Will BTS’ Label Take a Big Hit From Band’s ‘Hiatus’?

Will BTS’ Label Take a Big Hit From Band’s ‘Hiatus’?

HYBE will miss BTS — but not as much as it would have before acquiring Ithaca Holdings in 2021.

On Tuesday (June 14), the band announced it was “going on a hiatus” to allow each member to focus on their solo projects. What that might mean for the label that launched BTS in 2013 is unclear.

Companywide, BTS accounted for 27% of HYBE’s U.S. album sales and streams in 2021, according to the company’s fourth quarter 2021 investor presentation. In Japan — the world’s second-biggest music market — BTS accounted for about half of HYBE’s album sales, according to the company’s 2021 earnings. On top of that, BTS likely accounted for nearly all HYBE’s touring income that amounted to 191.1 billion ($148 million) in 2019 and 45.6 billion KRW ($36 million) 2021.

HYBE’s acquisition of Ithaca Holdings in 2021 made the company less reliant on BTS to drive revenue. In terms of U.S. music sales and streams, Ithaca Holdings — which includes label and management clients — made up 45% of HYBE’s U.S. album sales in 2021. Big Machine Label Group, headed by Thomas Rhett, and Florida Georgia Line, was responsible for 4.8 million album equivalent units. Artists managed by SB Projects accounted for 7.5 million album equivalent units in 2021.

HYBE has seen a greater variety in its Korean artist roster in recent years. In 2018, BTS accounted for 100% of the company’s U.S. album sales for its Korean artists. In 2019, 2020 and 2021, BTS’ share declined to 78.5%, 70.3% and 49.0%, respectively, as Seventeen, Tomorrow X Together and Enhyphen gained popularity.

CEO Park Ji-won addressed that in the first quarter 2022 earnings call on May 3, saying there had been “a bit of misunderstanding” about the company “strategically scaling back our dependence on BTS.” That’s not the case, he said. “This is a phenomenon or a result of an increase in revenues by other artists. At HYBE we really believe BTS represents a group of artists that are tearing down the walls of the existing music industry to completely reshape a new paradigm for the industry.”

BTS concerts are a key part of HYBE’s business. It will be difficult to replace them. The group ranked fourth on Billboard Boxscore’s mid-year 2022 list of top tours after selling 458,000 tickets for 11 concerts. Nearly 200,000 of those tickets came from just four shows at Allegient Stadium in Las Vegas. BTS’s four-night stand at SoFi Stadium in Los Angeles last December sold 200,000 tickets and grossed $33.3 million, according to Billboard Box Score — the sixth-highest grossing engagement in Boxscore history.

The rest of HYBE’s K-pop roster can’t compete with BTS but could do brisk concert business in 2022. This summer, HYBE K-pop group Seventeen will play two shows at the 25,000-capacity Gocheok Sky Dome in Seoul before traveling to North America to perform at arenas in 12 cities in U.S. and Canada. If a HYBE artist can sell albums, they can sell concert tickets, Ji-won said during the Q4 2021 earnings call on Feb. 22. “Seventeen and TXT have at least one million albums sold, which shows that they already have a strong fandom. If they hold in-person concerts, such fandom will translate into increased revenues.”

The pandemic forced HYBE to reduce its reliance on its concert income, which accounted for about a third of the company’s annual revenue in 2019. Instead, HYBE focused its attention on concert livestreams. HYBE has been a livestream breadwinner for BTS, but today’s HYBE has a more diverse company and a growing Korean roster as well as an international roster. HYBE’s New Year Eve’s 2022 WeVerse Con livestream, named after its proprietary social media platform, featured SB Projects’ Justin Bieber with Korean artists such as Tomorrow X Together and Enhyphen — but not BTS – and was viewed across 117 countries.

There is another scenario where HYBE can reap the benefits of BTS’s absence. On Tuesday, a spokesperson for the group — as well as HYBE — clarified BTS’ description of the break in a statement to Billboard: “To be clear, they are not on hiatus, but will take time to explore some solo projects at this time and remain active in various different formats.”

The label will retain rights to release greatest hits compilations or unreleased material and there is potential for even greater success.

With seven members possibly all pursuing solo careers, even possibly entertainment sectors — J-Hope will be performing solo at Lollapalooza later this summer and Jimin said he wants to go on a variety show — revenue from those projects could potentially make up any loss from BTS and then some.

In the earnings call, Park talked about the band’s “endless potential,” assuring investors that HYBE “will be following along on untraveled path with them, to support them in every way to the end.”

From a financial standpoint, what’s better that a single tour, album or TV series with all of BTS on it? Many albums, tours, and TV shows with different members. Could BTS become the Avengers franchise of K-pop with crossovers and collaborations galore? They are the best suited to do it.

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