The third-generation representative girl group BLACKPINK made a comeback on the 5th at the Goyang Sports Complex in Gyeonggi Province through their world tour 'Deadline' after about three years. News of BLACKPINK's return, YG Entertainment's flagship cash cow, caused YG's stock price to soar. On the 8th, the stock closed at 86,000 won, more than double compared to the same period last year.
While BLACKPINK's comeback acts as a boon for YG, the industry has raised concerns about the unsustainability of YG's revenue structure, which is overly dependent on BLACKPINK. In response, YG has recently focused on securing multiple super intellectual properties (IPs).
◇From BIGBANG to BLACKPINK… 'Representative entertainment company' that drove the growth of K-pop in the 2010s
Founded in February 1998 with the purpose of music and other audio publishing, fostering and managing new artists, YG listed on the KOSDAQ in November 2011 thanks to the growth of K-pop. It has established itself as a representative entertainment company in Korea by producing second-generation idols like BIGBANG and 2NE1.
Around 2014, YG increased its influence by producing various artists such as BLACKPINK, WINNER, and AKMU. In particular, BLACKPINK debuted as a 'monster rookie,' sweeping the first place on terrestrial broadcasts and the music chart just 14 days after their debut, setting new records on various charts and YouTube views, and even received the title of 'world's best girl group' from the Guinness World Records.
As the business grew, YG diversified its operations by entering the acting business. It runs the actor management business using the Company in Company (CIC) model, turning out actors like Yoo In-na, Choi Ji-woo, Lee Sung-kyung, and Nam Joo-hyuk. It also established YG PLUS, a subsidiary for music distribution and merchandise production, and is developing various businesses utilizing artist intellectual properties (IPs).
TheBLACKLABEL, the agency behind the recently popular girl groups MEOVV and izna, as well as the mixed group All Day Project, is also an affiliate of YG. YG has invested equity in TheBLACKLABEL, led by producer Teddy, holding 14.55% (61,941 shares) as of the end of 2024.
Currently, YG's largest shareholder is founder and chief producer Yang Hyun-suk, who holds 19.33% (3,613,128 shares). Following him are Naver with 8.89% (1,661,130 shares), the National Pension Service (NPS) with 5.23% (977,751 shares), and Yang Hyun-suk's brother, CEO Yang Min-seok, who is responsible for management and financial strategy, with 3.47% (649,910 shares). The Chinese company Tencent also holds a 4.3% stake in YG.
◇YG past its heyday… 'Obvious cash cow void after BLACKPINK'
YG's performance peaked in 2023 with BLACKPINK's world tour. After releasing the album Born Pink in 2022, BLACKPINK attracted over 2.2 million audiences across 65 performances worldwide. As a result, it recorded revenue of 569.2 billion won in 2023, a 45% increase compared to the previous year. Operating profit nearly doubled to 86.9 billion won.
The problem is that YG's business structure has been excessively dependent on BLACKPINK. Although the new girl group BABYMONSTER is set to debut in 2024 and the boy group TREASURE is coming back, there is still no IP that serves as a cash cow comparable to BLACKPINK. Given that the average lifespan of idol groups is about seven years, excessive reliance on a specific group can lead to volatility in the entertainment company's performance.
Ultimately, after failing individual contract renewals and with almost no team activities succeeding in their renewals, YG's revenue sharply declined in 2024. While the exact percentage that BLACKPINK contributes to YG's performance hasn't been disclosed, the industry estimates it accounts for over 80% of the revenue. YG recorded revenues of 364.9 billion won and an operating loss of 20.5 billion won in 2024, marking a return to operating losses after two years.
In fact, competitors are securing multiple super IPs to diversify their revenue structures. HYBE reduced its dependence on BTS by acquiring Pledis, the agency of SEVENTEEN, in 2020, while JYP Entertainment operates multiple IPs such as TWICE and Stray Kids.
◇Yang Hyun-suk, chief producer, says, 'We will focus on securing multiple super IPs.'
YG has recently recognized these issues and begun management innovation. Chief producer Yang Hyun-suk noted, 'I have recently thought it important to possess multiple IPs' and stated, 'When BABYMONSTER is active, I will strive to ensure that other junior artists can also work simultaneously to secure various IPs.' He added, 'We plan to increase the activity level of our affiliated artists from the second half of this year to next year and focus on securing new IPs.'
Additionally, after concerns were raised about the ability to supply songs and the quality of music following the departure of flagship producer Teddy, YG expanded its producer team from the existing ten to thirty. Earlier this year, it announced its withdrawal from the actor management business, solidifying its commitment to focus on the music business. It appears to be fully engaged in enhancing its competitiveness in the music sector.