SM Entertainment Ushers in a New Era with Success of aespa's Latest Release

SM Entertainment signals the onset of a new era, 'SM 3.0,' marked by the roaring success of their flagship girl group aespa.

Under the 'SM 3.0' strategy, implementing a 'multi-production center system,' aespa's third mini-album, 'MY WORLD,' has broken records. Following initial pre-orders exceeding 1.8 million copies, the album sold over 2 million copies just two weeks post-release. Compared to their previous releases - the first mini-album 'Savage' sold 510,000 copies and the second 'Girls' hit 1.65 million copies - 'MY WORLD' skyrocketed sales by 394% and 121% respectively, establishing a new record for the group.

This phenomenal success is reflected in a host of achievements including topping day-one sales records for K-pop girl groups, first-week sales, domestic and international album and music charts, as well as capturing quadruple wins in music programs. The novel concept and music style of aespa continues to generate explosive reactions from core fandoms and the general public alike, both domestically and internationally.

Following the album release, aespa made history as the first K-pop group to attend the Cannes Film Festival and embarked on a global tour across the United States, Europe, and Asia. In line with the 'SM 3.0' strategy for 'global fandom expansion,' the group plans to intensify their activities in the second half of the year, targeting the North American market with album releases and promotions.

Buoyed by the successful launch of the 'SM 3.0' era with aespa's hit release, SM Entertainment outlined five key investment strategies in their latest public announcement on May 26: building an advanced corporate governance structure, introducing a multi-production center system, maximizing IP value through business cooperation with Kakao, investing in publishing businesses and label acquisitions, and implementing a shareholder return policy based on an optimal capital structure.

The company plans to establish an advanced corporate governance structure that aligns with the interests of stakeholders - artists, fans, shareholders, and employees alike. This includes the parallel operation of various committees including the Compensation, Nomination, Internal Transactions, and Governance Committees, all chaired by non-executive directors.

The introduction of the multi-production center system is central to the 'SM 3.0' strategy, guaranteeing continuous business results through five production centers and driving maximization of IP profitability. The company plans to expand new business opportunities by complementing strengths and weaknesses of IP businesses in cooperation with Kakao.

Furthermore, SM Entertainment plans to expand IP production capabilities through external label acquisitions and establishing a music publishing subsidiary. This includes managing capital structure by sequentially utilizing cash inflows equivalent to 0.5-1 times of separate operating income (target leverage ratio), an investment policy based on target required return rates, and a shareholder return policy that uses surplus cash for shareholder returns based on a target financial structure.

Chul Hyuk Chang, the representative of SM Entertainment, stated, "The 'SM 3.0' strategy not only focuses on expanding profitability but also aims to establish an advanced corporate governance structure. It is the most exemplary growth strategy in the entertainment industry." He added, "Through the synergy of IP x IT created with Kakao, we will lead the development of the entertainment industry, showing SM's initiative."

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