BTS Case Study...Why Businessmen Pay attention to BTS

[Special Report III] -Economic effects alone at $4.9 billion...Convergence Results of 'Existing K-pop System + Big Hit Innovation Strategy']

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The term "21st Century Beatles" is no longer unfamiliar. Big Hit Entertainment's boy group BTS (BTS) showed off its prowess in winning the top spot on "Billboard 200" for a year (May 2018 to April 2019). Before BTS, the Beatles was the only singer to have topped "Billboard 200" in 1996. The success of BTS in the global market is drawing keen attention not only from academia but also from companies. 

BTS was born in 2013. At that time, the domestic K-pop industry was strongly influenced by the three major companies, SM Entertainment, YG Entertainment, and JYP Entertainment. No one could easily expect the boy band belonging to Big Hit, a small and medium-sized agency, to grow into a globally popular group. 

However, a close look at the growth of BTS shows that their success is not just luck. In particular, Big Hit, the agency, faithfully followed the existing K-pop idol formula in the process of planning, birth, and growth of BTS, while constantly trying new ways at the same time. The members of BTS are millennials in their late 20s. They are also creating a whole new phenomenon in the global music industry, along with their fan club "Army," which is also from the Millennial or Generation Z. 

Reports that analyze the new "success equation" created by Big Hit and BTS from a management perspective have been pouring in in in recent years. Hyundai Economic Research Institute studied how to apply this to corporate growth through a report titled "Analysis of and Utilization of Success Factors of BTS" in 2019 following the economic effects of BTS (BTS) in 2018. Recently, more and more Korean universities have been studying the success factors of BTS, including the report "Economic Effects of BTS Events" by Prof. Pyeon Joo-hyun of Korea University. Already, books such as "BTS Marketing" (Park Hyung-joon), "BTS Insight," "Goodness and Truth" (Kim Nam-guk), and "BTS Art Revolution" (Lee Ji-young) are pouring in from bookstores in Korea. 

A report on BTS is also available on the online store in the Harvard Business Review. They are "Big Hit Entertainment and BTS: Professor Morgan Zuo, Robert D. Austin," which was written for the "Case Study" textbook at Harvard Business School in 2018, and "Big Hit Entertainment Blockbuster Band BTS: K-pop (Professor Anita Albus, Lizzy Woodham June 8. In particular, Professor Anita Albus' team's report is drawing much attention as it contains in-depth analysis through interviews with Big Hit CEO Bang Si-hyuk and others. We have gathered at the heart of these reports.

◆ Big Hit Breaks the Limits of Small and Medium Entertainment Companies 

Big Hit, which created BTS, was established in 2005. Bang Si-hyuk, the head of Big Hit, has long been a composer and producer at JYP Entertainment, one of the top three agencies, since the 1990s. He was nicknamed 'Hitman' by writing hit songs by many famous singers. 

JYP's attempt to enter the U.S. market is behind his venture to establish a new agency, which was already solidly established as a composer and producer in the domestic music industry. At that time, as JYP's chief creative officer Park Jin-young spent more time overseas to make inroads into Wonder Girls and other countries, domestic affairs naturally fell to Bang.

According to the report by Albus' team, "At the time, JYP's work was more than just a composer and producer," Bang said. "After a long conversation with JYP's COO Park, we concluded that it would be better to establish a new company, become independent, and at the same time continue our cooperative relationship with JYP." 

In fact, JYP played a big role in establishing Big Hit. Singers and trainees such as JYP's 2AM and Lim Jung-hee were able to lay the foundation for the early stages as they moved to Big Hit. Bang, who had a long career in the domestic K-pop industry, took the strategy of following the existing idol system even in the early days of Big Hit's establishment. 

However, the company faced limitations as a small and medium-sized agency, and its profits began to decline. Big Hit, which needed a breakthrough, held a workshop with all its employees in 2011. Bang and his staff decided to stop analyzing what we were doing wrong and what we needed to improve it, which had been focused on at Big Hit until then. 

Instead, they focused on finding answers to some "essential questions." The questions were like 'What is an idol,' 'How can we define this business we are doing,' and 'What is a fan and what are their characteristics?'

Big Hit Entertainment | Financial Performance of Investment 

2016/2017/2018/2019

억 — hundred million

만 — thousand

매출 — sales

영업이익 — operating profit

순이익 — net profit

From this point on, Big Hit has actively introduced changes that differentiate itself from existing agencies while fully embracing the efficiency of the idol group development system, which is firmly established in K-pop. These 'new attempts' were the foundation for BTS's birth and growth.

The birth of BTS was the starting point for a meeting with RM (real name Kim Nam-joon), who is currently the leader of BTS. Pdog, then a producer of Big Hit, listened to Kim Nam-joon's rap demo and played it to Bang, who reportedly thought, "I must make this friend debut." Since then, he has formed a hip-hop-based boy group with Kim Nam-joon at the center and has started to find the right members. Back then, even in Korea, boy groups based on "hip-hop" were unfamiliar. Even Bang and other Big Hit employees could hardly think of the goal of growing into a global group. 

"There is no denying the economic effects of the BTS," Albus' team said in the report. According to a study, BTS contributed 4.9 billion dollars (about 5.85 trillion won) to Korea's GDP alone. The amount is larger than Korean Air, the No. 1 national airline. Assuming that the popularity of BTS lasts for 10 years, it is estimated to be close to $50 billion (about 60 trillion won). This is a greater economic effect than the 2018 PyeongChang Winter Olympics. 

The most important thing to prove that BTS' success is not a "fate" will depend on whether Big Hit will be able to re-create a global group like BTS. At the end of the report is Bang's answer. 

"It's only recently that I'm confident that we're on the right track in the new ways that Big Hit has challenged. We can succeed by applying our new strategies to BTS as well as other groups."