[K Changers]⑤ 16x Market Cap Growth in 10 Years... JYP's Focused Commitment

In the past, entering the 'Billboard Chart' was like an unattainable dream for Korean singers. However, seeing 'Korean songs' on the Billboard Chart is now a common occurrence. This is the result of pioneers who boldly faced challenges to promote K-pop. JYP Entertainment's 'Wonder Girls' is a representative example. The founder and Chief Creative Officer (CCO), Park Jin-young, handed out flyers with photos of the members on the streets of the United States. Wonder Girls did not hesitate to participate in even small events and worked tirelessly on the ground.

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However, the 'American Dream' was not realized. Since it was a project they were fully committed to, the aftermath was significant. JYP suffered losses amounting to tens of billions of won for three consecutive years until 2013, the period when Wonder Girls entered the U.S. market. Although they achieved the milestone of being the first K-pop act to enter the Billboard 'Hot 100' chart (at 76th place), it was a commercial failure. At the time, there was even talk that among the entertainment 'Big 3 (SM, YG, JYP),' JYP should be excluded and only called the 'Big 2.'

Now, ten years later, JYP is a leading figure in K-pop. The boy group 'Stray Kids' is called the frontrunner in the next generation competition against 'BTS (Bangtan Sonyeondan).' They are the first act after BTS to record more than one No. 1 on the Billboard 200. Earlier this year, the girl group 'TWICE' achieved the remarkable feat of being the first K-pop female artist to receive an award at 'Billboard Women in Music.'

More than a decade ago, the U.S. ignored JYP's albums. Now, foreign capital comes seeking them out. This year, JYP was the company whose stocks were most purchased by foreigners on the KOSDAQ, with nearly 300 billion won worth of net buying. This is the highest among entertainment companies. Thanks to this, the stock price has been hitting new highs daily. The market capitalization has also surpassed 3 trillion won, making it the 'No. 2' entertainment company after HYBE. Park CCO expressed his emotion, saying, "I have realized an absurd dream." The stock price, which was 5,450 won ten years ago, rose 15.8 times to 86,300 won (as of the closing price on the 20th).

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The failure of Wonder Girls left many lessons. Park CCO himself admitted that there was arbitrariness and stubbornness in pushing forward with the U.S. entry. The conclusion was this: "I will build a company that can succeed even if I die."

The result was the introduction of a 'multi-label' system and a reorganization of the 'song selection system.' Previously, marketing, planning, and managing were scattered across departments, but they were consolidated into a headquarters system. Each of the five headquarters independently manages artists and performs these functions. This is effectively a 'multi-label' system. While HYBE built its multi-label system through mergers and acquisitions (M&A), JYP developed its multi-label system internally.

The system reform did not stop there. They also revamped the process of selecting title tracks and album songs. In the past, Park CCO held 'absolute power' in this process. He voluntarily became one of the competing composers. Initially, a 'blind system' was introduced, where songs by Park CCO and other composers were anonymously voted on to select the artist's songs. After reorganizing into the headquarters system, songs are selected through discussions involving Park CCO, artists from each headquarters, and production staff. This is why the 'dependency on JYP' has significantly decreased.

The results were successful. High-quality idols began to emerge like a fountain. At one time, JYP heavily depended on 2PM and TWICE, but now it has a rich intellectual property (IP) portfolio with eight teams either active or planning activities. In line with the current trend of shorter music consumption cycles, they continuously make comebacks and release albums. Last year, the total album sales of JYP artists reached about 11 million copies.

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Along with system reforms, JYP also streamlined areas unrelated to its core business. They dissolved the Actors Headquarters, which managed actors, and sold their subsidiary JYP Foods, which operated in the food service industry. Unlike other entertainment companies involved in golf, finance, or gaming businesses, JYP focuses solely on music-related ventures. A representative example is its subsidiary JYP360. JYP360 opened its own online store last year, selling JYP artists' albums and official merchandise.

Securities firms evaluate JYP as "the company most dedicated to its core business." This focus on idol business alone has resulted in the highest profitability. JYP's operating profit margin last year was 27.9%, with sales of 345.8 billion won and operating profit of 96.6 billion won. Among the four major entertainment companies, JYP had the lowest sales but the highest operating profit margin, more than twice that of HYBE (13.3%), YG (11.9%), and SM (11%). Researcher Lee Hwa-jung of NH Investment & Securities said, "Operating profit in the first quarter is expected to increase by 38% year-on-year to 26.5 billion won, meeting consensus," and raised JYP's target stock price to 110,000 won.

JYP is currently focusing on 'local idol development' as a 'future growth engine.' This strategy involves selecting and debuting members locally. When necessary, they cooperate with local agencies. Confidence was gained from the success of the girl group 'NiziU,' whose all nine members are Japanese. This project was planned in partnership with Sony Music.

Alongside this, JYP is promoting the 'A2K Project' with Republic Records under Universal Music in the U.S. and 'NiziU Project Season 2' in collaboration with Sony Music. The A2K Project is a girl group project focused on North America. NiziU Project Season 2 is the 'male version' of NiziU. The boy group 'Project C,' composed of members from China and Taiwan, is also scheduled to debut in the second half of this year.

JYP Vice President Byun Sang-bong said, "This year, we will continue to meet the expectations of fans and the market through active activities such as new album releases and performances by existing artists, debuting new artists, and launching new projects," adding, "We plan to lay the foundation for sustainable growth by strengthening ESG (environment, social, governance) management this year." JYP, the first entertainment company to join 'RE100' (a private campaign to use 100% renewable energy by 2050), also conducts social contribution activities such as donating part of its annual operating profit to cover medical expenses for sick children.

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