Why Is JYP Alone Struggling Among the Top 3 Entertainment Agencies?

Q2 Operating Profit 9.5 Billion KRW... 38% Below Consensus
Sales Skewed Towards Digital Music and Albums... Expected Rise with New Male Group Debut in Q4

[Asia Economy Reporter Gong Byung-sun] JYP Entertainment (JYP Ent.) showed weaker performance compared to the other three major entertainment agencies. This is interpreted as due to its reliance on low-profit music and album sales, unlike other agencies that have diversified their revenue streams focusing on content.

According to the financial investment industry on the 19th, JYP's operating profit for the second quarter was 9.5 billion KRW, falling 38% short of market expectations (consensus). Although operating profit increased by 6.08% compared to the same period last year, it did not meet market expectations.

The weak performance is even more pronounced when compared with the results of the other three major agencies. SM Entertainment (SM) posted an operating profit of 27.5 billion KRW in the second quarter, 37.5% above consensus, while YG Entertainment (YG Entertainment) recorded 10.5 billion KRW, exceeding consensus by 169%.

The poor results are attributed to the concentration of sales in music and album sectors, unlike other companies. About 64% of JYP's revenue comes from the music and album segment, which is known to have low profitability. This explains why results were not favorable despite album sales reaching a record high of 1.67 million copies in the second quarter.

Other agencies are moving away from music-centered sales and aiming to diversify revenue streams through content sectors. SM operates the fandom platform ‘DearU Bubble’ and has recently increased subscribers to 1.2 million, showing positive results. YG is also experiencing rapid growth in digital content, with revenue from YouTube expected to have increased by 5 billion KRW compared to before.

Although artists will return starting from the third quarter, securities analysts predict the recovery will continue to lag. Major artists such as TWICE, Stray Kids, and ITZY are preparing for comebacks, but they are considered insufficient to lead the market. In fact, TWICE’s album sales have declined for two consecutive years since 2018 and are expected to decrease again this year.

Hyundai Motor Securities researcher Kim Hyun-yong explained, “Investment attractiveness is expected to emerge from the fourth quarter when the debut of a new male group in Japan becomes visible,” adding, “Whether there will be further increases depends on plans for rookie debuts and the resumption of offline performances.”

Accordingly, the stock price has also been somewhat sluggish. As of 10:32 a.m. on the 19th, JYP was down 2.01% (850 KRW) from the previous day, trading at 40,400 KRW. The stock fell 7.04% over three trading days from the 13th to the 18th, and the downward trend continued.

This content was produced with the assistance of AI translation services.