News Today – Business of K-pop: Inside the pandemic-proof empire of BTS

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SEOUL — In the entertainment industry, success needs a sequel. South Korea’s Big Hit Entertainment has swept to massive fame with its marquee boy band BTS — which is why, in March, grandees of the recording label gathered to reveal what would come next.

Big Hit was about to announce a metamorphosis, one that would take it from South Korean K-pop label to global entertainment multinational. In a fashionably clunky 90s-style video, since viewed more than 3.7 million times, the company rolled out change after change — including moving its headquarters from the Seoul neighborhood of Gangnam, K-pop’s customary center of power, to a hulking concrete-and-glass structure north of the Han River.

Most startling of all, Big Hit would come under an entirely new name, “Hybe.” Along with that came an all-encompassing motto: “We believe in music.”

“We will continue to create variations of music in a wider realm, unhindered by borders,” said Global CEO Lenzo Yoon.

The genesis of the new name was unclear (acronym? Portmanteau? Typo?). But Big Hit’s rebranding is the latest and perhaps most ambitious phase in the evolution of South Korean pop culture, a growing export commodity. Makers of Korean cinema, TV and music increasingly see global audiences, with films like the Oscar-winning “Parasite” and TV dramas like “Descendants of the Sun” and “Sky Castle” inspiring hordes of dedicated viewers.


Above: K-pop stars BTS perform during an online concert. (Supplied by Big Hit Entertainment). Below: Retro graphics accompanied Big Hit’s rebranding as Hybe. (Screenshot from HYBE YouTube page)

Hybe, the sprawling entertainment giant behind K-pop phenomenon BTS, is proving more adept than most in taking its business global, after companies for years stumbled in their attempts to find durable popularity outside of Asia. 

The company’s cultivation of a sophisticated online fan base has paid off, particularly during the pandemic. It saw year-on-year sales jump 36% between 2019 and 2020, a period when the entertainment industry was hampered by the inability to tour artists or host theatrical releases.

At the same time, BTS accounted for 87.7% of the company’s revenue in the first half of last year, according to Mirae Asset analysis. It makes the company, which listed on the Korea Stock Exchange in October at a $4 billion valuation, uniquely vulnerable to the performance of one seven-member group — albeit one that recorded South Korea’s first-ever No. 1 hit on the main U.S. Billboard chart. The fact that they will be out of action during their mandatory military service signals not only a period of national mourning, but financial risk to the company’s newly minted shareholders.

Hybe and its rivals are busily recruiting members from overseas, releasing multilingual tracks and partnering with global brands eager to share their halo. For their growing crowd of investors and fans, the question is: Can they keep it up? 

Hits and misses

BTS is one of the first South Korean bands to become a household name in the U.S. Their songs pipe in malls and form the soundtrack for viral TikTok dance videos. Their faces appear everywhere, from addressing the U.N. to appearing on mainstream late-night talk shows.

Their success has surprised with its apparently borderless appeal. BTS’s second English-language single, “Butter,” leapt into the U.S. Spotify Streaming Top 10 when it was released two weeks ago, while their recent album, “Map of the Soul: 7,” has spent more than 60 weeks on the Billboard 200 chart.


Bang Si-hyuk, founder of Big Hit Entertainment, now Hybe, appears on screen during the company’s initial public offering in Seoul last October.

  © Reuters

The figure credited with BTS’s commercial triumph is Hybe founder Bang Si-hyuk, who became a billionaire through the group’s initial public offering last year. Bang goes by the nickname “Hitman,” one that sits oddly on the pudgy, bespectacled 48 year old, who graduated from Seoul National University, South Korea’s most prestigious school. Behind closed doors, he has a reputation for being fiery and foulmouthed.

Born into a successful white-collar family, Bang once told an interviewer that, in his youth, he found studying a breeze and detected “echoes of genius” in himself, deciding that “it wasn’t cool to try too hard.”

“I was kind of a jerk,” he said.

