K-POP Firmly Established as a Global Genre
Timely Returns of BTS, Blackpink, and Twice
Hopes Rise for Lifting of China's Hallyu Ban in the Second Half of the Year
The Netflix original animation "K-POP Demon Hunters" is enjoying high popularity and is even dominating global music charts. Although this content was not produced in Korea, the main characters are K-POP idols, and songs by K-POP artists are featured throughout. Songs written and performed by Korean artists for the main characters have ranked high on the US Billboard charts. This is clear evidence that K-POP has now firmly established itself as a genre in the eyes of people around the world.
On July 22, Samsung Securities maintained its Overweight rating on the entertainment sector in its report "A Love Letter to K-POP," stating that the return of top-tier artists and expanding merchandise (MD) sales are expected, and that if the lifting of China's Hallyu ban allows for performances in mainland China, a significant improvement in earnings is likely.
First, the return of top-tier artists is revitalizing the market. In July, Blackpink and Twice released new songs and albums and began their world tours. BTS is also scheduled to release a new song in the spring of next year. Top-tier artists are expected to actively collaborate with global brands and content producers to release collaborative music tracks.
As the global recognition of K-POP artists increases, not only concert-related MD but also character MD and collaboration MD are enjoying great popularity both in Korea and abroad. For example, Blackpink has launched limited edition league collections with various popular teams from Major League Baseball (MLB) and the National Basketball Association (NBA) in the United States. Stray Kids collaborated with the English Premier League's Tottenham Hotspur to release a limited edition collaboration uniform. MD is driving improved earnings by diversifying the revenue structure of entertainment companies.
There is also a possibility that China's Hallyu ban, which has been in place since 2016, may be lifted. If performances in mainland China become possible, not only concert revenue but also MD, content, advertising, and licensing revenues are likely to increase. Considering the market environment, it is highly likely that smaller-scale performances will be permitted initially. Attention should be paid to news developments around the APEC summit scheduled for late October in Gyeongju.
The success of localized artists is also noteworthy. HYBE's US-localized artist "KATSEYE" has continuously entered the main Billboard chart in the United States and is steadily gaining popularity, with their first solo tour in North America scheduled to begin in November. In the second half of the year, attention should be paid to localized artists in the Latin American region.
Choi Minha, an analyst at Samsung Securities, stated, "Following structural improvements, earnings growth is expected to accelerate in the second half of the year, and we present YG Entertainment, which is expected to see a rise in scale, and DearU, which is expected to see sharply improved profitability with the launch of the QQ Music Bubble service in China and the opening of its web store, as our top picks."
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