As BTS prepare to join the military – and quit music until 2025 – HYBE’s CEO says company has a plan without its biggest earner

HYBE CEO Jiwon Park wrote to the company’s investors on Monday (October 17) with the content of breaking down the business strategy in the absence of one of the main revenue generators, BTS.

On Monday, HYBE confirmed that BTS will be doing their mandatory military service in their home country of Korea, after months of speculation about whether K-Pop superstars will be exempted from enlistment.

According to the official announcement, the group will reunite “around 2025”.

inside Letters issued by the CEO of HYBE to the publicly traded company’s shareholders, he said Monday’s announcement had “cleared uncertainties surrounding BTS,” and sought to reassure investors. , adding that “we have long anticipated and prepared for their military service”.

He further noted that the company will “continue to address shareholder concerns by implementing the plans we have prepared”.

According to Jiwon Park, some of those plans include a multi-label strategy to “ensure that a wide variety of music and content is created”.

He added that “in the short term, some members’ individual activities are scheduled for the first half of 2023” and that HYBE has “previously secured the content, which will allow BTS to continue to interact.” working with fans in the near future”.

On June 15, when BTS announced break To pursue solo projects, HYBE’s stock has dropped by nearly 25%, wiping out about $1.5 billion from its market capitalization.

As HYBE’s flagship group, K-Pop stars are the company’s main revenue driver, although the band’s share of HYBE’s revenue has steadily declined in recent years.

HYBE’s CEO noted in his letter that “the average annual revenue of artists excluding BTS has nearly tripled between 2020 and 2022.” Back in the first half of 2020, almost 90% of HYBE’s (later Big Hit) BTS-related revenue.

The team was responsible for nearly a third of the company’s album sales (and AES streams) in the US market last year, according to HYBE’s 2021 results. Of course, that was also the year it acquired Scooter Braun’s Ithaca Holdings (in a multi-billion dollar deal), which included SB Projects and SB Projects. Large machine label group.

BTS is also the world’s most recorded music artist in Year 2021 and in 2020, according to IFPI.

In addition to BTS, HYBE’s artist lineup includes names like SEVENTEEN, TOMORROW X TOGETHER, ENHYPEN, LE SSERAFIM, NewJeans, Zico, and Fromis_9.

That lineup of artists, according to HYBE, also includes “top global artists including Justin Bieber and Ariana Grande” (following the company’s acquisition of Ithaca Holdings last year).

Additionally, HYBE’s CEO told investors that the company will also introduce “at least four new groups” by 2023.

Jiwon Park also used the letter to outline various efforts to expand HYBE’s business by leveraging new technologies.

“HYBE plans to reveal new content and services to our fans by combining our content creation capabilities with Supertone’s AI-based vocal and vocal synthesis technology.”

Jiwon Park, HYBE

He confirmed HYBE’s recently purchase of South Korea-based AI voice startup Supertone, and said that the AI ​​company will “play an important part in the technology sector we want to create.”

He added: “HYBE plans to reveal new content and services to our fans by combining our content creation capabilities with vocal and vocal synthesis technology based on Supertone’s AI.”

Like report Earlier this month, Supertone claimed to be able to create “a super realistic and expressive voiceover.” [is not] distinguishable from real people”.

The startup gained global media attention in January 2021 with its so-called Vocal Synthesis (SVS) technology.

The company, founded in 2020, used the technology to “revive” the voice of Korean folk superstar Kim Kwang-seok, with the AI-generated voice then making its debut on the show. Korean TV Competition of the Century: AI vs Humans.

HYBE’s other areas of focus in the tech space include fan engagement platform Weverse, with plans for a “new subscription-based service that will allow fans and artists to engage with new ways”.

HYBE says that they are also planning “for international artists including artists from Japan and the US to join Weverse”.

In a separate development, HYBE’s CEO also said the company will outline an “ambitious future business plan” for its gaming business in November.

You can read his full letter to shareholders below:

To all HYBE shareholders,

Hello. I’m Park Jiwon, CEO of HYBE.

Today, we are proud to announce that the members of BTS are now moving forward with their military service plans. After the phenomenal concert to support Busan’s effort for World Expo 2030, and as each individual embarked on a solo endeavor, it was the perfect timing and the members of BTS were honored to serve.

