BTS 2.0 to usher in new era of K-pop

 BTS, South Korea's global boyband sensation, is set to return, with all seven members completing their mandatory military or alternative social service by the end of June.

Emerging from a little-known music label, BTS rose to global stardom through captivating music and electrifying dance performances, creating a success story that inspired a vast and devoted fanbase. Now the question is: Can a reunited BTS breathe new life into a K-pop industry showing signs of stagnation?

BTS debuted in 2013 as Bangtan Sonyeondan (Bulletproof Boy Scouts) and officially adopted the name BTS in 2017 for its international debut. Among fans, the group is still affectionately known as Bangtan (Bulletproof). The members' lively interactions with one another continue to enchant global audiences.

The group's rise to global fame began in 2018, when their album "Love Yourself: Tear" became the first K-pop release to top the Billboard 200 chart, an extraordinary feat for a non-English album that captured headlines worldwide.

In 2020, BTS made history with "Dynamite," their first single recorded entirely in English, which became the first K-pop song to top the Billboard Hot 100 chart. It was also the first time an Asian artist had reached No. 1 on the chart since Japanese singer Kyu Sakamoto in 1963. BTS went on to become the first South Korean act to receive Grammy nominations, earning nods for three consecutive years beginning in 2021.

BTS has played a pivotal role in globalizing K-pop, significantly elevating the genre's stature in the music industry. Their management company, Hybe, began as a small entertainment agency but quickly expanded its business in tandem with the group's rising popularity in the U.S.

In May 2022, BTS became the first K-pop group to visit the White House, where they met with then- President Joe Biden to discuss issues including racial discrimination. During the meeting, one member expressed the group's serious concern over the rise in anti-Asian hate crimes in the U.S.

As BTS began expanding its international activities around 2018, public debate intensified over the mandatory military service its members were facing. In South Korea, all able-bodied men between the ages of 18 and 28 are required to serve for up to 21 months. Many argued that BTS members deserved an exemption or deferment due to their significant contributions to the country's culture and economy.

In December 2020, the South Korean parliament passed a legal revision allowing prominent figures in popular culture and entertainment to delay the service until age 30, giving them more time to pursue their careers. Informally dubbed the "BTS law," the amendment was widely seen as being tailored to accommodate the group. In June 2022, BTS announced a temporary pause in its activities as members began fulfilling their mandatory military service, starting with Jin, the group's oldest member, in December.

Six of the seven BTS members have now completed their 18-month military or alternative social service. Jin and J-Hope have resumed solo activities following their discharge last year. The final member, Suga, is scheduled to complete his social service on June 21. Once all members have fulfilled their obligations, they are expected to resume group music production, with an all-member stage comeback anticipated in 2026 or later, according to sources close to the band.

BTS's global success is the result of meticulous music production combined with masterful marketing strategies.

Initially debuting as a hip-hop act, the group transitioned into an idol format as they set their sights on the Japanese market. Later, in pursuit of the U.S. fans, they further evolved their sound to align with global music trends.

By blending strategic music production, advanced rap techniques, strong vocal performances and dynamic choreography, BTS has successfully broken into the American market, long considered a formidable barrier for Asian artists.

The creation of a strong community between BTS and its fans through interactive communication has also played a key role in the group's success.

Its strategy is twofold: while attracting new fans with engaging free content on YouTube and social media platforms, it has also established a fee-based platform that allows dedicated followers to interact with the artists and participate in support activities. This approach has fostered a passionate global fandom, known as the BTS Army, which has been a key driver of the group's competitive advantage.

While BTS has joined the ranks of the world's most successful music groups, it still falls short in terms of streaming growth and sustained chart performance compared to top U.S.-based artists.

As the members embark on their second chapter as a reunited group, the key question is whether BTS 2.0 can narrow the gap with global superstars like Taylor Swift, who generated over $2 billion in ticket sales from her two-year tour, and Bruno Mars, a 16-time Grammy Award winner.

South Korea's entertainment industry has long been dominated by four major agencies: Hybe, JYP Entertainment, SM Entertainment and YG Entertainment. While earnings have generally increased since the 2010s, their financial performance and stock prices remain volatile, often influenced by artists' activities and scandals, as well as shifts in public perception of entertainment agencies

Although the K-pop industry is abuzz with the anticipated reunion of BTS, its primary revenue source, CD album sales, is showing signs of decline. According to Circle Chart, a South Korean music information website, album sales fell 17% last year compared with the previous year, totaling 98.37 million units. The once-surging growth in music CD exports has also stagnated, with shipments totaling $291.81 million, up just 0.5% on year, according to the Korea Customs Service.

The K-pop industry relies heavily on overseas demand, with developments in major music markets like the U.S. and China significantly impacting its business.

In the U.S., the most crucial market for K-pop, higher tariffs pursued by President Donald Trump's administration could pose significant obstacles. K-pop generates revenue from album sales, concert tickets, merchandise and fan club memberships. If tariffs increase the cost of these items, sales could be adversely affected.

The outlook for expansion in China remains uncertain. Following South Korea's 2016 decision to deploy the U.S.-made Terminal High Altitude Area Defense (THAAD) anti-missile system, China imposed restrictions on South Korean entertainment content. As a result, selling concert tickets and merchandise in China has become difficult.

Hybe, the agency behind BTS, has adopted a new marketing strategy to better respond to evolving global trends. Under its Hybe 2.0 strategy, unveiled last August, the company announced a shift from a U.S.-centric global focus to a "multi-home, multi-genre" approach. This strategy aims to discover, nurture and debut talent that authentically reflects the cultures and characteristics of key markets, particularly the U.S., Japan and Latin America.

Designed to transform Hybe from a music label into a global entertainment powerhouse, the new approach emphasizes localization. Instead of driving growth through uniform global exports, Hybe's overseas subsidiaries will take the lead in tailoring content and promotions to local audiences.

For example, Hybe has established a new division, Hybe Music Group APAC, to oversee its music business in Japan and South Korea. In June, Hybe Japan implemented organizational changes and appointed a top executive with expertise in J-pop.

Japan is Hybe's second most important market after the U.S. Since completing their military service last year, several BTS members have begun solo activities there. In line with Hybe's localization strategy, the Japanese unit may develop and release original content to strengthen its stage offerings.

Hybe is lessening its dependence on BTS for revenue. "BTS accounted for 95% of our revenue before the members began their military service, but that share dropped to less than 20% in the year ended December, as they were limited to solo activities -- if they could perform at all," CEO Lee Jae-sang said in February during the fiscal 2024 earnings briefing. "But [in BTS's absence,] other artists in our portfolio have gained traction, and we remain committed to maintaining a stable and diversified talent portfolio."

Hybe may have succeeded in diversifying beyond a single talent source, but it still faces many challenges, including concerns over corporate governance, rising competition from popular artists in Southeast Asia, Japan and other regions, and sluggish global consumption due to inflation. The agency's future will depend largely on how effectively it can help BTS recover from the hiatus caused by military enlistment and harness the experience the members gained through their solo activities.

But it is not just Hybe's future that is at stake -- the success or failure of BTS 2.0 could have far-reaching implications for the entire K-pop industry.