Proper Context Of HYBE's Internal Report Mentioning "Abandoning" NewJeans

Here's the TLDR:

• NewJeans Popularity: Despite their huge success since debut, NewJeans' momentum has slowed due to internal management conflicts at HYBE involving ADOR's former CEO Min Hee-jin. This dispute hurt NewJeans' image and sales, leading to a slight dip in ADOR’s net profit and a decline in NewJeans’ brand reputation rankings.

• HYBE’s Position and New Star Groups: HYBE seems less reliant on NewJeans now, thanks to other popular groups like BTS, SEVENTEEN, TXT, and newcomers such as ILLIT, BoyNextDoor, and the US-based KATSEYE. These groups are showing impressive growth in album sales, streaming, and international markets.

• BTS Return & New Group Success: BTS members will fully return from military service by mid-2025, allowing HYBE to maintain strong revenue. New groups are also achieving significant milestones, with KATSEYE gaining traction in the US and ILLIT breaking streaming records on Spotify.

The analysis of the writer of the report concluded that it won't hurt HYBE if it loses NJ because it isn't reliant on it and has other groups gaining ground. HYBE is prepared to maintain its growth and profitability even with NewJeans’ recent challenges, thanks to its diverse and expanding roster of successful artists.

As the term "Newar" emerged in HYBE’s community, reflecting a lineup of NewJeans, ILLIT, and LE SSERAFIM, mentions of ILLIT have seen a slight uptick.

"I’ve been wrestling with the word 'Newar' for days, but maybe all it takes is to drop 'New' and start fresh."

This statement appears in HYBE’s internal report for executives. The report compiles market feedback and public opinions on industry trends, including community responses and HYBE's own assessments.

Among the report’s key highlights is an analysis of HYBE's flagship girl group, NewJeans. While the report refrains from harsh comparisons with other idols, it mentions a notion of "moving on" from NewJeans, suggesting that even without them, HYBE’s roster could fill the gap.

34% = BigHit

32% = Pledis

13% = Ador

11% = BeLift

7% = Source Music

3% = KOZ Music

NewJeans, a group that sparked a “syndrome,” is now reportedly in a “downtrend” due to the negative effects of internal management conflicts.

NewJeans has firmly established itself as HYBE’s leading girl group. Their debut songs “Attention” and “Hype Boy” in July 2022 gained phenomenal popularity, achieving simultaneous first and second positions on Melon, a major streaming platform—a rare accomplishment.

The NewJeans phenomenon continued last year, with hits like “Attention,” “Hype Boy,” “Ditto,” and “OMG” achieving massive success. In 2023, NewJeans became the only girl group with four songs in the annual top 10 streaming chart. Their second mini-album, Get Up, sold 2 million copies within 17 months of their debut, marking a record among 4th-generation girl groups.

The group’s popularity is evident in numbers. ADOR, NewJeans’ label, recorded 110.3 billion won in sales in 2023, a 492% increase over the previous year, making it the fastest-growing domestic label to surpass 100 billion won in annual sales. ADOR also achieved an operating profit of 33.5 billion won.

Internationally, NewJeans' performance has surged. Their achievements on the US Billboard chart place them among top K-pop groups like BTS and Blackpink, as they, too, have ranked highly on the Billboard 200 and HOT100 charts. With this momentum, ADOR is projected to reach annual sales of 300 billion won in 2025 and 400 billion won in 2026.

However, their rise slowed this year due to the fallout from a management dispute involving former ADOR CEO Min Hee-jin and HYBE. In April, HYBE conducted an internal audit alleging that Min and other executives attempted to seize control from HYBE. Min and her team countered that they were simply voicing concerns about NewJeans' similarity to Belift Lab’s new girl group ILLIT and denied any attempt to assume management control.

The conflict escalated as HYBE publicly highlighted former CEO Min’s activities, raising allegations of business secrecy leaks and favor requests. Despite a request from NewJeans for Min’s reinstatement, HYBE did not comply, widening the rift.

This management dispute has impacted NewJeans’ public image. Although the group returned to the Korean stage in May and debuted in Japan in June, their performance fell below expectations.

By the end of June, ADOR’s net profit was 11 billion won, a 5% decline year-over-year. With no planned domestic comeback in the second half of the year, ADOR’s annual revenue is expected to decrease for the first time in three years.

Advertising and brand endorsements have also been affected. While NewJeans previously topped brand reputation rankings, the dispute saw this ranking fall: from 10th place in April to 29th in May and 48th in June, and eventually out of the top 50 by September.

An IB industry insider commented, “With HYBE’s current stance on NewJeans, their future activities may face limitations. A downturn in profitability seems inevitable, driven by declining brand reputation.”

Alternatives to NewJeans: ILLIT, ENHYPEN, KATSEYE, and More

Despite NewJeans’ recent struggles, HYBE reportedly has sufficient support from other popular groups, allowing the company to take a firm stance on the ADOR management dispute.

First, BTS, HYBE’s mainstay, is scheduled to return soon. Following Jin’s military discharge, the remaining members—J-Hope, V, RM, Jungkook, Jimin, and Suga—are set to finish their service by mid-2025, allowing BTS to resume full group activities by June.

For SEVENTEEN, with Jeonghan enlisting this year and Hoshi, Wonwoo, and Woozi joining next year, their large roster allows them to continue with unit activities, minimizing disruption.

HYBE’s future stars are also experiencing strong growth. Even amid the ADOR management dispute, rookies like Tomorrow X Together (TXT), ENHYPEN, BoyNextDoor, TOURS (TWS), and ILLIT are achieving impressive results.

Album sales and streaming metrics reflect this growth. ENHYPEN and BoyNextDoor saw album sales rise by 30% and 22%, respectively, earning 60.1 billion won and 32.4 billion won this year from album sales alone. &TEAM, HYBE’s Japanese localization group, went from platinum (250,000 copies) to double platinum (500,000 copies), setting new records.

TXT, now in their sixth year, recorded 35.6 billion won in album sales, placing them just behind SEVENTEEN (217.3 billion won) and ENHYPEN.

ILLIT, another rising group, has excelled on Spotify, surpassing 400 million cumulative streams. They became the fastest K-pop group debut to reach this milestone, with only one mini-album, SUPER REAL ME, marking unprecedented success.

The US-based group KATSEYE is also thriving. Their debut EP SIS, released in August, shows rapid growth, with monthly listeners on Spotify surpassing 11 million and North American album sales exceeding 100,000 copies. An upcoming promotion with Target is expected to further boost their popularity, setting the stage for even greater success next year.

source: https://dealsite.co.kr/articles/130465