Cube's ambition to become a 'Kpop giant'

ZNews•04/05/2023

Music

Wednesday, May 3, 2023 08:00 (GMT+7)
08:00 3/5/2023

According to Hankyung, many securities firms believe that Cube, the agency managing (G)I-DLE, is quietly battling the Big 4 for the position of "entertainment giant" in Kpop.

In reality, HYBE, JYP Entertainment, SM, and YG Entertainment are considered the Big 4 of the Korean entertainment industry. However, recently, many small and medium-sized brands have been quietly challenging the Big 4 to claim a position as one of the "entertainment giants" in K-pop.

Among them, Cube Entertainment, the management company of (G)I-DLE, is showing strong potential for growth in many aspects.

Stock prices rise

According to Hankyung , Cube Entertainment's stock closed at $18.07 on April 7th. Compared to the closing price of $11.72 on January 2nd, the company's stock has increased by 54.14% in the first few months of the year. Explaining this increase, IBK Investment & Securities pointed out in a report: "Cube's business performance is significantly improving thanks to the expansion of the global fandom of its artists, especially (G)I-DLE."

Lee Hwan Wook Lee, an analyst at IBK Investment & Securities, said: “Besides direct sales such as albums, recordings, concerts, and advertising, the consumption of secondary products related to intellectual property (IP), such as content (YouTube), has contributed significantly to the company’s overall profits.”

Additionally, Hankyung reported that Cube Entertainment is preparing to release an NFT in collaboration with PALA, the largest NFT exchange in South Korea (NFT stands for Non-Fungible Token, meaning tokens that are unique and non-fungible. Each NFT acts as proof of ownership in digital-related fields).

In February 2020, VT GMP acquired 30.61% of Cube Entertainment's shares, becoming the largest shareholder of the brand. Through this transaction, VT GMP plans to seriously strengthen its new business activities, focusing on developing the media and commercial business sector.

Previously, VT GMP acquired a 51% stake in Cablery – a company that innovates and develops services combining artificial intelligence and virtual reality. Additionally, a platform optimized for Generation Z was also developed as part of its media commerce business.

Therefore, after completing the acquisition of Cube and Cablery, VT GMP's stock began to see a strong increase (approximately 23.85%) this year. At the same time, HYBE recorded a 28.02% increase, JYP Entertainment 14.88%, SM Entertainment 29.79%, and YG Entertainment 27.99%. This result makes Cube Entertainment one of the top-earning brands among Korean entertainment companies.

The influence of artists

Despite lacking a solid foundation, Cube Entertainment has gradually established its position in the K-pop scene thanks to the success of artists such as BEAST, 4-Minute, Btob, Pentagon, (G)I-DLE… Although facing numerous obstacles and shortcomings in management, Cube has quickly restored its former growth.

According to last year's business report, Cube Entertainment recorded consolidated revenue of $90 million (a 67.7% increase year-on-year) and operating profit of $5.1 million (a 485.6% increase year-on-year).

(G)I-DLE's strong growth has significantly contributed to the company's overall performance improvement. Photo: Naver .

In particular, the strong growth of (G)I-DLE is a key factor contributing to Cube's steadily increasing revenue. Specifically, (G)I-DLE's album sales have seen a stable increase, with 150,000 copies for their third mini-album in 2020, 202,000 copies for their fourth mini-album in 2021, 254,000 copies for their first full album in 2022, and 839,000 copies for their fifth mini-album in October of the same year. This year, (G)I-DLE's new album is expected to reach million copies sold.

According to experts, if the Hallyu ban in China is lifted, Cube could reap significant profits thanks to (G)I-DLE's popularity in the country, especially as the number of advertising contracts for member Yuqi continues to increase.

As of April 7th, Yuqi, the Chinese member, had 7.63 million Weibo followers. This number placed her in the top 5 most followed Kpop idols in China, second only to Lisa BlackPink (8.93 million) in the female idol rankings.

In addition, Thai member Minnie is also showing her influence in the fashion field. Having gained attention since her comeback with TOMBOY, the idol has attracted a large fan base. In February 2023, she was an honored guest at the launch event of Tiffany & Co.'s new high-end jewelry collection in her home country of Thailand. A week later, she continued to be the center of attention at Paris Fashion Week Fall/Winter 2023 when she appeared as a guest of the Miu Miu fashion house.

Lee Nam Soo, a researcher at Kiwoom Securities, mentioned, “(G)I-DLE is being reborn as a global star. Therefore, the economic impact of (G)I-DLE’s world tour will increase significantly compared to last year.” With their rising popularity, not only the group but also each individual member is receiving more attention from the audience.

Kiwoom Securities added that Cube Entertainment plans to introduce a new boy group and a new girl group this year. With the debut of two rookie groups, this year's revenue is projected to reach $119.8 million (a 36.8% increase year-on-year) and operating profit $12.1 million (a 122% increase year-on-year).

By sector, the entertainment industry is projected to generate $70.4 million (a 62% increase year-on-year), while advertising is expected to reach $49.3 million (a 12% increase year-on-year).

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Linh Phuong

The power of Cube Cube (G)I-DLE Kpop Big 4 HYBE JYP SM YG Yuqi Minnie