Reality Check: YG’s Urgent Response to BLACKPINK’s Departure

YG Entertainment, commonly referred to as YG, ranks alongside other leading entertainment firms regarding its size and workforce. In contrast to its competitors, which operate seamlessly with structured album launches, concert tours, and the introduction of new artists, YG seems to lack a crucial component in its machinery. If this absent element continues to be Yang Hyun-suk, who is currently facing legal challenges, the outlook for YG may be grim.

The company’s urgent reliance on BLACKPINK starkly highlights its difficulties. Although the members of BLACKPINK have signed with different agencies, YG increasingly needs their presence amid a significant content scarcity.

It’s hardly an exaggeration to claim that BLACKPINK has been the financial backbone of YG over the years. Their sales have constituted a substantial portion of the company’s revenue; in fact, some financial analysts estimate that BLACKPINK accounted for over 85% of YG’s operating profits last year. Since the group’s departure from the agency this year, YG has faced challenges, with projections indicating that the company’s operating profit in Q3 may plunge into the red.

Nevertheless, there remains a sense of optimism regarding next year’s earnings, largely tied to BLACKPINK. Even though the group’s members have left YG, they have consented to continue performing together under the YG banner. Analysts are therefore hopeful as the group gears up for full activities next year. Ironically, YG, which once stood tall as a major player in entertainment, now finds its fate tethered to a group that has already exited the company.

Long before and after the expiration of BLACKPINK’s contract last year, YG reiterated that they were “in discussions” about the group’s future. Their fervent desire to keep BLACKPINK was apparent, leading them to secure a contract for future group activities, even if they lost the individual members.

This outcome was somewhat expected. Despite each member’s undeniable ability and global appeal as solo artists, they recognize that their collective influence as BLACKPINK is significantly stronger. However, performing under the BLACKPINK name requires YG, as they own the group’s branding and music copyrights. While YG may have sought more control, these group activities are the best arrangement they could negotiate.

This development has allowed YG to barely stave off a potentially crippling crisis. Although the specific terms of the new contractual agreement, including duration and details about activities, remain undisclosed, it appears to encompass world tours, which are vital for revenue.

Since September, YG has been touting that “BLACKPINK intends to engage with fans globally through a full group return and world tour in 2025.”This announcement feels sudden and seems insensitive to the members who are focusing on their independent careers, notably lacking precise details. Such a move portrays YG as somewhat desperate.

Understanding the context of YG’s timing is crucial, given that its stock price has been precariously close to a 52-week low of 30,000 won. Following the announcement, there was a more than 20% increase in YG’s stock value within a month.

The downside remains that YG still lacks strong acts outside of BLACKPINK. While the boy group TREASURE achieved their first million-seller with their second full album “REBOOT”amidst the K-pop sales surge last year, they have not released any new album in over a year. This stagnation contrasts sharply with other K-pop acts that typically release new music at least annually while touring.

Although they did put out a digital single titled “KING KONG”in May, it managed to only reach position 713 on Melon’s daily chart. Their most notable achievement this year has been successfully concluding their second Asia tour, yet it still falls short in scale when compared to the leading boy groups from rival companies.

YG has gone “all-in”on their rookie girl group, BABYMONSTER, this year. They released a single in February, a mini-album in April, and another digital single in July, with a full album scheduled for release on November 1st. While their performance has not been subpar, it has also not been extraordinary. The overconfidence exhibited by Chief Producer Yang Hyun-suk prior to their debut now seems almost cringe-worthy.

Consequently, YG has struggled during this transitional period, failing to establish new income avenues. Even after Yang Hyun-suk resumed his role as chief producer postponing the debut of new groups, his tenure has been characterized by more promises than actual progress. Rather, it seems the company’s operational structure has regressed.

Additionally, lacking foresight during BLACKPINK’s peak years, YG now finds itself with a stark absence of engaging content. Recently, they surprisingly showcased a full group concert for 2NE1, a group that disbanded over seven years ago. While this event thrilled fans and generated considerable excitement, it also highlights YG’s dearth of new offerings.

Meanwhile, Yang Hyun-suk continues to navigate a series of legal troubles. Initially indicted in 2019 for overseas gambling, he was fined 15 million won. Currently, he is facing trial on accusations of concealing drug allegations involving B.I from the group iKON. Last year, the appellate court found him guilty and sentenced him to six months in prison, suspended for a year, a ruling his side is appealing.

Further complicating matters, Yang Hyun-suk was indicted last month at the Seoul Western District Court, charged by the Busan District Prosecutors’ Office for tax evasion involving luxury watches valued at hundreds of millions of won, received as gifts from abroad. This prosecution came after questioning a recently appointed company representative. Amidst this, it was revealed that his wife, Lee Eun-joo, has a prior criminal record for drunk driving.