YG Entertainment Faces Financial Struggles but Optimism Grows for 2024

YG Entertainment continues to face financial challenges, reporting a deficit for the third quarter. Despite ongoing annual losses, there is optimism for improved performance next year.

According to a disclosure on the 12th, YG recorded sales of 83.5 billion KRW for the third quarter, a significant drop of 42% compared to the same period last year. The operating loss was 3.6 billion KRW. Initially, a deficit of 7.9 billion KRW was expected, but the production costs for the group BabyMonster were deferred to the fourth quarter, reducing the deficit.

While negative growth is expected to continue this year, analysts remain optimistic about YG's future. The company's strong intellectual property (IP) is set to be fully utilized next year.

BabyMonster, which is on a growth trajectory, is expected to contribute to revenue growth through world tours. Their debut album 'DRIP' recorded initial sales of 670,000 copies, and with exports, the figure is expected to approach 900,000. Kihoon Lee, an analyst at Hana Investment & Securities, noted, "Following the success of Rise and BoyNextDoor, we anticipate album sales to surpass one million copies, indicating rapid growth."

Additionally, WINNER is set to resume activities after completing military service, and TREASURE has new releases and tours planned. Furthermore, 2NE1's Asia tour under YG's umbrella is expanding with additional cities.

The most significant event is BLACKPINK's anticipated comeback and world tour in the latter half of next year. Having signed an exclusive contract with YG for group activities last December, BLACKPINK is expected to release a new album and embark on a world tour, significantly boosting YG's finances. Lee stated, "During BLACKPINK's previous tour, the combined operating profit over four quarters was around 100 billion KRW. Considering BabyMonster's additional contributions, we expect a similar level of profit."

Apart from scheduled activities, YG is being re-evaluated for its IP development and production planning capabilities, as artists who have left the company continue to perform well. Former YG artist G-Dragon, along with BLACKPINK members Rosé and Jennie, who are under contract for group activities, are achieving success in their solo endeavors. Although not directly linked to YG's revenue, the perception of 'trustworthy YG artists' is spreading in the industry.

Choi Ji-ye, TenAsia Reporter wisdomart@tenasia.co.kr