INDIO, CALIFORNIA – APRIL 22: Jennie, Jisoo, Lisa, and Rosé of BLACKPINK accomplish at the Coachella Stage throughout the 2023 Coachella Valley Songs and Arts Competition on April 22, 2023 in Indio, California. (Picture by Emma McIntyre/Getty Illustrations or photos for Coachella)
Emma Mcintyre | Getty Photos Amusement | Getty Visuals
In the oversaturated K-pop new music scene, groups occur as quickly as they go.
Most agreement renewals consider spot without a lot fanfare — but not for Blackpink, a person of the most significant woman groups in the environment.
When members of the lady group ended up owing to renew their contracts, shares of their label YG Entertainment went on a wild journey.
In September, shares of the Kosdaq-outlined YG Entertainment plunged on two different instances. Stocks of the amusement group fell 9% on Sept. 14 and tumbled 13% on Sept. 21 when media reported that three of its members will not renew their contracts with the label.
Nonetheless, YG’s stock has risen so far this year, with the enterprise recording a year-to-day get of 23.38% as of Nov. 21.
Just this week, South Korean outlet Munhwa Ilbo uncovered that specific members will not be renewing their unique contracts with YG, but the team will reportedly continue group pursuits as Blackpink underneath the label. Shares of YG climbed about 3% on that information.
Analysts have mixed sentiments over the the latest enhancement.
[YG Entertainment] has relied much too much on a few artists even though its rivals have reinforced their artist lineups.
Minha Choi
Senior Analyst, Samsung Securities
Samsung Securities senior analyst Minha Choi cut his goal selling price for YG Entertainment by 9.5% to 76,000 won, representing an upside of 41% from Tuesday’s near.
“3 months have passed given that Blackpink members’ agreement expired in August. But there has been no formal announcement about the deal renewal. The uncertainty is weighing on shares,” Choi reported in a Nov. 14 observe.
Even so, provided that users Jennie and Rosé released material underneath YG in Oct and November respectively, the analyst assumes the deal renewal will acquire place in his latest valuation, while he stays “conservative about the quantity of the group’s things to do.”
The impending debut of new female group Babymonster on Nov. 27 will most likely serve as a growth driver for the corporation, Choi extra.
On the other hand, he pointed out that YG “has relied way too much on a couple artists though its rivals have reinforced their artist lineups.”
On the other hand, NH Expense and Securities managed their “purchase” score and target price tag of 87,000 gained on the inventory, representing an upside of extra than 60%.
The analysts, Hazell Lee and Seungjun Lee, stated in a Nov. 14 report that the firm’s present-day share price tag has baked in all main chance factors, such as artist departure, which implies an easing of earnings uncertainty for YG.
‘Seven year curse’
Unlike Western artists and songs acts, who are commonly formed prior to signing with a label to promote, K-pop artists generally enter a management enterprise as a trainee.
They train for a interval of months or decades in advance of remaining selected as a comprehensive fledged artist. If the trainee would not make the debut lineup, the human being will have to leave the company.
Contract renewals are a milestone for K-pop groups mainly because of the standardized seven-yr contracts that artists indication with labels — it is really even been referred to as the “seven-calendar year curse,” the place teams disband at the close of their contracts.
Some media shops even questioned if Blackpink would endure the “7-year curse.”
As this sort of, should a prosperous group go away a label, this would indicate a big loss for the firm, specified the cost wanted to train and debut a new group from scratch.
South Korean media outlet JoongAng Ilbo claimed in December that the cost of generating a woman team can variety between 2 billion won and 5 billion gained (about $1.55 million to $3.89 million).
Citing South Korean enjoyment enterprise Fantagio, the report explained the value of making a lady team with a few yrs of training for its members is estimated at 3.18 billion South Korean received, or just over $2.47 million.
Bokyung Suh, director and senior investigate analyst at Bernstein explained: “We know that leisure is frequently regarded as as a lottery enterprise, as we simply cannot easily forecast the long term and efficiency right before launching the intellectual assets, these kinds of as Squid Activity or Activity of Thrones.”
“So this is the explanation why the world wide leading entertainment players try out to diversify their IP portfolio, to operate their company much more sustainably,” he explained to CNBC’s “Road Signals” in an interview on Sept. 25.
