SEOUL: The leadership of Big Hit Entertainment gathered on Thursday (Oct 15) for a ceremony to mark the company’s debut on the stock market.
Even watching via livestream, the anticipation in the air was obvious as Big Hit founder and CEO Bang Si-hyuk stepped up to the podium to express his hopes for the company’s future.
Big Hit was the most anticipated stock market debut in years in South Korea. They are the agency behind K-pop sensation BTS and are about to become far richer, with the company garnering a massive vote of public confidence in the form of share purchases.
Big Hit has been gaining momentum for some time, building up to BTS’s latest triumph, “Dynamite,” an English-language single that broke the record for most-viewed new video on YouTube.
BTS is not just a cultural phenomenon but a growing commercial force as well.
The international business media parses the group’s each move and the “BTS effect” on the economy with a rigour customarily reserved for corporate conglomerates, like Samsung.
According to Forbes, the group accounted for a staggering US$4.65 billion of South Korea's GDP last year.
While BTS is the company’s core business, they are working to develop new artists, and have business and education projects in line with their brand of “music for healing.”
A FORCE TO BE RECKONED WITH
Shares in Big Hit made an explosive debut on South Korea’s main stock exchange last week, rising to the daily limit of 30 per cent. By the end of the day, Big Hit’s market value was more than 8.7 trillion won (US$7.63 billion), with all BTS members having earned about US$15 million in shares.
While attempting to grasp just how impressive these numbers are, it is useful to go back a short way in Big Hit’s history. Bang, a music producer who earned the name “Hitman,” founded the company in 2005, a time when the music industry was still scrambling for a way to make up for the loss of revenue from declining physical album sales.
Success didn’t come immediately. Like other industries in South Korea, entertainment is dominated by a few big players that use their clout to attract top talent, and it took years before Big Hit made its mark.
BTS debuted in 2013 after around three years of training, and didn't blow up into superstardom until around 2016, with their second Korean studio album "Wings."
Bang has said that fortuitous timing is a big part of how BTS built their massive global audience, that with its message of kindness and self-love, "BTS touched something that wasn’t being addressed in the US at the time".
Although BTS has the deft choreography and chiselled good looks of typical K-pop acts, what sets them apart are their stories and message.
The group has openly appealed to young people, including in a speech at the United Nations, to “speak yourself” and “love yourself” while openly sharing their own tribulations and self-doubt.
And perhaps like no other musical act, BTS has harnessed the power of social media to spread their messages through direct interaction with fans.
CAN K-POP BE SUSTAINABLE?
Now that Big Hit has ridden BTS to the top of the music industry, the question is how long they can stay there, and in relation to that, whether Big Hit is a sustainably wise investment.
Boy bands are not known for longevity; even the most successful pop groups tend to rule the airwaves for a few years before fading when their young fans move on to the next cute thing.
The K-pop industry is exceptionally fickle, with a group's every move tirelessly tracked by media and fans, as members are expected to maintain a pristine image.
Even small missteps could lead to serious reputational damage, and reduced fan support. And for all its recent strength, BTS showed vulnerability this week when Chinese netizens took exception to comments made by group leader RM about the Korean War.
RM made an apparently benign expression of gratitude to South Korean and US veterans of the war, saying, "We will always remember the history of pain that our two nations shared together and the sacrifices of countless men and women.”
Some Chinese observers, however, interpreted RM's words as disrespectful to Chinese soldiers who perished in the 1950 to 1953 conflict, and called for a boycott of BTS in response.
There is also the looming question of what happens when BTS members have to complete their mandatory military service, which lasts around two years, though some in the South Korean government have floated the possibility of allowing the members to fulfill their duties while continuing with the group in some manner.
THE BTS ARMY
But there is something more durable in BTS than in previous boy groups and this is the inspired dedication from its fans.
BTS fandom, called ARMY, is a broad and thriving ecosystem of people of various ages, genders and nationalities who share merchandise and translations of the group's works while tracking the group's online statistics at a level so granular that data scientists are taking notice.
Perhaps the most valuable aspect of ARMY is the community it provides. Even before the coronavirus pandemic, BTS fans found a common passion and gathered on online forums to connect with each other.
For most of this year, at a time when people in so many countries are sheltering in place, unable to normally interact with friends or classmates, those bonds have become even more valuable, shown through the high numbers of participants in BTS streaming events.
BETTING ON ONE HORSE
Plenty of analysts have pointed to the extent to which Big Hit relies on BTS – the group generates nearly 90 per cent of the company's revenue – as a red flag, meaning that if the company can’t find another hit once BTS fades or disbands, things may fall apart.
Despite this, what investors are clearly lining up for is access to this community, based on the expectation and belief that the millions who love BTS do so not just as a passing fad or matter of taste, but as part of what gives their lives meaning.
For investors, this built-in community means a reliable market for whatever Big Hit does next.
While at the podium for the stock debut, Bang pledged that his company would work toward becoming “the world’s top entertainment and lifestyle platform”.
The company’s future, and whether this current bonanza is sustainable, will depend on Big Hit’s ability to accomplish its founder’s bold promise.
With BTS’s established fan base, the company is in a strong position to branch out in various directions, such as having the band’s more stylish members helm their own fashion brands.
Like hip-hop producer Doctor Dre did with headphones, Big Hit could market branded electronic products – the options to diversify are certainly there.
Maybe Bang won’t be able to double the company revenue every year forever, as he has for the past several years, but my bet is that Big Hit’s stock smash hit is more a sign of things to come than a one hit wonder.
Steven Borowiec is a journalist based in Seoul.