Good morning, good afternoon. Thank you for joining us today at HYBE's first quarter 2023 earnings call. This is Lee Sangwoo, head of the IR team, and I will be moderating today's call, which will proceed through consecutive translation. Our CEO, Mr. Park Ji-won, will first walk us through first quarter highlights and future business plans, followed by Mr. Choi Joon-won, CEO, Weverse Company, then our financial results by our CFO, Mr. Lee Kyeong-jun, which will then be followed by Q&A. Please be advised that today's earnings call is based on preliminary consolidated estimates under K-IFRS, and may be subject to change upon external audit review. I will pass it on to our CEO, Mr. Park Ji-won.
Yes. Good morning. This is Park Ji-won. Thank you for joining us today at what is our tenth earnings call since going public.
Typically, in the first quarter, our artists are usually busy preparing for their next new albums after spending a very busy year-end, and we usually do not have many new album releases in the first quarter. Now, under our multi-label structure, our artists are working their albums evenly throughout the year. I think the strong performance we recorded even in the first quarter is really proof of the power of our multi-label production system.
First, let's look at BTS. Members have continued their solo ventures outside of BTS following last year. Last March, Jimin's solo album, Face, upon release recorded 1.45 million in first week album sales. The title track, Like Crazy, debuted at number one on the Billboard Hot 100, opened at number two on the Billboard 200, making it the best-selling K-pop solo album of all time.
It also swept the top place on local music charts and earned a platinum album certification in Japan, as fans from all over showed their love.
Tomorrow X Together grabbed the number one spot on the Billboard 200 with their fifth mini-album, TXT: The Name Chapter Temptation, recording 3.14 million copies sold year-to-date, becoming the best-selling artist in Q1 according to Circle Chart. They have solidified their fandom since last year's world tour, are currently touring this year as well following the release of their album in March. They started this year's world tour in Korea in March, followed by Japan in April, will be stopping by the U.S. in May, pulling off a fantastic showcase and mature performance for their fans. The Dome concert in L.A. will take place.
Well, will play to an audience of more than 20,000 fans as TXT has continued to sell out venues twice as large as last year, thanks to adoring fans all over the world. They are also scheduled to perform at the Lollapalooza Chicago Music Festival as the headliner act.
SEVENTEEN's 10th mini-album, FML, which was released on April 24th, has also done phenomenal, recording 4.64 million in pre-orders, 3.99 million copies sold on the same day of release, and 4.55 million first week album sales, which is an unprecedented record in K-pop history. As the group, now going strong on nine years since debut, continues its race to the top with endless growth momentum.
SEVENTEEN was able to grow its fan base thanks to its album releases last year, own developed content and world tour, selling 1.27 million copies of older albums in the first quarter of this year alone, demonstrating the strength of their existing fan base as well as explosive growth driven by their new fandom. The first single, SECOND WIND, by the BSS threesome unit and their title track, BSS Fighting, has really made the inflow of new fans take off with different SEVENTEEN units, giving fans a wide spectrum of entertainment to enjoy. The different unit tracks are included in SEVENTEEN's 10th mini-album and getting a lot of love from fans who appreciate the diversity offered by the different units.
This system allows for a constant flow of enjoyable music and content during a time when they are not performing as one team, one united team, and helps strengthen the bond between individual member artists and their fans. We believe that the extraordinary growth in album sales is driven by SEVENTEEN's growing presence and stature within the global music scene. We noted very rapid growth, particularly from Asian markets, including Japan, where they already had a significant fan base. Since debut, SEVENTEEN has been reaching out to fans with their self-produced music and healthy, wholesome kind of energy, and are planning on following up on their successful album performance with a world tour in the second half of this year, which will be larger in scale than last year.
Just yesterday, of course, LE SSERAFIM's first studio album, UNFORGIVEN, was released, setting a new personal record for the group of 1.38 million pre-orders sold, which is two times what they recorded on their last album, ANTIFRAGILE, and represents significant growth for the group. The album track and music video have seen a great response so far, and they're planning their first concert tour in Asia in the second half of the year in Korea and also Japan, et cetera. ENHYPEN will also be releasing their fourth mini-album, DARK BLOOD, on May 22nd, marking their comeback after their third mini- album 10 months ago.
The concept trailer, directed by Mr. Yu Kwang-keung , who is a famous commercial director from Korea, was unveiled May 1st, and will show you a glimpse of a new side of ENHYPEN that we haven't seen before. Please keep an eye out for the line of very interesting contents to follow. It's been quite a while, the newest boy group band, BOYNEXTDOOR from HYBE, are scheduled to debut on May 30th, as noticed, after the group name was fixed last month. The group is produced by KOZ Entertainment, which is headed up by artist and producer Zico. As the name suggests, have an approachable boy next door feel. They'll be coming out with honest music about everyday life that peers in their age group will be able to relate to.
