BUSINESS IN THE TIME OF COVID-19
AN INSIGHT INTO BIG HIT’S 2H CORPORATE BRIEFING WITH THE COMMUNITY, Part 1
2020 started with a bang for BTS and ARMY and the start of the promotion cycle for BTS’ fourth full-length album MAP OF THE SOUL: 7. The promotions, which included the ambitious global art project CONNECT BTS, were extensive. At the same time, the novel Coronavirus began to spread through different parts of the world making Big Hit Entertainment’s second briefing from the first week of February available to only the media.
As the situation worsened, the MAP OF THE SOUL: TOUR was in danger of getting scrapped. RM expressed his feelings about the situation on VLive, saying, “Throughout the promotions, I felt powerless. Even though I sweated, it didn’t feel like sweat”. The feeling of helplessness only crept in deeper when the WHO declared the virus a full blown pandemic in March.
For BTS and Big Hit, the first part of the year was all about attempting to get back on track, attempting to make 2020 known as the year they tried their best. Despite the circumstances, BTS still created new records and crushed old ones. Big Hit broke new ground with their plans as well. But how exactly did Big Hit not only stay afloat, but grow? This blog is here to explain exactly that.
FINANCIAL REPORT AND LABEL EXPANSION
Keeping in mind both the fans and the main philosophy of Big Hit Entertainment, “Music and Artist for Healing”, Founder and CEO Bang Sihyuk began the third Corporate Briefing. He first explained the financial progress the company was making, despite BTS’ tour getting shelved.
He displayed a bar graph made by the Korean International Financial Reporting Standards (K-IFRS), stating that Big Hit achieved an estimated pre-audit performance of 294 billion Won ($244.8 million USD) in connected revenue and 49.7 billion Won ($41.4 million USD) in connected operating profits. They earned this not just with albums and music, but also by utilizing online concerts, merchandise, and multimedia content.
Mr. Bang then went into the Labels ecosystem, which consists of numerous labels and companies. Their expansion started last year when Big Hit acquired Source Music, followed by Pledis Entertainment this year in May. This meant the groups GFriend, Seventeen and Nu’est would now be indirectly under Big Hit Labels. The company also plans to expand their portfolio by debuting a new boy group this year, for which the hunt is still on through the reality show I-LAND. In addition, a new girl group and another boy group will debut in 2021 and 2022 respectively.
Mr. Bang explained that in the first half of 2020 they had five groups actively promoting: BTS, TXT, GFriend, Nu’est and Seventeen, which yielded exciting results. On Gaon Album Chart, 40% of all album sales belonged to artists from Big Hit Labels, with BTS topping the chart followed by Seventeen (2nd), TXT (11th), Nu’est (16th) and GFriend (38th). Overall, there were 22 albums in the Top 100. BTS and Seventeen stood out the most, selling 6.21 million and 1.45 million albums respectively.
BTS’ MAP OF THE SOUL: 7 sold over 4.26 million units in the first half of 2020, also ranking #1 on Billboard 200 for four weeks in a row, as well as 1st on iTunes Top Album charts in 91 countries and regions around the globe. All seven of BTS’ albums, with the exception of BTS WORLD OST, have recently sold over a million copies each. The band also took part in Dear Class of 2020, an online graduation ceremony hosted by YouTube, where they gave advice to the graduating classes of 2020 alongside former President of the US Barack Obama, former First Lady Michelle Obama, and Google CEO Sundar Pichai. Mr. Bang mentioned BTS’ newest single Dynamite, which was released on August 21st.
The highlight of this segment was the upcoming ventures of the artists, with BTS’ new album releasing in the fourth quarter of this year, between October-December.
THE BUSINESS SIDE
The second half of the briefing focused on the business aspect of Big Hit, which had Global CEO Lenzo Seokjun Yoon taking over the presentation. He started by asking some important questions that he’d had while he traveled with BTS for their previous LOVE YOURSELF: SPEAK YOURSELF tour. How can the artists under their label solely focus on creating content and album related subject matter? And how can the label better support their artists with stable profit?
According to Mr. Yoon, “Artists must carry out their creative pursuits based on sound, mind and body, and present their best selves to fans. When the artists are more involved in activities and projects, quality of the content and their health are bound to be compromised. This environment is not sustainable for the artists and company.”
That’s how the company had worked in its early years, with almost 80% of profits coming from advertisements and album sales driven directly by the artists. To prevent this unsustainable cycle from continuing, Big Hit created and implemented a structure that would generate profit indirectly of their artists while preparing for BTS’ debut. The proper execution of this structure led to the expansion of their Intellectual Property (IP).
In three short years, spanning 2017-2019, their profit went from 22.3% to 45.4%.
THE INTELLECTUAL PROPERTY OF BIG HIT
For the third segment of this briefing, the General Manager of Big Hit IP, Rhee Seung Suk, took the stage to explain the content under the company’s Intellectual Property (IP). He began the segment with TinyTAN, the chibi alter ego characters of BTS, which were briefly mentioned in the previous briefing. They made their first appearance in the online concert etiquette video for BANG BANG CON: The Live, where they enter a magic door into the real world to provide encouragement and healing.
In order to propel the business model of indirect artist involvement for content creation, Big Hit IP expanded by claiming the artists’ music, photos, music videos and other sources. Big Hit’s essence remains intact, offering fans healing and comfort, making them feel like they are living and breathing with their favorite artists and offering new experiences. One such example that fulfills this principle is the graphic lyric books, which launched in June. It was created with the aim to “enjoy music in a whole new way” by illustrating the lyrics of songs. The five volumes of the series were well-received and hit the Top 10 weekly bestseller list, both online and offline, within a week in Kyobobooks in Korea.
Mr. Rhee then went on to the topic of merchandise, which is sold during concerts as an extension of the audience's memories. In the first half of 2020, 458 official products were sold. Big Hit also started carrying out multi-faceted licensing businesses in June 2019, beginning with their collaboration with Starbucks. They’ve since collaborated with Samsung Electronics, launching the Galaxy S20+ and Buds Plus BTS Edition, which were sold out within an hour on its first day of release on Weverse Shop.
Their collaboration with Starbucks earlier this year also yielded similar results, with 90% of their stock getting sold out on the first day. In both cases Big Hit was able to succeed because they asked themselves, “Is this a partner that shares our philosophy?” before making partnerships with companies.
JOIN US FOR PART 2
The Big Hit Corporate briefings have become another way ARMY gets a glimpse into BTS’s world. They provide us with information we would not otherwise get to hear or see in graphs. Please join us for part 2 as we continue to break down every aspect of this briefing. Borahae!
Written By: Anugya
Edited By: LJ
Designed By: Judy
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