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Writer's picturelewishooper1

Why is SM Entertainment not making a profit? And how they're looking to turn it around!

Is the K-pop industry in trouble? One of the biggest companies in K-pop, SM Entertainment, has reported a massive decrease in profits this year. What is happening to the K-pop industry's entertainment giant? We explain!


SM Entertainment headquarters in Seoul (SM Entertainment)
SM Entertainment headquarters in Seoul (SM Entertainment)


Recently on November 5, 2024, SM Entertainment released its third-quarter financial results to the public, which reported a revenue of 242.2 billion KRW and an opening profit of 13.3 billion KRW. This has however fallen by 9% compared to the same period last year, and an operating decreased profit by 73.6%.


There are factors as to why it is lower, some of them are lower album sales and a decline in sales from major affiliates, and it has also been reported that it is lower due to affiliate revenue and the production costs for SM's first UK boy group DEAR ALICE.


Dear Alice (SM Entertainment)
Dear Alice (SM Entertainment)


How can such a well-known K-pop machine like SM accumulate losses? Looking ahead to the fourth quarter and into early next year, SM Entertainment has planned a series of activities for their artists. This includes a new girl group, which will be the first seen since Aespa, who debuted five years ago.


Aespa (SM Entertainment)
Aespa (SM Entertainment)


Aespa has also been thriving, with the release of their member solo singles from their recent concerts and their mini album Whiplash on October 21st, which has been warmly received. This year, they have maintained their number-one streak with relay hits starting with "Supernova". 


Let's check out this video!




This expansion will help roadmap new IPS such as Riize and NCT Wish. With the hope of working on more global projects like they did with the BBC in the series Made in Korea, the K-pop experience for Dear Alice. This will also enable them as a label to gain more recognition on an international level which can not only boost their profits but also make K-pop a true global success and cement Korea's place on the map.


SM is also approaching its 30th anniversary at the beginning of 2025. To mark the spectacular event they are preparing to launch a variety of commemorative projects including the renowned SMTOWN Live concert and the SMTOWN album. Will these events boost their profits?


Let us know why you think they are not making a profit in the comments below.


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