“K-Pop band BTS has been a blessing to work with,” said CEO Park Ji-won of Korean entertainment company HYBE as he announced the record sales the company had in the first quarter of 2022. HYBE announced on May 3 that it recorded sales of 285 billion won ($225 million) (K-IFRS consolidated basis, provisional settlement before the review of external auditors was completed) in the first quarter of this year, up 59.8% from the same period of the previous year. Hybe’s operating profit increased 62.7% year on year to 37 billion won ($29 million), and net income was 30.8 billion won ($24 million), up 78.7% from the same period last year.

BTS & other labels’ sales, online & offline performances increased sales

Hybe has been announcing Adjusted EBIT and Adjusted EBITDA, respectively, since the fourth quarter of 2021 to present an indicator that can measure the company’s actual profit-generating ability. Adjusted EBITDA stood at 44.4 billion ($35 million). Adjusted EBITDA, excluding amortization of non-cash tangible and intangible assets, more than doubled from the same period of the previous year to 64.3 billion won ($51 million). Adjusted EBIT and Adjusted EBITDA reflected profits from labels such as Belip Labs, which are classified as affiliates, and NSN Apparels, a US apparel company.

Direct participatory sales amounted to 153.6 billion ($121 million) in the first quarter, accounting for 54% of total sales. Direct participation-type sales include sales generated from albums and performances. In March, sales related to BTS’ Seoul concert ‘BTS PERMISSION TO DANCE ON STAGE – SEOUL’ also reflected indirect participation type sales in the first quarter. The total sales of the performance division, including BTS’ Seoul concerts, were counted at 61.3 billion won ($48 million).

Hybe decided to partially change the performance sales counting criteria by announcing its first-quarter earnings. In the past, sales of online streaming services for offline performances were classified as content that belongs to indirect participation. Still, from the first quarter of this year, both online and offline performances will be counted as performance sales that correspond to direct participation. As the line between performances and content has become blurred starting from the COVID-19 pandemic, it is per the judgment that it is reasonable to include the performances generated from online streaming in the performance sector.

Album releases, worldwide concerts, & fan clubs in 2Q

As many major Hybe artists are scheduled to release albums in the second quarter, direct participation-type sales, especially in the album division, are expected to increase significantly. The girl group Le Seraphim album, which debuted on May 2, recorded 380,000 pre-orders, and the pre-orders of Tomorrow X Together and Seventeen’s albums are also showing an increasing trend compared to the previous album. BTS has also announced the release of a new album on June 10.

Tomorrow X Together decided to go on their first world tour after their debut in July. Hybe America’s Justin Bieber tour, which has sold all seats since February, is expected to be held in more diverse places. Sales in the performance sector are also expected to expand, starting with the BTS concert in Las Vegas in the second quarter.

Indirect participation-type sales, including sales from MD (official product), licensing, content, and fan clubs, were 131.3 billion won ($10 million). The proportion of indirect participatory sales in total sales decreased by 18 % compared to the previous quarter due to the increase in performance sales, which corresponds to direct participatory sales, and a change in the counting method to include online streaming services in performance sales.

Among the MDs, ‘By BTS’ MD, in which BTS members directly participated in the production, was particularly popular. BTS MD sold out of the 1st sale early, so the 2nd and 3rd sales were also conducted. In addition, it was found that sales of tour MDs and light sticks drove MD sales. After 2Q, new albums by artists are released in large numbers; new MD releases are expected to increase.

Hybe also revealed the results of the game ‘In the Island with BTS,’ which Hybe IM is preparing for release, through a conference call held immediately after the announcement of the results on the same day. Developed with the participation of BTS members to reach the goal of providing emotion to fans through music and artists, In the Island with BTS received 1 million reservations in 3 days.

Hybe CEO Park Ji-won emphasized, “It is the intrinsic value of Hybe to impress fans through music and artists, and there will be no neglect of this.”

BTS’s popularity helped sales go up

Hybe mentioned the unique presence of the ‘super IP’ of BTS and expressed their will to support BTS to expand its capabilities continuously. CEO Park Ji-won said, “It is a blessing to Hybe to work with BTS, and we plan to support BTS’s ability to expand without stopping intensively.”

Hybe’s Weverse Company, a platform subsidiary, took over Naver’s fan community service V Live in February and decided to introduce a more advanced fan platform service through technological advancement and service expansion.

Weverse, which provides a unified fan experience on one platform, will evolve the fan experience, starting with integration with V Live, video live, fan letter function, online/offline concert experience and related content expansion. In addition, the entertainment company announced plans to strengthen existing core business areas such as streaming, data analysis technology, and the advancement of global logistics systems.

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