However Massive Hit Leisure’s excessive reliance on BTS may turn into simply as a lot a legal responsibility as it’s an asset.

The corporate raised practically 963 billion received ($840 million) by promoting shares in its preliminary public providing, making it South Korea’s largest IPO since July 2017, in response to information compiled by Dealogic.

Early reception was very constructive: Shares opened Thursday at 270,000 received ($236) every, nicely above the IPO value of 135,000 received ($118) every. They have been final buying and selling at 301,000 received ($263).

Earlier than buying and selling started, Massive Hit was value 4.Eight trillion received ($4.1 billion), making it extra useful than the nation’s three greatest listed document labels mixed. And that is nearly solely because of the meteoric rise of BTS. The group accounted for 97% of Massive Hit’s gross sales final yr.

Whereas BTS has damaged out in a manner that no different South Korean act has earlier than, there are some evident dangers.

Counting on the inventive output of any movie star expertise comes with a variety of potential issues, from scandal to unexpected tragedy. However BTS has a singular complication that might threaten the enterprise: South Korea mandates greater than a yr of navy service, and the group’s members are quick approaching the deadline to enlist.

The group that fueled Massive Hit’s rise

Earlier than their rise, South Korea’s music business was dominated by three music labels — JYP Leisure, SM Leisure and YG Leisure — that turned out Ok-pop’s greatest acts, together with Ladies’ Technology, SHINee, GOT7, Massive Bang and PSY.

However BTS, an acronym for Past the Scene, was created by the a lot smaller Massive Hit. The label was based in 2005 by producer Bang Si-hyuk, also referred to as “Hitman” Bang.

Within the seven years since their debut, BTS has broken records and turn into an unstoppable power within the business. They’ve offered extra physical albums in the USA this yr than Harry Kinds, Billie Eilish or Justin Bieber, and have been the primary group from South Korea to promote out US arenas and win a Billboard Music Award.
And their race to the highest of the Billboard Sizzling 100 charts — they have been the primary all-South Korean act to take action — helped contribute an estimated 1.7 trillion won ($1.5 billion) to the South Korean economic system by boosting tourism and growing demand for South Korean merchandise corresponding to cosmetics and meals, in response to the Ministry of Tradition and Korea Tourism Analysis Institute.

The group’s success has reworked Massive Hit’s fortunes. Final yr, Massive Hit reported 587 billion received ($512 million) in gross sales — practically double the earlier yr’s whole.

Nevertheless it additionally highlights the necessity for Massive Hit to diversify.

“Ninety % of Massive Hit Leisure’s income is from BTS, so the danger is there,” stated Park Ju-gun, a enterprise analyst from company evaluation agency CEO Rating. “Nevertheless it has began to shift its income construction to a multifaceted portfolio.”

Over the previous yr or so, the corporate has acquired different music labels so it may carry extra acts into the fold and debuted the boyband TXT, or Tomorrow X Collectively. Massive Hit additionally launched a platform known as Weverse the place followers can see unique content material and message their favourite artists — a service that units the corporate aside from the opposite main labels, in response to Ji In-hae, an analyst from Hanwha securities agency.

The modifications have not been revolutionary. BTS nonetheless made up practically 88% of gross sales by means of the primary half of this yr, in response to the corporate’s IPO prospectus printed in September. And there isn’t any assure that new teams will repeat the success of BTS.

“We do not know if there’ll ever be one other group that may obtain BTS’ degree of recognition,” stated Indiana College Bloomington professor and Ok-pop skilled CedarBough Saeji.

Imminent navy service and different dangers

BTS, in the meantime, might quickly face an enormous disruption: obligatory navy service.

In South Korea, nearly all wholesome males are required to register for the military and serve 18 months. Individuals can delay their service for causes together with increased schooling or particular coaching till they’re 28 years previous.

BTS’ oldest member, Kim Seok-jin — also referred to as Jin — turns 28 in December, whereas rapper Suga whose actual identify is Min Yoon-gi, turns 28 in March.

Massive Hit has acknowledged that navy obligation is a threat for buyers. However the firm additionally prompt that the band nonetheless has a while: Massive Hit informed CNN Enterprise that Jin has enrolled in a graduate college program. That might permit him to delay his service till simply earlier than his 29th birthday in 2021, in response to South Korean regulation.

Whether or not BTS and different pop teams ought to need to serve their whole time period has turn into a subject of nationwide debate. In contrast to different artists, classical musicians and sports activities gamers, high Ok-pop stars cannot obtain exemptions from full navy service.

“The worth of their contribution to Korea Wave and our nation can’t be fathomed,” Noh Woong-rae, a lawmaker from the ruling Democratic Celebration stated at a Nationwide Meeting assembly earlier this month. “Now’s the time we should talk about how these proud younger males may higher serve our nation.” The nation’s parliament is contemplating a invoice that may permit Ok-pop teams to delay navy service for 2 years past the present deadline.

The foundations as written, although, may disrupt the group for years.

That possible means extra solo initiatives — although the group tends to do higher as a unit.

BTS is extremely prolific, releasing eight studio albums in seven years together with elaborate music movies, candid vlogs, behind-the-scenes movies, mini-series, solo initiatives, combine tapes and tv appearances.

Korean Ok-pop followers are used to their idols disappearing for navy service, however this shall be uncharted territory for worldwide followers who have been launched to the style by means of BTS. Saeji, the Indiana College professor, stated that might imply an “uncomfortable transition interval,” though she was optimistic that followers would keep loyal to BTS by means of their absence.

Massive Hit additionally famous the group’s repute as a possible threat in its submitting.

Different labels have struggled with scandal. Final yr, YG Leisure’s inventory plunged after a member of one in every of its acts, Massive Bang, was investigated for a variety of allegations, together with allegedly violating South Korea’s prostitution regulation. The member, Seungri, quit the industry and was indicted on prostitution and ordinary playing fees in January this yr. Seungri claims he’s harmless aside from one violation of overseas foreign money buying and selling regulation, in response to his former lawyer Son Byoung-ho.

“There are issues that may occur which may deeply harm an organization, and we noticed that with YG Leisure,” stated Saeji.

“Nobody needs to be investing within the creativity of artists and their reference to followers with out understanding that there are issues that may occur,” Saeji added. “This isn’t a get wealthy scheme.”

The members themselves even have an incentive to keep away from doing something to jeopardize the group. They every obtained shares of Massive Hit in August that are now worth millions of dollars due to the IPO.

“One of the simplest ways to protect the shares can be to maintain working and keep as a seven-member group,” Saeji stated.

What does the longer term maintain?

Regardless of the dangers, Massive Hit has quite a lot of cause to be proud of its superstars.

Despite the fact that the coronavirus pandemic pressured BTS to cancel a world tour this yr, the group appears to have managed to turn into much more common.

In June, the band dwell streamed a live performance known as Bang Bang Con which drew greater than 750,000 followers from around the globe. The occasion nabbed them a new Guinness World Record title for many viewers of a dwell streamed music live performance.

“What they’re providing when it comes to positivity has been so completely attuned to the second that we’re dwelling in,” Saeji stated.

The continued reputation of BTS has salvaged Massive Hit’s backside line through the pandemic. Live performance income plunged practically 99% within the first half of 2020 in comparison with the identical time a yr in the past. However album gross sales shot up 80%. General income fell simply 8% in comparison with final yr.

“If the corporate is very valued now within the midst of a pandemic, it is going to be a possibility to achieve much more momentum subsequent yr post-pandemic,” stated Park, the CEO Rating analyst.

— Joh Yunji, Yoonjung Website positioning and Gawon Bae contributed reporting from Seoul.

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