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On Thursday, May 2, 2024, BTS made headlines as reports surfaced that HYBE witnessed a sharp decline of 72.6% in its operating profits in the first quarter of 2024 due to the band's absence compared to 2023. The entertainment company's operational profit for the first quarter was 14.4 billion won ($10.4 million), a decrease from the 15.1 billion won market forecast provided by Yonhap Infomax.
The billion-dollar company attributed the sharp fall to both BTS' absence due to their ongoing military enlistment as well as the costs of launching new groups, leading to net income falling by 87.4 percent to only 2.9 billion won ($2.1 million), while revenue also decreased by 12.1 percent year-over-year to 360.9 billion won ($264 million).
However, HYBE did highlight some encouraging rises in its report, pointing to the triumphant album debuts of TWS and ILLIT, whose combined sales exceeded 500,000 copies. Sparkling Blue, the first EP by TWS, sold 260,000 copies in its first week of sales and 500,000 copies in its first nine weeks of release. Super Real Me by girl group ILLIT sold 380,000 copies in its first week of sales and half a million copies in just 4 weeks.
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"This success helped mitigate some of the financial impacts from the hiatus taken by senior artists," Hybe explained in its report shared on Thursday.
BTS' agency BIGHIT MUSIC has the highest profit turnover in Q1 2024 despite the group's absence
According to HYBE Corporation's latest earnings report that was released on Thursday, May 2, 2024, revenues from recorded music, live performances, advertisements, and appearances in the artist direct-involvement sector fell 7.5% year over year to 216.98 billion won ($163.27 million).
Furthermore, at 143.94 billion won ($108.31 million), the artist indirect-involvement sector had a year-over-year (YoY) decline of 18.3% in 2024 compared to last year. This segment of business comprises content, merchandise and licensing, and the Weverse fan platform. However, the variety show Nana Tour with Seventeen by Pledis' top boy band and Tomorrow by Together (TXT) tour kept it from decreasing any further.
BTS members' individual digital releases have maintained the momentum in favor of HYBE in Q1 of 2024, despite their absence from the spotlight. BTS' Taehyung released his solo single FRI(END)S in March, and J-Hope released his second solo album and docuseries HOPE IN THE STREET on March 28 and 29 of this year.
Now, BTS frontman Kim Namjoon, aka RM's upcoming second solo album Right Place, Wrong Person, will be digitally released on May 24, 2024. Hence, these have enabled HYBE to earn through artist indirect-involvement and artist direct-involvement segments.
Furthermore, according to HYBE's report on Thursday, its operating profit plummeted to KRW 14.34 billion ($10.79 million), a 72.6% YoY decline. The company made about 110.3 billion won in total profit. With a net profit of 140.3 billion won (over $102 million) in Q1 2024, BIGHIT MUSIC is the largest contributor to HYBE's earnings.
With 44 billion won ($33.1 million) in concert income in 2024, it was up 74.5% from the previous year. Q1 2023 was unusually sluggish, even though that was the category with the largest year-over-year rise. HYBE's most recent quarter was comparable to the 45.3 billion won ($34.1 million) in concert earnings recorded in the company's first quarter of 2021.
However, the operational profit of the company failed to meet the 15.1 billion won prediction provided by Yonhap Infomax, the financial data provider of Yonhap, a Korean news agency. Additionally, the ongoing HYBE's feud with ADOR's CEO, Min Hee-jin, has caused another hit to the dropping share prices of the company, resulting in a loss of 850 billion won ($621 million).
In 2023, Monthly Active Users (MAUs) peaked in Q3 at 10.6 million due to BTS' Jungkook's Weverse livestream, where the singer came online more than 40 times in a year with an average of 2-3 hours long per livestream. However, Monthly Active Users dropped to 10.1 million in Q4 of 2023.
Furthermore, Monthly Active Users (MAUs) on HYBE's social media platform, Weverse, decreased by 9.2 million in Q1 of 2024 and kept decreasing in Q2.
BTS enlisted in the military in December 2023, and since then, the average profit per paying user as well as the amount paid decreased in 2024 from the levels attained in 2022 and 2023.
However, HYBE mentioned in its report that this year is predicted to see more than 30% more album releases than in 2023 due to the return of BTS member Kim Seokjin in June 2024 after fulfilling his mandatory 18 months of service in the Republic of Korea Army.
Jin is reported to release his debut solo album this year since he enlisted in December 2022 after releasing his debut solo single, The Astronaut, in collaboration with Coldplay in October 2022. Likewise, BTS' rapper and songwriter Jung Hoseok, aka J-Hope, is set to return from the military in October 2024.
"We expect the company's new album releases to increase by more than 30 percent from the previous year, thanks to the returns of existing artists and debuts of new ones," the company said.
HYBE predicts an increase in operational profits, revenue, and net income from the third quarter of 2024 after BTS members Jin and J-Hope's return.