Please also be on the lookout for BOYNEXTDOOR, who definitely will have a different appeal from other HYBE artists. At HYBE, as part of our expansion strategy in terms of both geography and genre, we have been working on constructing a system where we can work with global labels to produce a constant pipeline of global artists. Quality Control Music, which joined HYBE this March, is one of the most influential labels in the world in hip-hop, with producers such as Pierre P. Thomas and Kevin Coach Lee, and also top artists like Lil Baby, Lil Baby, Migos, Lil Yachty. Lil Baby was chosen as the Artist of the Year at the 2020 Apple Music Awards, and with 134 songs on the Billboard Hot 100 charts, is a very well-established sensation in music.
She's planning a total of 32 performances this year from May through September.
The US girl group project that we are working on together with HYBE America and UMG will provide another added layer of diversity to HYBE's multi-label system. We will explain more on this project as well as the directionality of HYBE America and also financial results at our earnings call in the second quarter. Yes. Let's move on to HYBE's platform business, Weverse, which has been drawing a lot of interest lately. We have Mr. Choi Joon-won, the head of Weverse Company, with us today to share more on the direction pursued by the Weverse business and what new services will be added on this year. Mr. Joon-won, hello.
Yes. Hello, this is the head of Weverse Company, Choi Joon-won.
I think it's been a year since I last joined a HYBE earnings call. As HYBE artists have displayed dazzling growth, we at Weverse have also been enjoying compact growth, which I will explain more about as I take you through what values we seek to achieve, as well as the overall orientation of the Weverse business. Weverse is a platform service that is intended to support close communication between artists and their fans, helping improve upon any inconveniences that fans may experience in their interaction with their favorite artists. Since launching services in 2019, more and more artists have opened up their channels on the Weverse platform as we shape a new kind of fandom culture.
Previously, as of the end of Q1 2022, we had 36 teams engaged in our community, but as of April end 2023, we now have 83 teams on board, including (G)I-DLE and Japanese artists like AKB48, the latest additions. 12 more teams from SM Entertainment are also planning to join the platform and open up an official community by September this year. Weverse is working closely with HYBE Japan, HYBE America, and many other labels to further exchange and achieve synergy. We are preparing so that we can hopefully announce U.S. artists join the platform starting in the second half, following Japanese artists who have already joined in the first half.
팬 경험의 확장을 위해 서비스를 고도화시키고 있는데요. 이에 결정적으로 기여를 한 것이 2022 July V LIVE와의 통합을 시작하며 선보인 Weverse Live입니다. 아티스트들은 생일이나 앨범 판매, 콘서트 소감 등을 직접 팬들과 나누며 더욱 생생한 소통을 만들어 가고 있습니다. 전 세계의 팬들이 시공간적 제약을 넘어 아티스트의 공연을 감상할 수 있는 스트리밍 서비스도 선보여 대형 음악 페스티벌, BTS의 Busan concert 등 짧은 시간 안에 대규모 트래픽이 발생하는 이벤트도 높은 퀄리티로 송출하는 완성도를 보였습니다. 점점 더 많은 아티스트들과 팬들이 Weverse Live를 이용하고 있는데요. 2023 Q1 동안 Weverse Live를 시청한 숫자는 460 million 건으로, 라이브를 선보인 시점인 2022 Q3에 160 million 건에 비교했을 때 nearly three times 증가한 수치입니다.
Meanwhile, we have been working to advance our services further to expand the fan experience. A decisive contributor to these efforts has been Weverse Live, which was launched in July 2022 following integration with V Live. Weverse Live enables lively communication between artists and their fans as they can engage directly with each other on birthdays, for example, or share thoughts on album releases or concerts. We also offer seamless live streaming services so that fans all over the world can tune in to performances, transcending the boundaries of time and space with high-quality execution for major traffic surge events like large-scale music festivals or the BTS Busan concerts.
Consequently, more and more artists and fans are coming on to use Weverse Live, with 460 million views recorded in the first quarter 2023, which is almost three-fold growth compared to 160 million recorded in the third quarter last year, which is when the service was first launched.
