Revenue decreases Despite aespa, NCT 127 Albums

Revenue decreases Despite aespa, NCT 127 Albums

With a roster of new artists and a North American joint venture, SM Entertainment’s revenue reached 250 billion won ($189.5 million at the period’s average exchange rate) in the fourth quarter of 2023, a decrease of 3.4% year over year and 6.1% lower than the third quarter, the company announced on Wednesday (February 7th). Operating profit fell 51.7% to 10.9 billion won ($8.3 million) while the company posted a net loss of 19.7 billion won ($14.9 million) compared with a net profit of 1.9 billion won ($1.4 million) in the year-ago period.

The company attributed a decline in revenue from its concert-related subsidiaries to smaller-sized concerts and a decline in its content-related subsidiaries to “slow business conditions.” SM Entertainment’s share price rose 0.2% to 73,000 won ($54.77) after the earnings release.

SM Entertainment sold 5.6 million albums in the fourth quarter, up 40% from the year-ago quarter; NCT 127’s album Fact checking sold 1.86 million units and aespa’s Drama The EP sold 1.26 million units. As for concerts, NCT Wish performed 24 shows in nine cities in Japan before the release of its debut album later this quarter. SHINee performed for 80,000 fans in four concerts in Japan. NCT 127 held six concerts in Seoul, Korea with a total attendance of 60,000.

For the entire year, SM Entertainment released 64 albums that sold a record 20.1 million units and its artists performed in 340 concerts worldwide. RIIZE, the first boy group launched under the company’s new multi-producer system – an organizational structure introduced in 2023 to break away from the previous system that relied solely on the ousted founder and chief producer Lee Soo-man – sold more than 1 million units of his debut album, Pick up a guitarwhich was published in September.

“The multi-production system, which is the core part of our SM 3.0 strategy, has been operating successfully since its introduction last year, and active musical activities are underway under the direction of each SM production director,” CEO Jang Cheol Hyuk said during Wednesday’s earnings call. The system aims to accelerate the introduction of new artists and material by providing other leaders with decision-making powers.

Looking ahead to 2024, SM Entertainment will launch four new artists: NCT Wish, virtual artist naevis, an unnamed girl group, and a UK-based boy group. The company also plans to release global albums for top artists at least once a year and expand the scale of global concerts, Jang said.

In the first quarter, SM has EPs from NCT Dream, TEN, Taeyong, and Wendy, while NCT 127 is performing 13 dates in Japan, Indonesia, the Philippines, Thailand, and Macau. The second quarter will see a new album from aespa and EPs from Red Velvet, RIIZE, SHINee, SUHO, and WayV, as well as 15 concert dates for NCT Dream in Korea, Japan, and Southeast Asia. Other artists including MINHO, TVXQ!, Super Junior-LSS, SHINee, TAEmin, and aespa each have a handful of shows in Q1 or Q2.

SM Entertainment also expects to see results from its North American partnership with Kakao Entertainment. The two companies are “working to create and expand local partnerships for artists,” Jang said. He noted the strategic joint venture agreement with Moon & Back, a UK-based entertainment and TV production company, which will form a five-member boy band in the UK and perform sourced songs by KMR, the new music publishing subsidiary of SM Entertainment.

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