[비즈엔터 윤준필 기자]Establishing a multi-production system...NCT DREAM, aespa, and RIIZE in action

▲RIIZE(Bizenter DB)

SM(041510) has entered the second year of SM 3.0. After achieving significant results with the introduction of 'SM 3.0' last year, SM is looking to take another leap forward in 2024.

SM closed at 82,500 won on the KOSDAQ market on the 24th. This is an increase of about 15% compared to the price of 71,700 won in early January last year. On the last 10 days, it rose to 96,500 won, showing the strength of the core enterprise stock. While the stock has been pausing in the midst of the overall bear market, SM has enough strength to rebound.

SM proved its mettle last year. In Q3, the company posted its largest quarterly profit ever, and its 2023 earnings are expected to remain on track. According to Daol Investment & Securities, SM's 2023 consolidated revenue is estimated at KRW 1.641 trillion and operating profit at KRW 182.4 billion. This represents a 26.8% and 34.4% year-on-year increase, respectively.

One of the reasons behind SM's growth is "SM 3.0. On February 7, last year, SM announced the start of "SM 3.0," saying that it would break away from the system of a single executive producer, Lee Soo-man, and announced a strategic partnership with Kakao Entertainment to collaborate using their respective business capabilities.

▲NCT DREAM(SM Entertainment)

SM announced a multifaceted blueprint for 'SM 3.0,' the core of which is the establishment of a 'multi-production system' where five production centers and internal and external labels produce music independently.

With the multi-production system in place, SM has been releasing one to four albums a month, with each album utilizing the individuality and characteristics of its artists, including SHINee, aespa, NCT DREAM, NCT 127, RIIZE, Red Velvet, and Taeyeon.

Album sales reached an all-time high in the third quarter. In the third quarter alone, 8.71 million new albums were sold, far exceeding the 4.15 million sold in the same period last year. Among them, NCT DREAM's "ISTJ" sold 4.32 million copies, and its first week sales (initial) were 3.65 million. This is the first triple-million seller for an SM artist in history.

▲aespa(Bizenter DB)

With "Girls," "MY WORLD," and "Drama," aespa recorded three consecutive initial million-sellers, and their youngest group, RIIZE, which debuted in September, sold 1.01 million copies, ranking second in terms of initial sales for debut albums in history.

aespa also succeeded in expanding its musical spectrum across generations by remaking Seo Taiji and I.D's popular song "Era Regret" on the 15th. While keeping the main message of the song, such as the spirit of resistance, they filled the musical aspect with aespa's colors.

In addition, with "Drama," released in November last year, aespa continued their "seventeen days" this year by taking the top spot on SBS's "Popular Songs" on the 14th, collecting their third number one trophy.

▲Taeyeon.(SM Entertainment)

The popularity of Girls' Generation's Taeyeon, who is celebrating her 17th year of debut this year, is also unabated. Taeyeon's "Two X," released last November, ranked second on the Melon and Bucks weekly charts in the third week of January. In addition to the music charts, the song also won the number one trophy on MBC's "Show! Music Center," which aired on the 13th, for the second week in a row.

In addition, Taeyeon's OST "Dream" from the recently concluded "Welcome to Samdalee" also entered the Melon Top 100 chart and continued its popularity streak alongside "Two X," demonstrating Taeyeon's music power.

Not only albums but also performances have been going well for SM. aespa has held 18 world tours, including North America, Asia, and Europe, and expanded its global fan base. NCT 127 started its third world tour last November with a performance in Seoul. Starting this month, the group will be traveling to Tokyo, Osaka, and Nagoya for the Japan Dome Tour, as well as performing in Jakarta, Bulacan, Bangkok, and Macau.

▲SM Entertainment Building(SM Entertainment)

SM plans to further solidify "SM 3.0" this year. The basis for the confidence is that SM has artists of various years of experience, from rookies to veterans.

Kim Kyu-yeon, a researcher at Mirae Asset Securities, attributes the longevity of SM's artist portfolio. "The average age of SM's artists, who are active in the global market, is 12 years, which is 1.5 times the median age of the Big 4," Kim said.

"The SM fandom network built by entering the Japanese market early on is the basis for the artists' long-term activities," he said. "Based on this know-how, revenue growth is expected to be driven by the synergy of a large number of accumulated IPs and a younger group that has entered a growth period."

▲NCT 텐(SM Entertainment)

Kim Hye-young, a researcher at Daol Investment & Securities, also said, "SM Entertainment's current stock price is at a low level considering its 2024 earnings growth potential." "We expect girl group aespa and boy group RIIZE to lead SM Entertainment's performance this year."

NCT, which serves as S.M.'s cash cow, will overcome the 'military hiatus' with a 'separately and together' strategy, even though some of its members are due to enlist in the military. First and foremost, TEN will be holding a solo fan concert in February, and tickets for the show were sold out as soon as they went on sale. Due to the overwhelming response from fans to Ten's first concert, SM decided to hold one more concert.

In addition, rookie girl groups and virtual idols, such as NCT WISH, are set to make their debuts, and SM hopes to capitalize on the trickle-down effect of the fandom built up by the senior groups.