He cut his teeth early in his career penning catchy tunes for JYP, one of K-pop’s biggest agencies, before breaking off on his own to form Big Hit Entertainment in 2005 — an unusually brash move in Korean business culture, where long-term loyalty to one’s first company is the norm.


Hybe’s headquarters in Seoul.

  © Getty Images

The engine of the company’s ascent has been BTS. The seven-member act has hit unprecedented achievements: Along with becoming the first non-English language act to have a song debut at the top of the Billboard Hot 100 singles chart, it was also the first K-pop act to be nominated for a Grammy.

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But their rise has been almost a decade in the making. After being assembled through K-pop’s customarily grueling audition process, the group released its first album in 2013. That and subsequent efforts failed to make much of a splash — in South Korea or elsewhere.

They finally hit their stride in 2015 with their third EP, which went all-in on the theme of youth. The group’s music related the struggles of South Korea’s young people, who face intense educational pressure before entering a brutally competitive job market.

The 2020 chart-topping single “Dynamite,” the group’s first song sung entirely in English, created an economic effect worth $1.43 billion, according to South Korea’s culture ministry, by spurring huge increases in exports of merchandise and the creation of 8,000 jobs in tourism and other sectors.

BTS fans call themselves “Army,” a moniker that carries only a touch of overstatement. Although fan bases that identify stridently with a particular act have long been a feature of the K-pop landscape, Army stand out for their level of impassioned support.

Scholars who study the group’s far-reaching fandom say that Army are comparable to fans of the Beatles, whose music commands an enormous following decades on — even beyond those who came of age alongside the band members. Online, fans experience their interactions with the band as genuine and confessional.

“The relationship between BTS and their fandom are almost like friends, not like stars and mere followers,” Lee Ji-young, a professor at Sejong University and author of “BTS, Art Revolution” told Nikkei Asia. 

American Staci Custus, 28, first encountered BTS in 2017 while working as a language assistant in a school in Japan’s Kagoshima Prefecture. Struggling with loneliness and self-doubt as she adjusted to her new life, Custus stumbled on BTS’s videos on YouTube.

“BTS was producing music with messages for a generation that was being pressured and harassed to follow in the same footsteps as their older counterparts, but with less support on all sides,” Custus said. “I realized that I wasn’t alone.”


BTS appear on the Tonight Show with Jimmy Fallon in September, 2018.

  © Getty Images

While South Korean acts have long had large followings in China, Japan and Southeast Asia, the U.S. — the world’s biggest music market — has been far harder to crack.

In April, Hybe announced a deal worth an estimated $1 billion to acquire a 100% stake in Ithaca Holdings, which counts on its roster superstar acts including Justin Bieber and Ariana Grande. For supporters, it was evidence that BTS had shattered the stubborn impression that Western audiences were put off by non-English language lyrics, and accustomed to a more swaggering kind of pop star than comparatively innocent K-pop acts.

A key pillar of the expansion will be bringing Ithaca’s artists onto Weverse, a web service developed by Big Hit Entertainment by fusing the functions of Twitter, Instagram and YouTube into an integrated channel for communication with fans. The platform brings in an estimated $90 million in payments per quarter, through merchandise and ticket sales. Exclusive streaming concerts and live chats with artists are held on the platform, drawing users to spend time there.

“K-pop was continuously growing, but there was no forum where the global fandom could gather to communicate and connect,” Bang said during the rebranding presentation. “We felt that we needed a space where the global fandom could communicate with artists without a language barrier and enjoy all fan activities, and that was Weverse.”

Hybe declined a request to comment on the story, and did not respond to follow-up requests.

A recent Samsung Securities report found that in the fourth quarter of last year, Big Hit’s operating income came in at 52.5 billion won ($47 million), up 122% year on year, despite none of the label’s acts being able to hold in-person concerts due to the COVID-19 pandemic. Sales of albums and other content, like merchandise and tickets to streamed concerts, drove the increase.

The company’s yearly growth outpaced global industry giants. Helped along by increased streaming revenue, Universal Music Group posted revenue growth of 3.8% in 2020, while Sony Music saw a 9% rise.

