third quarter," adding, "Assuming 1.5 million attendees for Blackpink encore performances and 600,000 for Big Bang concerts, there is room for operating profit to rise by approximately 33 billion won compared to current estimates."
Big Bang was originally a five-member group, but members Seungri and T.O.P have declared that they will not participate in Big Bang activities due to personal reasons. Even if a 20th-anniversary concert is held next year, it is highly likely to proceed as a three-member group. It is difficult to guarantee the same level of ticket power that Big Bang had during their prime.
The entertainment industry is pinning its hopes on the lifting of China's Hallyu ban (the restriction on Korean cultural exports). Domestic idol groups generate significant revenue in the Chinese market that cannot be ignored. It is known that due to the recent deterioration of South Korea-China relations, revenue from the Chinese market for the entertainment industry has not been the same as it once was. Amidst this, Chinese President Xi Jinping exchanged pleasantries with Park Jin-young, Chairman of the Popular Culture Exchange Committee, at a dinner held immediately following the South Korea-China summit on the 1st.
In fact, the entertainment industry laments that holding performances in China has been difficult recently. The boy group EPEX was scheduled to perform in Fuzhou, China, this May, but the concert was postponed due to "unavoidable local circumstances." The girl group Kep1er was also scheduled to hold a fan concert in Fuzhou in September, but it was postponed due to "unavoidable local circumstances." No news of either performance resuming has been heard yet.
If the threshold for performances by Korean idol groups in China is lowered, it could be a significant boost for the domestic entertainment industry. The recent atmosphere is not entirely bad. Democratic Party lawmaker Kim Young-bae stated on social media, "A scene was staged where President Xi Jinping responded to a proposal to hold a large-scale performance in Beijing by calling over Chinese Foreign Minister Wang Yi to give instructions," adding, "I hope this is the moment that opens the door for a full-scale entry of K-culture, going beyond the lifting of the Hallyu ban."
On the other hand, some analysts suggest that it is premature to talk about lifting the Hallyu ban. The Popular Culture Exchange Committee, to which Chairman Park Jin-young belongs, stated, "We understood the exchange of greetings at the official diplomatic event as nothing more than pleasantries at a principled level," adding, "We judge that it is hasty to over-interpret this."