K-Pop Industry Faces 2024 Decline Amid Political Turmoil, Scheduling Issues, and Internal Conflicts

K-Pop Labels Experience Significant Stock Declines in 2024

In a startling shift, four major K-pop entertainment companies reported an average stock decline of 19% in 2024, contrasting sharply with the impressive 30% gain they achieved in the previous year. This downturn has raised concerns about the future sustainability of these businesses amidst an evolving global market.

Underperformance Against Market Benchmarks

A recent Billboard report highlighted that the performance of these agencies not only lagged behind their own previous successes but also the overall South Korean stock index. Despite the burgeoning popularity of K-pop overseas, especially in the Americas, these labels are grappling with myriad challenges that have hindered their financial returns.

HYBE’s Sharp Decline and Internal Struggles

Prominent among these agencies is HYBE, the label of global sensation BTS, which experienced a staggering 99% drop in net profit for the third quarter compared with record gains in the second quarter. This financial slump reflects a downturn in revenue from both concert performances and recorded music sales.

Additionally, HYBE’s stock plummeted by 17.2%, settling around 193,400 won (approximately $131). The company has been facing scrutiny over several internal disputes, notably the controversial contract termination involving the popular group NewJeans. Compounding these issues, South Korean regulators are investigating the company’s founder, Bang Si Hyuk, for allegedly orchestrating a lucrative profit-sharing deal during its 2020 IPO, resulting in personal profits of $285 million.

Challenges for Other Major Labels

SM Entertainment, which manages successful acts like NCT, Red Velvet, and aespa, saw its stock fall by 17.9% to 75,600 won (around $51). The company’s net profit dwindled by over 95% alongside a 9% decrease in revenue during the third quarter.

Meanwhile, JYP Entertainment, home to fan-favorites such as GOT7, Stray Kids, and iTZY, witnessed an alarming 31% drop in its stock price, now valued at 69,900 won (approximately $47). YG Entertainment, the label driving BLACKPINK and the emerging group BABYMONSTER, fared relatively better but also faced a decline; its stock dipped 10% to 45,800 won (around $31), marking a significant shift as total revenue plummeted by 42% year-over-year.

Broader Economic Context and Political Unrest

The decline in K-pop stocks parallels a broader downturn in the Korean stock market, with the KOSPI index falling by 9.6% in 2024. Billboard attributed part of this decline to the political instability surrounding Prime Minister Yoon Suk Yeol, whose declaration of martial law on December 3 triggered a 4.3% drop in the KOSPI index. This upheaval led to subsequent political crises, including the impeachment of both the Prime Minister and the acting President, Han Duck-soo.

The Struggle of the Korean Won

In light of these developments, the Korean won has reached its lowest levels since March 2009, trading at 1,467.5 won to the dollar, marking a stark comparison to the 1,483.5 rate during the global financial crisis. This financial stress further complicates the recovery for K-pop labels struggling to adapt to a shifting landscape.

As the K-pop industry navigates these turbulent waters, stakeholders will be closely watching how these companies manage internal conflicts, marketing strategies, and respond to a rapidly shifting global entertainment market.

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