Seeing 60,000 fans from Korea and from around the world come together to support BTS, and with millions more streaming the event in real-time globally, HYBE is confident in The structure has been in place for the past 10 years with BTS and each individual member that this is a time to honor their duty to their country. Team member Jin will begin this process as soon as his solo release schedule ends at the end of October. He will then follow the Korean government’s enlistment procedure. The other team members plan their military service based on their individual plans. Both the company and the members of BTS look forward to being reunited as a group again sometime around 2025 in accordance with their commitment to service.

When BTS was founded over ten years ago, the need for these artists to serve their country was obvious. They have risen to international success, broke many records, and brought K-Pop out into the global stratosphere, they have given something not only to their country but also to fans around the world. all over the world. HYBE prides itself on nurturing, guiding and supporting talent. Build opportunities and create value for each opportunity. With BTS, we continue to lead by these principles, more than ever, and we are honored to have them in the HYBE family. As a result, our company has been able to achieve an annual growth rate of nearly 90% in CAGR over the past five years in terms of revenue.

We have always been aware of the mandatory status of military service, and we have long prepared to be ready for this moment. In the short term, some members’ individual activities are scheduled for the first half of 2023, and we have secured the content in advance, which will allow BTS to continue interacting with fans in the future. near the. In the long term, HYBE is perfecting its multi-label structure so that it can continue to create music and establish artists who can resonate with our fans.

We’re driving new projects like platforms and games that can leverage new technologies to deliver fan experiences that have so far not been possible in the entertainment industry. I will explain in more detail our medium and long term plans to help HYBE continue towards growth.

First, let me review the achievements of our multi-brand strategy and outline our future plans.

• Currently, there are nine independent brands under HYBE. By giving autonomy to each label, we ensure that a wide range of music genres and content is created; We expect their development through mutual cooperation and sometimes, healthy competition.
• Therefore, HYBE in 2022 maintains an artist lineup that includes not only SEVENTEEN, TOMORROW X TOGETHER, ENHYPEN, LE SSERAFIM, NewJeans Zico and Fromis_9 but also top global artists including Justin Bieber and Ariana Grande .
• Thanks to these strategies, the average annual revenue of artists excluding BTS has nearly tripled between 2020 and 2022, and we look forward to even more opportunities for further growth as these developments continue. The stability in place for performances due to the COVID-19 pandemic has been resolved.
• Dissatisfied with our track record, HYBE will announce at least four new teams to the world in 2023. In Japan and the US, we will focus on impacting those markets with teams. will debut there according to the K-pop process. These pioneering efforts to localize our expertise in these key markets will, when successful, make an even bigger impact in the mainstream music market.

In addition, I would like to highlight our efforts in leveraging new technologies to expand the existing boundaries of the entertainment business.

• First, Weverse launched its live streaming service through a merger with Naver V LIVE in July. Artists and fans can now engage in real-time video communication and the platform. This can stream concerts and other large-scale events. BTS’s performance last weekend set a record with more than 49 million online views through Weverse.
• We are preparing subscription-based services that will allow fans and artists to engage in new ways, with plans for international artists including artists from Japan and the US to join Weverse. You will be able to see the results of these initiatives in 2023.
• In the gaming business, “In The Seom with BTS”, which was launched to great popularity in Q2 will continue to receive new updates; Our lineup will be further expanded through publishing deals. We will outline our ambitious future business plans in November.
• We expect the recently acquired Supertone to serve as an important part of the technology sector we want to create. HYBE plans to reveal new content and services to our fans by combining our content creation capabilities with Supertone’s AI-based vocal and vocal synthesis technology.
• Through these pioneering efforts, we are poised to adopt a variety of approaches to allow our fans of our artists and music to enjoy new experiences not only online, but also online. in the virtual world.

As I mentioned above,

• HYBE is continuing to develop dynamically through its multi-brand strategy.
• HYBE will lead innovation in our industry through technology convergence, and achieve continuous and explosive growth by expanding the boundaries of our business.
• Today’s announcement has cleared up the uncertainties surrounding BTS as we’ve long anticipated and prepared for their military service. We will continue to address shareholder concerns by implementing the plans we have prepared.

“Change” has always been the driving force to create better results over the past 17 years at HYBE. We’ve been continuously building on that change. As always, we will not rely on our achievements. We will not compromise on mediocrity. And we will create the future of HYBE by moving forward without hesitation. Of course, traveling on a path with no trail will inevitably lead to some trial and error. However, HYBE is ready to leapfrog with great plans for our next big move, and we’re ready to go. Please allow me to once again express my deep gratitude to our investors, who have been, are and will continue to support HYBE throughout this journey.

Thank you.Worldwide music business