|BTS / Courtesy of Big Hit Entertainment|
By Kim Jae-heun
Big Hit Entertainment's heavy dependence on BTS has long been pointed out as its biggest weakness, as the group was responsible for 97.4 percent of the talent agency's revenue until last year.
It would be rainbows and unicorns for Big Hit if BTS were to never get old, didn't have to undertake mandatory military service and could manage to stay popular forever, but the reality of the Korean entertainment industry prevails.
And so it stands that any sudden unfavorable factor for BTS could also spell the end for Big Hit as well.
Before the listing of the entertainment firm, BTS made history with its new digital single "Dynamite" reaching the No.1 rank on Billboard's Hot 100 main single chart. It brought high expectations for the success of Big Hit's successful IPO, but one of the members made a seemingly benign remark on the 1950-53 Korean War that provoked controversy among Chinese fans. As a result, a number of Korean firms ― including Samsung Electronics, Fila and Hyundai Motor ― pulled advertisements featuring BTS from the Chinese market.
"The biggest strength of Big Hit is BTS. At the same time, it is their biggest weakness because the K-pop group is all they have for now. Big Hit has failed to change its system that places much of its corporate value in the group, not the firm itself. BTS's value does not belong to Big Hit, but to the group itself," said Lee Hyo-jin, a researcher at Meritz Securities.
To lower its reliance on the group, it broadened the spectrum of its musicians by acquiring two entertainment firms, Source Music in July last year and Pledis Entertainment in June this year.
Pledis Entertainment is home to boy bands like Seventeen and NU'EST and girl groups including Orange Caramel and Afterschool. Source Music has only one group, GFRIEND.
All five groups have followings within and outside of Korea but their reputation is nowhere close to that of BTS.
Big Hit introduced new boy band Tomorrow X Together (TXT) in March last year and became the second fastest K-pop group to appear as a Billboard Emerging Artist. However, they have not showed any significant achievement close to that of BTS yet.
To make the situation worse for Big Hit, all BTS members will have to do their mandatory military service, starting with Jin next year. Every member is eligible for enlistment now and they can all join the military at the same time but this is unlikely.
The government has been deliberating on allowing BTS members to fulfill their military service later but this has not been decided yet. All Korean men must do their service before they are 30 years old.
Thanks to its flourishing platform business Weverse, Big Hit has been able to lower its overall dependence on BTS, which now takes 70 percent of the company's total revenue. But its diversification drive still has a long way to go.