HYBE achieved record-breaking sales in the second quarter of 2024, reporting 640.5 billion KRW in consolidated sales. However, the company faced a significant decline in profit, with operating profit falling by 37% and net profit dropping by 85.9% due to investment in the game industry. Despite these profit challenges, HYBE remains optimistic about future growth and expects improvements as its new business ventures progress.
Record-breaking Sales for HYBE
HYBE announced on August 7th that it achieved record-breaking quarterly sales. The company reported a consolidated sales figure of 640.5 billion KRW for the second quarter of 2024. This surpasses the previous record of 621 billion KRW set in the second quarter of the previous year. For the first half of the year, HYBE’s total sales reached 1.0014 trillion KRW, marking the second consecutive year of surpassing 1 trillion KRW in sales, despite the absence of group activities from BTS due to their military service obligations.
HYBE’s Direct Sales Drive Second Quarter Performance
The impressive second quarter performance was driven by direct sales, including album sales, amounting to 423.9 billion KRW. This is significant given the overall decline in album sales in the K-pop market since the second half of the previous year. Nevertheless, comeback albums from HYBE’s key artists received positive responses, maintaining direct sales at levels similar to last year. Album sales, the largest component of direct sales, increased by 1.5% year-on-year to 249.5 billion KRW for the second quarter. HYBE Music Group artists sold over 15 million albums in the first half, accounting for 34% of total domestic album sales.
Decline in HYBE’s Operating Profit
Operating profit on a consolidated basis for the second quarter fell by 37% year-on-year to 50.9 billion KRW. This decline is attributed to the launch of various new businesses and the initial costs associated with them, as well as the expansion of the lineup of new artists. HYBE is investing in ‘tech-based future growth businesses’ to ensure sustainable growth. The company anticipates profitability improvement from the third quarter onwards due to the planned domestic and international activities of its artists.
Mixed Reactions to HYBE’s Sales and Profit
The news sparked critical reactions in the Korean community, theqoo. This community comprises fans of Min Heejin, who often conflict with HYBE. They were particularly hostile. ARMYs felt upset, believing BTS’s contributions were underplayed by HYBE’s announcement. They highlighted solo albums and merchandise in the second quarter. However, this criticism is weakened by BTS’s limited contributions due to their military service. Their service prevents them from holding concerts or world tours.
Concerns Over HYBE’s Profit from Game Industry Investment
Theqoo members highlighted a fundamental issue: HYBE’s investment in the game industry led to declines in operating and net profits. While HYBE’s announcement mentioned the drop in operating profit, net profit also fell significantly to 16.5 billion KRW, an 85.9% decrease. Members blamed the management for these decreases and expressed a desire for BTS to part ways with HYBE.
Strategic Justification for HYBE’s Game Industry Entry
Despite criticisms, HYBE’s venture into the game industry is not necessarily a misjudgment. The entertainment and game industries can leverage shared resources, creating synergies between music artists and game characters. Platforms like Weverse can build game communities. Additionally, diversifying HYBE’s business model is crucial to avoid over-reliance on the music industry and secure new revenue streams, ensuring stable corporate growth. Expanding its IP through game development can enhance its value through successful games.
Conclusion: HYBE’s Sales Success and Profit Challenges
In conclusion, while HYBE succeeded in terms of sales, it fell short in operating and net profits due to investments in new game businesses. The future success of this game business remains to be seen, but according to HYBE, the business is progressing as planned.
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Photographer: Igor Ovsyannykov Source: Pixabay
These things with HYBE is play of push and pull, just end these already.