SM ENTERTAINMENT JAPAN Co.,Ltd.

Business Details

This segment handles the exclusive Japan management of SME artists, providing an integrated business spanning dome- and arena-scale concerts, music production and distribution, merchandise (MD) sales, fan club operations, and advertising appearances. It also supports event and fan club operations for Korean artists affiliated with other agencies. The segment is pursuing multifaceted monetization measures including exclusive broadcasting rights sales and live viewings, while working to transition to a high-profitability business model through the development and in-house production of original IP. This is the core business, accounting for approximately 82% of consolidated net sales.

Recent Overview

Successive large-scale performances drove a 61.2% year-on-year surge in Q1 segment net sales

In the first quarter of FY2026 (ending December 2026), large-scale performances were concentrated, including SMTOWN LIVE at Mizuho PayPay Dome Fukuoka (approx. 70,000 attendees), SUPER JUNIOR's 20th anniversary tour at Belluna Dome (approx. 60,000 attendees), and RIIZE's solo Tokyo Dome concert (120,000 attendees, the fastest ever for a male K-POP artist). A total of 21 performances were held with a combined audience of approximately 340,000, and the MD business, advertising appearance business, exclusive broadcasting rights sales, and live viewings worked in tandem to boost results. The segment profit margin improved from 8.1% in the same period of the prior year to 11.8%. The in-house IP "GPP" also achieved its CD debut, and fan base expansion is progressing.

Key Products

Growth Drivers

• Continued staging of large-scale performances, including RIIZE's solo Tokyo Dome concert (120,000 attendees), and expansion of attendance figures
• Multifaceted monetization measures for performances combining exclusive broadcasting rights sales and live viewings
• Solid trend in advertising appearance contracts in the beauty and apparel sectors, driven by rising recognition and popularity of aespa, RIIZE, and NCT WISH
• Expanding revenue contribution from concert-linked venue and e-commerce merchandise sales in the MD business
• Fan base expansion and future monetization from the CD debut of the first original in-house IP, "GPP"
• Expansion of revenue base beyond concerts, including the music business and travel business, and margin improvement through internalization of operations
• Continued rollout of large-scale festival-style performances leveraging the SMTOWN brand

Risks

• Continued sharp rises in production costs and personnel expenses amid global inflation and yen depreciation
• Risk of earnings dependence on the activity status (timing, scale, and frequency of concerts) of specific artists
• Intensifying competition in the live entertainment market, including K-POP, and diversification of fan needs
• Risk of revenue concentration with major customer Avex Live Creative Inc. (¥3,389 million in FY2025, ending December 2025, 33.2% of total net sales)
• Burden of upfront investment costs required to develop and monetize new IP (such as GPP)
• Risk of quarter-to-quarter earnings volatility due to concentration of large-scale performances in Q1 (full-year earnings forecast calls for net sales of ¥9,089 million, a 10.8% year-on-year decrease)