K-Pop Faces Growth Challenges as Market Shows Signs of Decline

The K-Pop industry is currently experiencing a downturn, marking a significant shift in its growth trajectory. After a decade of continuous expansion, the export and sales of K-Pop albums saw a slowdown last year. According to the Korea Customs Service's trade statistics as of January 19, 2025, the total export value of physical albums reached approximately 423.8 billion KRW, a slight increase of 0.55% from the previous year (421.5 billion KRW). This marks the first time since 2015 that growth in export value has stalled.

In terms of country-specific statistics, K-Pop exports to Japan fell by 24.7% last year, totaling 130.3 billion KRW. Japan, along with the United States (87.5 billion KRW) and China (86.8 billion KRW), accounts for 72.8% of total K-Pop exports. However, exports to China rebounded by 76.4% last year, helping to mitigate the overall decline.

The much-touted 'era of 100 million K-Pop album sales' has also come to an end just a year after its inception. The Circle Chart, managed by the Korea Music Content Association, reported that K-Pop physical album sales from January to December last year totaled 98.9 million, a 17.7% decrease from the previous year's 102 million.

Industry insiders attribute this decline to the absence and underperformance of major groups that have historically driven the market. With global sensations like BTS (방탄소년단) and BLACKPINK entering hiatuses, the sales of newer generation groups have also dropped. SEVENTEEN, which achieved a record 16 million album sales in 2023, saw its sales plummet to 8.96 million last year. The number of teams selling over 3 million copies of a single album decreased from 11 to 7, while those selling over 1 million dropped from 26 to 24. No group surpassed 5 million in sales.

Additionally, there have been no new global mega-hits emerging. As of last year, 25 K-Pop songs remained in the top 2500 cumulative streaming tracks on Spotify, with BTS contributing 16 and BLACKPINK 9.

The conflict between Min Hee-jin, former CEO of ADOR, and HYBE executives surrounding NewJeans has also been linked to the decline in album sales. An industry source noted that excessive competition for first-week sales, repeated purchases by fans for signings, and 'album pushing' were highlighted as issues, leading to a slowdown in proactive album marketing.

While K-Pop streaming has seen growth, the operating profits of the so-called 'Big Four' entertainment companies have declined, as album revenue typically exceeds streaming income by more than double. HYBE reported a 10.5% increase in daily streaming counts for its artists, totaling 12.6 billion, but projected a 6.1% decrease in operating profit compared to the previous year.

In response to these challenges, the industry is seeking to overcome the crisis through bold investments. Major entertainment companies have announced plans for new debuts starting this year. SM Entertainment is set to debut a new girl group, Hearts to Hearts, and a localized boy group, Dear Alice, next month. JYP Entertainment will launch a new boy group, Kickflip, on the 20th, while HYBE plans to introduce a Latin localized group through an audition program later this year. YG Entertainment is preparing to debut a new group, tentatively named Next Monster, following the debut of the girl group Baby Monster last year.

The anticipated returns of BTS and BLACKPINK in the second half of the year are seen as potential catalysts for revitalizing the K-Pop market. BTS is expected to resume group activities after all members complete their military service in June, while BLACKPINK plans to restart their full group overseas tour later this year. Analysts predict that BTS's return could generate approximately 1.87 trillion KRW in revenue for HYBE, accounting for half of the company's sales in the first half of next year.

The demand for large-scale K-Pop live performances is also a positive indicator for market recovery. According to Hyundai Motor Securities, the number of attendees for K-Pop concerts is projected to reach 17 million in 2025, reflecting a 27% growth compared to the previous year. The number of groups hosting stadium concerts with capacities of 30,000 to 50,000 has increased, with new additions like Stray Kids, TOMORROW X TOGETHER, and ATEEZ joining the ranks of BTS, BLACKPINK, and TWICE. Additionally, the number of groups hosting arena concerts with capacities of 10,000 to 30,000 has grown from 6 to 17.

Kim Jin-woo, the chief commissioner of Circle Chart, commented that during the pandemic, fans concentrated their spending on album sales due to halted performances, but now spending is diversifying towards concerts. He noted that the growth of core fandoms, which previously spent heavily, is slowing down, suggesting that increasing general demand to expand the size of fandoms could be a solution to the current challenges.