The MBW Assessment is the place we intention our microscope in direction of a number of the music biz’s greatest latest goings-on. This time, we delve into what BTS’s information of a hiatus means for HYBE’s traders. The MBW Assessment is supported by Instrumental.
BTS shared some shock information this week that spooked traders in HYBE, the publicly-traded Okay-pop firm behind the group.
Yesterday (June 14), the Okay-Pop superstars revealed a ‘BTS Dinner Social gathering’ video on their official YouTube channel to their 67.9 million subscribers.
Over dinner, the band mentioned challenges they’re going through – and revealed that they might be taking a break to pursue solo tasks.
Right this moment (June 15), in an official press launch, HYBE-owned label BIGHIT MUSIC confirmed that the group shall be specializing in solo tasks going ahead, however added that they may even stay “energetic as a gaggle”.
In a press release, BIGHIT stated: “BTS now begins a brand new chapter with new solo tasks in addition to group tasks.
“BTS now begins a brand new chapter with new solo tasks in addition to group tasks.”
“Members will take this time to realize private development by means of varied new actions, and we count on it to additional strengthen the muse for the group‘s long-run as a group.
“BIGHIT MUSIC will actively help the artists.”
BTS member J-Hope is the primary of the group to formally kick off his solo profession with an upcoming album.
Information of a BTS ‘hiatus’ induced HYBE’s shares to fall by almost 25% to 145,000 South Korea Received on Wednesday (June 15), wiping round $1.5 billion from the Okay-pop big’s market cap worth.
Traders have good motive to be involved.
As HYBE’s flagship group, BTS are a key income driver on the firm, though the band’s share of HYBE’s revenues has been lessening lately.
Almost 90% of HYBE’s (then Massive Hit’s) revenues within the first half of 2020 had been BTS-related.
(The group was additionally a key contributor to the corporate’s 191 billion South Korea Received (approx $147m) revenues generated from concert events in 2019, and has been every year since.)
However in accordance with HYBE’s FY 2021 outcomes, BTS was accountable for almost a 3rd of the corporate’s album gross sales (and AES streams) within the US market final yr.
That, after all, was the identical yr it acquired Scooter Braun’s Ithaca Holdings (in a billion-dollar deal), together with SB Tasks and Massive Machine Label Group.
BTS’s dominance amongst HYBE’s roster of different Okay-pop artists can be attention-grabbing to ponder.
In keeping with HYBE’s investor filings, the agency’s 4 biggest-selling Korean artists in 2021 had been BTS, Seventeen, TXT, and Enhypen.
BTS accounted for 49% of a collective 15.1 million albums offered by these acts in 2021 (see above).
BTS’s share of this metric declined from 70% in 2020, and 78% in 2019.
Whereas the music enterprise continues to take a position about what this information means for HYBE’s share value long run, one thing shareholders ought to perceive a few BTS hiatus is that it might supercharge the corporate’s enterprise.
Right here’s a couple of explanation why that might be true…
1. BTS taking a break as a gaggle might imply that HYBE positive factors seven famous person solo stars…
Musical historical past is plagued by examples of famous person pop teams producing famous person solo artists with lengthy and profitable careers.
The Supremes gave us Diana Ross. From The Beatles, got here Paul McCartney.
Extra just lately, within the US, Justin Timberlake emerged from boy band NSYNC as a megastar in his personal proper, proving as a lot together with his latest catalog sale to Hipgnosis, in a deal the Wall Road Journal reported to be value $100 million.
“Within the US, Justin Timberlake emerged from boy band NSYNC as a megastar in his personal proper.”
Over within the UK, since pop band One Route disbanded, Harry Kinds has additionally morphed into a world pop phenomenon, breaking the first-week vinyl gross sales document within the US together with his newest LP, Harry’s Home.
In keeping with BTS and HYBE, on the root of this week’s announcement is that the band’s members wish to pursue solo tasks.
What, then, if even two or three particular person artists that comprise BTS go on to get pleasure from solo careers as profitable because the likes of Justin Timberlake or Harry Kinds?
It will be nice information for them, nice information for HYBE, and nice information for HYBE’s traders.
Every of the seven members have already got their very own respective Spotify artist profiles with vital month-to-month listener counts, plus giant particular person social media profiles after launching their respective Instagram accounts in December.
BTS’s huge fanbase, mixed with the powerhouse backing from HYBE, might see traders’ Okay-pop fortunes a number of seven-fold in years to come back.
2. HYBE’s ‘artist oblique’ enterprise line was its principal income driver for the previous two consecutive years…
HYBE’s traders ought to keep in mind these three phrases: “Oblique Artist Involvement” – revenue-generating tasks that use an artist’s model/likeness, with out the precise artist needing to be concerned.
