Increased Revenue Expected from Online Concerts and Content Sales
Platform Activation Anticipated to Surpass 1 Trillion Won in Sales This Year
The Metaverse is becoming a reality. The term Metaverse is a combination of "Meta," meaning virtual, and "Universe," meaning world. It is similar to the spaces "Matrix" and "Oasis" featured in the movies 'The Matrix' and 'Ready Player One.' The COVID-19 pandemic accelerated the adoption of contactless (untact) culture. Generation Z, born from the mid-1990s to early 2000s, adapted most quickly to the pandemic situation. They began communicating by creating avatars within the Metaverse. The Metaverse is most actively realized through gaming. With the advancement and integration of various technologies such as location-based technology (GPS), augmented reality (AR), and digital graphics, diverse Metaverses are emerging. Asia Economy aims to assess growth potential in the Metaverse environment by analyzing Big Hit Entertainment and Giant Step.
[Asia Economy Reporter Park Hyungsoo] Interest in the three-dimensional virtual world "Metaverse" is growing in the entertainment industry. The globally popular idol group BTS (Bangtan Sonyeondan) premiered the choreography version music video of "Dynamite" for the first time in the online game 'Fortnite' last September. Big Hit Entertainment, BTS's agency, is exploring various business opportunities within the Metaverse, where there are no spatial limitations. This is why it is expected to surpass 1 trillion KRW in sales this year.
According to the Financial Supervisory Service on the 12th, Big Hit recorded consolidated sales of 796.3 billion KRW, operating profit of 142.4 billion KRW, and net profit of 86.2 billion KRW last year. These figures represent increases of 35.6%, 44.2%, and 19.0% respectively compared to the previous year.
A company representative explained, "Sales and operating profit increased due to strengthening the multi-label system through mergers and acquisitions (M&A), growth of the fan community platform 'Weverse,' and strong album sales."
Big Hit recorded cumulative sales of 484 billion KRW through the third quarter last year, about 9% higher than the same period the previous year. Achieving sales of 312.3 billion KRW in the fourth quarter allowed the company to maintain a high growth rate despite the impact of COVID-19. Lee Ki-hoon, a researcher at Hana Financial Investment, analyzed, "BTS released two special albums, recording 140.8 billion KRW in album and music sales. Content sales also surged due to BTS and Big Hit Labels' online tours."
In the first half of last year, as COVID-19 spread worldwide, domestic idol groups popular overseas faced a crisis. Planned overseas concerts were canceled or postponed. To compensate fans who were disappointed not to see their favorite artists in person, online concerts were held instead. Online concerts were one of the reasons entertainment agencies, which had poor performance in the first half, were able to recover in the second half of last year.
The fan community platform "Weverse," operated by Big Hit, is visited by BTS fans from over 200 countries. Fans communicate with artists and consume content on Weverse. Weverse offers features such as Feed, where fans can interact with each other; Artist, where fans can check content posted by artists; and Media, which aggregates various artist content in one place. The cumulative number of app downloads exceeded 25 million as of last month. Weverse is a virtual world built on fandom. It has the highest monthly active users (MAU) among global fan community platforms.
Lee Sunhwa, a researcher at KB Securities, said, "Weverse generates revenue through artist-specific membership subscriptions and sales of various merchandise (MD) and content," adding, "Fans can enjoy benefits such as exclusive membership-only content, opportunities to purchase exclusive products, and priority ticket booking for performances."
Recognizing Weverse's potential, Naver, YG Entertainment, and Universal Music Group (UMG) have decided to form an alliance with Big Hit. YG Entertainment's BLACKPINK and four overseas artist groups under UMG communicate with fans through Weverse. As world-renowned artists continue to join, the value of the Weverse platform is expected to grow as the Metaverse develops.
As the Metaverse advances, demand for paid content provided by entertainment companies is bound to increase. Platforms in the Metaverse ecosystem provide an environment where individual developers can create content. A monetary payment and reward system has also been established between developers and users. This system encourages developers to build content that meets user demand by extending beyond simple enjoyment to monetary rewards. In the Metaverse ecosystem, goods functioning like money are distributed through in-app purchases. The amount paid by users passes through the platform and reaches the developers. As the number of developers increases and competition intensifies, the importance of popular intellectual property (IP) also grows. Big Hit is one of the entertainment agencies actively utilizing the Metaverse. BTS released a music video on Fortnite, one of the representative Metaverse platforms, and sells clothing items on Zepeto, an augmented reality (AR) avatar-based social networking service (SNS). Big Hit invested 7 billion KRW (4.5% stake) in Naver Z, the provider of Zepeto.
Choi Minha, a researcher at Samsung Securities, said, "Big Hit is responding quickly to market changes," and predicted, "With strong artist power, strengthened Weverse position, and expanded revenue-generating capabilities, Big Hit's profits will increase." Samsung Securities estimates Big Hit will achieve sales of 1.372 trillion KRW and operating profit of 261 billion KRW this year.
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