K-Pop (Korean pop) is on a roll. And so are the South Korean talent agencies that nurture pop stars adored by millions of fans across Asia.
The growing popularity of Korean idol groups such as Big Bang and Girls’ Generation have given Korea new-found kudos across the region, boosting stock prices of local entertainment companies and the country’s tourism revenues.
YG Entertainment, the label responsible for some of the biggest acts in Korean pop, made a successful debut on the domestic stock market last month. Its shares more than doubled in their first day of trading on November 23 after individual investors ordered 561 times more stock than was available in the company’s initial public offering. The talent agency, which manages a boy band named Big Bang and a girl group called 2NE1, has climbed nearly 130 per cent so far from its IPO price of Won34,000 ($29) to enjoy a market capitalisation of Won387.4bn.
YG Entertainment is not alone. Its peers such as S.M. Entertainment and JYP Entertainment have all become the country’s stock market stars, with their stock price tripling this year amid K-Pop’s increasing popularity not just in Asia but also in some parts of Europe and America.
Korean pop stars are making fast inroads into foreign markets as YouTube and other social networking services help them promote K-pop all over the world. Music videos of S.M. Entertainment’s flagship bands such as Girls’ Generation and Super Junior have generated tens of millions of views globally on Google’s YouTube.
In Paris, hundreds of fans rallied in front of the Louvre on May 1, demanding S.M. hold another concert of its artists after about 7,000 tickets for a June concert sold out in just 15 minutes. Music acts of S.M. Entertainment also had a successful concert in Madison Square Garden in New York in October.
The phenomenon, known as Hallyu or Korean wave, which started with popular Korean dramas such as Winter Sonata in early 2000s, is becoming wider with the emergence of a new hip generation of South Korean musicians. These talent agencies recruit youngsters at their teens and groom them through years of rigorous training until they reach stardom. With catchy songs and highly-choreographed dance, these pop acts are now trying to break into western markets.
“The so-called Hallyu was not made overnight. I think it will become wider as Korean pop culture is fun and unique but not entirely foreign to overseas audiences,” says Han Koo-hyun, director of the Korean Wave Research Center.
Seoul has emerged as Asia’s new capital of pop culture on the back of Hallyu. The country is now associated with pop music and TV dramas as much as with cars, chips and mobile phones. Government officials hope that Hallyu would breathe a fresh life into the Korean economy, although its economic growth is still driven mainly by big chaebol groups such as Samsung and Hyundai.
As an economic phenomenon, Hallyu has been a boon to South Korea’s slowing economy as it is not just spreading culture out from Korea, it is also drawing people in. The number of people who visited South Korea specifically to attend events such as album launches, concerts and awards ceremonies doubled to 34,000 last year. Still more came to visit the set of a famous soap opera or movie. According to South Korea’s Trade and Investment Agency, income from cultural exports like pop music and TV shows has been increasing by about 10 per cent a year since 2008, when it was worth almost $2bn.
But can K-pop be a reliable investment? Investors are not yet sure about whether these K-pop groups are bankable, with some raising the possibility of bubbles forming in the red-hot industry.
Despite their increasing global appeal, K-Pop acts such as Wonder Girls and BoA have so far failed to reach the US mainstream market. And any mishaps related to individual pop stars could hurt stock prices of entertainment firms as seen in the case of YG Entertainment’s IPO. The company had to cut its IPO size by 10 per cent at the last minute because, it said, of its lead singer’s marijuana consumption.
Kim Shi-woo, an analyst at Korea Investment & Securities, says K-pop bands have proved profitable in Japan but not yet in other foreign markets. “They have a certain fan base in some parts of the western world but have yet to break into the mainstream markets there. That will take time,” he says. “The firms’ current stock prices reflect their potential, which could be seen as bubble, but I don’t think that bubble would pop easily any time soon.”
Source: beyondbrics | Financial Times – FT.com via GD_holics@twitter
Credits t0: http://bringbb2uae.tumblr.com