BTS to Release Female Sibling... Concerns Over Negative Impact on HYBE's Performance

Schoolgirls in uniforms appearing in BTS's new song 'Permission to Dance' music video.

[Asia Economy Reporter Park So-yeon] HYBE, the agency of the group BTS, will debut a girl group in the fourth quarter of this year. HYBE has been preparing a rookie girl group in collaboration with its subsidiary Source Music, which it acquired in 2019. For this team, HYBE’s chairman Bang Si-hyuk and Min Hee-jin, Chief Brand Officer (CBO) who nurtured popular girl groups such as Girls' Generation, f(x), and Red Velvet at SM, have taken the lead. This is HYBE’s first girl group production and the first rookie group introduced since Min Hee-jin joined HYBE, drawing significant attention from the market. However, there are concerns that it may take some time for the rookie group to form a sizable fandom, which could negatively impact the company’s performance in the fourth quarter and next year.

◇ 'Bang Si-hyuk + Min Hee-jin' Style Girl Group Raises Expectations Among K-pop Fans = A senior HYBE official said on the 9th, "We are preparing to launch a girl group in the fourth quarter," adding, "The exact schedule, number of members, and music genre are still confidential."

The official added, "Internally, there is great anticipation for rookies with looks and skills comparable to BLACKPINK." HYBE had originally planned to launch the girl group in October and aims to debut them by the end of the year at the latest.

According to the Korean Intellectual Property Office’s patent information search site KIPRIS, HYBE registered multiple trademarks last month, including 'RED MARBLE' and 'CHAKHO.' There is speculation that these might be the names of the rookie girl group.

Market expectations have risen further as the group is known to be a collaboration between Chairman Bang Si-hyuk, who developed BTS, and CBO Min Hee-jin, who has shown exceptional talent in producing girl groups.

Chairman Bang oversees music production and overall management, while Min Hee-jin CBO is responsible for creative directing and overall branding, including concepts and visual imagery.

HYBE conducted auditions for this girl group across 16 cities in 7 countries, including the United States, Australia, Singapore, Japan, Taiwan, Vietnam, Thailand, and South Korea.

◇ Impact of the Rookie Girl Group on HYBE’s Performance = The securities industry maintains a positive outlook on HYBE for the second half of this year, citing the release of BTS albums, deferred recognition of MD sales, and expansion of the Weverse platform.

Park Ha-kyung, a researcher at Korea Investment & Securities, said, "BTS’s album and TXT’s repackage album are scheduled to be released in the third quarter," adding, "BTS’s initial album sales have already reached 1.9 million copies, and TXT’s repackage has recorded 400,000 pre-orders, so third-quarter album sales are expected to increase by 27% to 4.3 million copies compared to the previous quarter."

According to Hana Financial Investment, HYBE’s sales and operating profit for the third quarter of this year are expected to reach a record high of 342.6 billion KRW and 72 billion KRW, respectively. The operating profit margin is also expected to recover to the 20% range.

However, there are concerns that the launch of the rookie girl group could negatively affect HYBE’s performance in the fourth quarter and next year. A financial investment industry official said, "Debuting rookies can actually hold back performance," adding, "Usually, rookies are considered a cost factor for about a year."

Since it is almost impossible for rookie idols to become popular from their first album, continuous investment with risk-taking is required for at least 2 to 3 years. If they do not succeed within 2 to 3 years after debut, cumulative losses generally reach tens of billions of KRW. It is considered ideal to have a hit in the 2nd or 3rd year after debut, as immediate success is difficult in reality.

Another industry insider said, "There is a difference in scale (album sales volume) between boy groups and girl groups," adding, "Especially HYBE’s production style is not about instant stardom upon debut but rather about forming a fandom and heating up the atmosphere over time, so we need to watch closely."