HYBE CEO says military plans for BTS members besides Jin is undecided and there will be challenges in earnings with their enlistment

It is predicted that HYBE's profitability in 2023 will be worse than this year due to the enlistment of BTS members. But HYBE is hoping that the company will be able to recover its profit starting next year with the improvement in performances of other groups and artists.

On October 3, HYBE's CEO Park Ji Won said in a conference call for the 3rd quarter earnings announcement, "The proportion of sales (for HYBE) is BTS at 60-65%, and the rest of the artists are around 35-40%." He also predicted that "this year, we will be able to achieve an operating profit margin of mid-10% due to the activities of BTS." HYBE's operating profit margin in the first half of this year was 15.7%.

As Jin, the oldest of the seven BTS members, is expected to enlist at the end of this year or early next year, the proportion of their sales in HYBE is expected to decrease. CEO Park predicted that "margin pressure will intensify next year as the proportion of BTS' sales decreases and other artists' sales increase."

BTS members will continue releasing solo albums. Following J-Hope and Jin, leader RM is planning to release a solo album soon, and SUGA, Jimin, V, and Jungkook are also expected to release solo albums next year. HYBE hopes to resume BTS' activities as a whole group around 2025, but the schedule for the other members to enlist in the military, except for Jin, is undecided. 

Regarding the military service plan for Jungkook, who is five years younger than Jin, CEO Park declined to comment, saying, "We will discuss with the artist and make a decision, and proceed according to various implementation plans."

HYBE announced on the same day that their sales in the third quarter of this year (consolidated basis) were 445.5 billion KRW (~313 million USD), up 30.6% from the same period last year. It is the highest level in HYBE's history in the third quarter. Although there was no significant difference in album sales, sales of artist-related merchandise (MD) and indirect participation-type sales such as games increased along with concert sales, boosting performance. HYBE's chief financial officer Lee Kyung Jun analyzed, "As major artists' world tours resumed (album and concert sales), direct participatory sales increased, but indirect participatory sales such as games increased even more."

This year, HYBE has focused its efforts on the growth of other artists such as Seventeen, TXT, and ENHYPEN, which will fill the void of BTS, and new groups such as LE SSERAFIM and NewJeans. CEO Park also emphasized that the sales of artists other than BTS showed an average annual growth rate of 200%. He said, "NewJeans and LE SSERAFIM are aiming for a growth of more than 100% compared to this year." However, as the cost of offline performances, including investment in new groups, was reflected, operating profit in the third quarter decreased by 8% year over year to reach 60.6 billion KRW (~42.5 million USD).

Following the rookie girl groups introduced this year, HYBE plans to continue producing new groups, such as debuting a new boy group from 'Trainee A' in December and a boy group in Japan. HYBE America, in partnership with Universal Music, will release a global girl group next year.

CEO Park said, “With a diversified artist portfolio, we can avoid focusing on a specific country and respond flexibly to changing trends to reduce risk. We have also decided to venture into new business-related technology companies, such as mergers and acquisitions (M&A), joint venture (JV) establishment, equity investment, and partnerships."