This enterprise line is the primary motive why HYBE thrived throughout the pandemic, turning into the corporate’s major income driver in 2020 within the absence of stay reveals throughout this era.
“This ‘Artist Oblique-Involvement’ enterprise was HYBE’s principal income driver in each quarter of 2021.”
In FY 2021, a yr by which HYBE revenues surpassed $1 billion in revenues for the primary time, the corporate’s greatest natural income driver was, as soon as once more, its “Artist Oblique” enterprise, accounting for greater than 60% of the corporate’s revenues. These “Artist Oblique” enterprise actions generated 733 billion KRW ($640m) final yr – up 72.8% YoY (see under).
This ‘Artist Oblique-Involvement’ enterprise was HYBE’s principal income driver in each quarter of 2021, together with Q1 (ending March 31), Q2 (the three months to the tip of June), Q3 (the three months to the tip of September) and This fall (ending December 31). It was solely overtaken by the corporate’s ‘Artist Direct Involvement’ enterprise line in Q1 2022.
An instance of considered one of Massive Hit’s Artist Oblique companies is ‘TinyTAN’ – cartoon character variations of the seven BTS members used for licensed merchandise and model partnerships with the likes of Korean Material Softener model Downy. The Tiny Tan model has a major following of its personal, with 3.9 million followers on Twitter alone.
3. might Hybe hypothetically launch BTS music with out their energetic participation?
This subsequent level is solely speculative. However primarily based on Spotify’s latest acquisition of an organization that created an AI audio mannequin primarily based on Val Kilmer’s voice for Prime Gun Maverick, it’s not utterly out of the realm of chance.
What if HYBE continued to launch BTS music (or a minimum of BTS content material), even with out the band actively contributing vocals to that music?
Supertone claims that its AI tech can create “a hyper-realistic and expressive voice [not] distinguishable from actual people”.
The corporate additionally claims that its Singing Voice Synthesis (SVS) expertise can study songs in a selected type after which mimic what it’s realized, even over new compositions.
“Supertone claims that its AI tech can create ‘a hyper-realistic and expressive voice [not] distinguishable from actual people’.”
You would possibly recall that Supertone made headlines final yr for utilizing its SVS expertise to “resurrect” the singing voice of South Korean folks famous person Kim Kwang-seok, with the resultant cloned voice debuted on Korean tv present Competitors of the Century: AI vs Human.
Chatting with CNN in January 2021 – a month previous to Massive Hit’s funding – Supertone COO Choi Hee-doo defined that one other hypothetical use for its SVS tech might be BTS-related
“BTS is basically busy as of late, and it’d be unlucky if they’ll’t take part in content material as a result of lack of time,” Choi Hee-doo stated.
“So, if BTS makes use of our expertise when making video games or audiobooks or dubbing an animation, for example, they wouldn’t essentially must document [their vocals] in individual.”
In different phrases, Supertone’s voice cloning AI might theoretically be taught to ‘sing’ BTS’s total catalog, after which replicate every of the person members’ voices for future recordings.
4. HYBE has been getting ready to be much less reliant on BTS.
HYBE has been laying down the groundwork for a post-BTS enterprise for a while.
The corporate’s $1 billion acquisition of Scooter Braun’s Ithaca Holdings final yr hints at a diversification technique past a BTS-driven enterprise.
In keeping with HYBE’s FY 2021 outcomes, US album gross sales for Ithaca artists totalled 12.3 million, with SB Tasks and Massive Machine Label Group accounting for 7.5 million and 4.8 million respectively (see under).
As well as, BTS’s declining share of world album gross sales amongst HYBE’s 4 biggest-selling Korean artists (49% in 2021 versus 70% in 2020) highlights a potential altering tide on the firm as its different artists turn into extra common.
SEVENTEEN, for instance, just lately scored their highest Billboard 200 debut (No.7) with their fourth studio album Face the Solar (PLEDIS Leisure/Geffen Data), their first in partnership with Geffen.
HYBE says that SEVENTEEN additionally grew to become the second artist in Okay-pop historical past, after BTS, to rack up over 2 million first-week album gross sales for the alum (launched Might 27).
With 2.06 million models offered, HYBE says that Face the Solar additionally scored the biggest first-week gross sales tally for any album launched in Korea in 2022 thus far.
The MBW Assessment is supported by Instrumental, one of many music trade’s main development groups for impartial artists. Instrumental makes use of information science to establish the quickest rising impartial artists on the planet after which supply funding, premium distribution and advertising and marketing help to take them to the subsequent stage, with out taking their rights.
Music Enterprise Worldwide