“What you see in the case of Hybe is a coming-together of IT development and K-pop, where K-pop itself becomes a platform as well,” Michelle Cho, Assistant Professor of East Asian studies at the University of Toronto, told Nikkei. “They’re bringing American artists onto the Weverse platform, and creating a system for thinking about how artists build the connection that they have with fans. Other companies in the industry are likely to follow this model.”

No accident

For South Korea’s cultural sector, reaching fans around the world is the culmination of decades of work. Hwang Seon-hye, former director of Korea Creative Content Agency’s Tokyo business center, suggested that roots of today’s international success of South Korean content date back to the late 1990s. Seeking growth after the 1997 financial crisis, then-President Kim Dae-jung bet on two complementary industries: culture and information technology.

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“In a way, it was the start,” said Hwang.

Successive South Korean leaders continued their focus on culture, and poured state funds into supporting the creative industry. Facing the country’s struggling economy and relatively small domestic market, talent and businesses looked overseas. The focus on information and communication technology meant that the content was designed to be distributed online globally, Hwang said.

“Of course, content has to be interesting and fun,” said Hwang. But international competitiveness, she said, lies in intellectual property rights being applicable across formats. Content-related IP rights, whether for music or actors, or for distributing online or in different countries, all have to be transparent and clearly established.


Female idol group Blackpink perform at California’s Coachella festival in 2019.

  © Getty Images

KOCCA is part of an efficient bureaucratic machine that supports South Korea’s small and medium enterprises and creators. Looking at content destined for international export, the agency reviews which markets they might be suited to. Regional offices then help connect these companies or individuals with local customers.

The first international offices were set up in Japan and China in 2001, primarily to support the animation industry. But Hwang said that opportunities have multiplied. Korean online cartoons can be turned into Japanese anime, and dramas can be remade in other languages, musicals or merchandise.

“All along, Korean entertainment companies have been on the cutting edge … trying to make their content as accessible as possible, no matter where in the world you are,” Jenna Gibson, a Ph.D. candidate at the University of Chicago.

“They were making videos that were shareable and were meant to go viral right away — and they invested not just in good music but in the whole production, the music video to go along with it, the stage performance,” Gibson said.

As far back as 2000, singer Park Ji-yoon’s “Coming of Age Ceremony” garnered as much attention for its sensual dance routine as for the song itself. The dance, risque for its time, is still covered to this day, including by members of BTS.

The first truly global K-pop hit, 2012’s “Gangnam Style” by Psy, came with a now-infamous horse dance that made the otherwise highly specific song — about a certain kind of guy who lives in a certain part of Seoul — open and accessible to audiences worldwide.

Deploying the Army

A driving force of K-pop’s success has been the role of fans themselves in spreading their favorite act’s content. Fans of BTS gather to communicate on Weverse, Twitter or YouTube to discuss how to best render lyrics, artist interviews and social media posts into dozens of languages — a kind of PR activity that money can’t buy.

Army has proved effective at tracking and analyzing who makes up BTS’s global fan base. Last year, they carried out a survey of more than 400,000 BTS fans representing more than 100 countries and territories. The survey was carried out in 46 languages, and found that slightly more than half of Army are younger than 18, and 86% are women. External data from ticket sales suggests that the fan base is growing more gender-diverse.

The country with the most respondents to the survey was, by far, Indonesia, accounting for 20% of those surveyed, beating the U.S. with 8.4% and South Korea with 3.7%. Indonesia is a young, populous country, with a longtime affinity for K-pop that includes the cosmetics and fashion that go along with it.


BTS fans socially distance while watching an online concert in Seoul in October.

  © Reuters

Indonesian bookstores have hundreds of Korea-related book titles available. Some are translations, but many, if not most, are written by Indonesians. The topics range from how to master basic Korean language, travel tips to South Korea, introductions to K-pop, and novels and children’s comic books themed around Korea.

“I’ve bought seasons-greetings packages, CDs, figurines, posters, shirts,” Gustidha Budiartie, a 34-year-old state-owned enterprise employee in Jakarta, told Nikkei, with the items all representing her favorite stars — BTS, Super Junior and popular Korean actor Hyun Bin. Most were official merchandise, but some items were locally produced.

