SM Entertainment Aims to Achieve 1.2 tln Won in Sales by 2025

SEOUL, Feb. 21 (Korea Bizwire) — SM Entertainment, a K-pop powerhouse, said Tuesday it will achieve 1.2 trillion won (US$92.6 million) in sales by 2025 and operating profit margin of 35 percent, releasing a detailed strategy to carry out the business blueprint announced earlier this month.

The plan was included in the company’s second strategy for the “SM 3.0″ blueprint, which was announced on its YouTube channel.

The envisioned figures are 2.4 times and 4.3 times the company’s revenue and operating profit for last year.

On Feb. 3,the agency unveiled a new business blueprint named “SM 3.0,” which covers four growth strategies to adapt to the fast-changing environment of the music industry.

The company then vowed to shift to a multi-production and label system from the current system of founder Lee Soo-man overseeing all projects alone as part of the first strategy to carry out the blueprint.

The gist of the second strategy announced Tuesday was a plan to generate additional profits from secondary intellectual property (IP) businesses, such as merchandise, IP licensing, fan community platforms and video content, not only from album and digital music sales and concerts.

In the new video, SM Entertainment CFO Jang Cheol-hyuk said the company will improve its operating profits by severing all business ties with founder Lee.

“We terminated a producing contract with Like Planning on Dec. 31, 2022, and the payment of all related additional expenses will be stopped,” Jang said, adding the cost saved from the termination will result in a rise in the operating profit margin.

“We’re going to directly operate key business projects and stop giving all outsourcing work to a specially related company (of founder Lee),” he added.

Lee, known as the godfather of K-pop, has been in dispute with SM’s current management in recent years over issues involving the company’s business dealings with his Seoul-based private music production company Like Planning.

He has not held any official position at SM for more than a decade but has reportedly exerted a significant influence in managing and training the company’s K-pop artists.

Jang said the company, under the strategy, will manage more than 21 active singers or groups, release more than 40 albums a year, sell more than 27 million copies of albums and hold over 400 K-pop concerts a year in 2025.

The company said it will unveil more plans, including one on overseas markets and investment, to carry out the SM 3.0 blueprint later.

(Yonhap)