'SM 3.0 Era' as a stepping stone for SM Entertainment's 'aespa success'

Espa announced the successful start of the 'SM 3.0' era.

Aespa's 3rd mini album 'MY WORLD', released under the 'multi-production center system' according to the 'SM 3.0' strategy, surpassed 1.8 million copies in pre-orders and exceeded 2 million copies within 2 weeks of release, surpassing the previously announced mini album 'MY WORLD'. Compared to 510,000 copies of the 1st album 'Savage' and 1.65 million copies of the 2nd mini album 'Girls', sales soared by 394% and 121%, respectively, breaking their own record.

These figures appear as achievements such as No. 1 in sales on the first day of K-pop girl group release, No. 1 in Initial Chodong (first week sales) of all-time K-pop girl groups, No. 1 on major domestic and international music and music charts, and achievement of 4 gold medals in music programs. Regarding the music style, explosive reactions from not only the core fandom but also the public at home and abroad are continuing.

Espa, which has been participating in the Cannes Film Festival for the first time as a K-pop group and continuing its global tour in the United States, Europe, and Asia, after recording activities, released an album targeting the North American market in the second half of this year in accordance with the SM 3.0 strategy of 'expanding the global fandom'. We plan to continue to be more active, such as promotions.

SM Entertainment, which successfully opened the era of SM 3.0 with the success of a new aespa game, ▲established an advanced corporate governance structure ▲introduced a multi-production center system ▲maximized IP value through business cooperation with Kakao through public disclosure data announced on May 26 ▲ Investment in publishing business and label acquisition ▲ Shareholder return policy based on optimal capital structure, etc. were presented as key investment points, revealing confidence and strong will to promote SM 3.0 strategy.

First, looking at the advanced corporate governance structure, the Compensation Committee, Outside Director Recommendation Committee, Related Party Transactions Committee, and Governance Committee are being operated in parallel with the Board of Directors at the center, and all committees including the Board of Directors are chaired by outside directors. It is a policy to establish an advanced corporate governance structure to leap forward as a 'global entertainment company that manages the interests of stakeholders such as shareholders and employees.

The introduction of the multi-production center system is the core of the SM 3.0 strategy, and it is a plan to secure continuous business performance and maximize IP profitability through 5 production centers. In this process, in order to maximize IP value through business cooperation with Kakao, new business opportunities will be increased by mutually complementing the strengths and weaknesses of the IP businesses of both companies.

In addition, SM Entertainment is expanding its IP production capabilities through the acquisition of external labels and the establishment of subsidiaries specializing in music publishing, while ▲ managing its capital structure by utilizing net debt at 0.5 to 1x of separate operating profit (target leverage multiple) ▲ expected from investment An investment policy based on the target required rate of return, in which the investment is carried out when the shareholder rate of return is higher than the target required rate of return The plan is to steadily implement the vision of 'Leaping to become a fan- and shareholder-centered global entertainment company' through five measures of the SM 3.0 strategy, including plans to use it for

Cheol-Hyuk Jang, CEO of SM Entertainment, said, “The SM 3.0 strategy is not just focused on increasing profitability, but is the most exemplary growth strategy in the entertainment industry in that it aims for an advanced corporate governance structure.” Through this, we will show SM initiatives that lead the development of the entertainment industry.”

Reporter Yoon Jun-ho, Ten Asia delo410@tenasia.co.kr