CedarBough Saeji, visiting assistant professor in East Asian Languages and Cultures at Indiana University, Bloomington, describes the commercial opportunities based on overflow from K-pop as “shadow industries.” In countries including Indonesia, instructors build careers teaching K-pop dance classes. K-pop stars adorn advertisements for a slew of products, notably cosmetics and skin-treatment products, in dozens of countries.

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K-pop fans themselves lead initiatives to teach languages, cooking, and to help each other find jobs. “The friendships and connections built amongst fans are also a part of what makes many in this community feel that they are part of the BTS and Army family for life,” said Candace Epps-Robertson, a professor who studies BTS fandom at the University of North Carolina at Chapel Hill. 

Saeji argued that K-pop is exceptionally fertile ground for product placement and endorsements by artists. “In the case of K-pop, the industry has really exploded out in so many directions, because in K-pop they’re not pretending to somehow have a problem with commercialization,” Saeji told Nikkei.

The industry itself is far from transparent. Murmurs have circulated for years of performers being stuck in unfair contracts with their every move controlled by management agencies, even facing sexual or psychological abuse. Those concerns spilled into the open in 2019, when several high-profile K-pop figures were found to be involved in prostitution, drug trafficking and distribution of sexual videos of women that were taken without their consent. 

But that K-pop stars are presented by their agencies as clean and flawless boosts their potential as endorsers. “There has always been a desire for alternatives, where instead of this raunchy, in your face, aggressive sort of pop star, there has always been demand for the beautiful, aspirational pop star, someone you can look up to. Western pop stars didn’t provide that,” Saeji said.

“BTS is the result of everyone that came before. A lot of it is just a plain, slow building of an audience. As K-pop became less of a niche and less of a subculture, and people no longer felt embarrassed or shy about it, their sharing became even more normal.”

Life after BTS

Hybe’s efforts to diversify into other geographies and areas of musical taste represent a recognition that BTS, like most bands, can’t remain on top forever.

In December, South Korea’s legislature passed a bill that would allow the members of BTS to delay their mandatory service until age 30. The driving force behind the bill was Jeon Yong-gi, a ruling party lawmaker, who said that the purpose of the legislation is to recognize entertainers who have made significant contributions to promoting the country abroad, and allow them to defer their service to minimize the interruption to their careers.

He mentioned BTS as being particularly deserving for the positive attention they have drawn to South Korea, and said the deferment could be extended to outstanding esports athletes.

The country stopped short of allowing the members and other K-pop stars to skip their service altogether. South Korea’s system of compulsory service is a hot-button issue domestically, as members of the country’s wealthy, well-connected elite have in the past found ways to avoid service, and moves to grant exemptions to entertainers or athletes are met with fierce public resistance.

Now, the question hanging over Hybe’s rebranding is whether the company can find new acts to take the torch from BTS and create revenue to make up for the group’s temporary absence, as well as carry Hybe into the future.

Hybe is likely to put more promotional muscle behind Enhypen and TXT, groups that have already debuted successfully. The company also recently signed a strategic tie-up with YG Entertainment, a rival which represents girl group Blackpink, while also planning to expand further into areas spanning from music production to platform businesses and Korean-language education.

“Big Hit is doing things that other companies have done before, but what’s distinct is how quickly they’re doing it and how much they’re investing in it. At this point, they’re experimenting by going down a lot of different avenues,” Gibson said. “At this point it’s too early to tell.”

The consensus among experts is that BTS fans are not likely to lose interest in the group, or even significantly reduce their fandom activities, while the members are in the military.

“I don’t think Army will age out of the fandom because BTS’s music and messages aren’t capped at a particular age,” said the academic Epps-Robertson.

“If anything, I think you find that their music and messages have cross-generational appeal, because they reflect feelings and experiences that we encounter across our lifetime.”

Additional reporting by Jada Nagumo and Akane Okutsu in Tokyo and Erwida Maulia in Jakarta.





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