서비스가 확장됨에 따라서 Weverse와 Weverse Shop을 방문하는 팬분들의 규모와 빈도도 증가하고 있습니다. 2023 1Q 기준 월 평균 방문객은 9.36 million 명으로, 이는 3분기 연속으로 10% 이상 증가하는 수치로 2022 2Q에 6.04 million 명과 비교했을 때 약 54% 이상 증가한 수치입니다. 유저당 평균 이용 시간도 2022 2Q 월 162분에서 2023 1Q 월 251분으로 55% 증가하는 등 여러 지표들이 Weverse가 건강하게 성장하고 있다는 것을 보여줍니다. 2023 1Q ARPU는 BTS의 콘서트가 있었던 2022 1Q와 비교했을 때도 견조한 흐름을 보이고 있으며, Payment Amount는 오히려 증가하는 추세를 보일 정도로 Weverse를 통해 구매 경험을 하는 팬들도 점차 많아지고 있습니다.
As our service expands, the scale and frequency of fans visiting Weverse and the Weverse Shop is also increasing. Monthly average visitors recorded 9.36 million in the first quarter this year, which is growth of 10% or more for three quarters straight. In fact, 54% growth compared to 6.05, or excuse me, 6.04 million recorded in the second quarter last year. Average use time per user also grew 55% from 162 minutes in the second quarter last year to 251 minutes as of Q1 this year, with many metrics all indicating healthy growth across the platform. ARPU in the first quarter this year is also showing robust trends versus Q1 of last year, when we had the BTS concert.
Also payment value is on the rise as more fans experience purchases on Weverse.
이는 시작에 불과합니다. 지금까지의 Weverse가 오프라인 팬 경험을 온라인으로 옮김으로써 효율적인 팬 경험을 제공하는 데 힘써왔다면, 이제부터는 platform 자체로서의 새롭고 다양한 서비스를 제공하면서 한층 고도화된 platform으로 진화하고자 합니다.
All of this is just the beginning. If up to now, we are focused on transferring the fan experience from offline to online to enable a more efficient UX. Going forward, we'll be focused on coming up with new and differentiated services to evolve into an even more advanced platform.
오월 이일, 오늘이네요. AKB48을 시작으로 아티스트와 메시지를 주고받을 수 있는 구독형 서비스인 위버스 DM을 시작합니다. 연이어 유월 십일 위버스콘 페스티벌에서 아티스트의 사진과 손글씨 등을 이용해 직접 원하는 디자인으로 공식 상품을 주문할 수 있는 위버스 바이 팬스 서비스를 시작합니다. 삼분기에는 다양한 서비스를 한데 묶어 팬분들께 통합적인 경험을 제공하게 될 새로운 멤버십 서비스를 구독 형태로 출시할 예정입니다. 새로운 멤버십 서비스는 글로벌 팬분들이 오랫동안 기다려온 실시간 자막 서비스를 포함해 팬레터, 손글씨 서비스 등 새로운 기능과 혜택들을 포함할 예정입니다. 더불어 보다 안정적인 실시간 영상 송출 환경 구축 및 서비스 제공을 위해 위버스 내 광고 도입을 계획하고 있습니다.
As of May second, which is today, we actually will be launching our Weverse DM subscription service, starting with AKB48 fans so that they can share messages back and forth with the artists. This will be followed by Weverse by Fans services at the Weverse Con Festival on June 10th, where fans will be able to order official merchandise of their own design, incorporating photos or handwriting from their favorite artists. In the third quarter, we'll be launching a new membership service, packing different services together to offer fans a comprehensive mix of user experience based on a subscription payment scheme. The new membership service will provide the long-awaited real-time subtitle service for global fans, as well as many other new features and benefits such as fan letter and handwriting features.
To provide for a more stable transmission environment, we are also planning to incorporate advertisements onto Weverse as well.
Fan bun-dal gak-ja-ui profile-e Weverse Collection-iran ginung-do saeobkke chuga doeyossseubni-da. Community-nae yeoreo mission-eul dalseonghamyeon bo-sang-eulo badge-ga jeong-gongdoemyeo ileul moawaganui jaemi-reul neukkil su issneun ginung-imni-da. Ttwohan fan-deuri artist-bbun anira seolo-reul follow hamyeo janheunsseubkke so-tong-i irwoojigil gidaehago issseubni-da. Dangayo han-hwadong-e chamyeohan fan-deureun community an-eseo seoro yeonggeoldoego yeonghyang-eul kkiechimyeoso saeroun julgeoum-e eopgo so-sokgam-eul neukige doebni-da. Icheoleom fan-deul-gan-ui sang-o yeonggeolgwa so-tong-i deoejin Weverse-neun deoug saengdonggamissneun fan gyeong-eom-eul seonsohal geosimni-da.
We will also introduce a new feature called Weverse Collection on fan profiles. If a user completes missions within the community, they will receive a badge as a reward upon completion, and collecting the badges can be great fun. Fans will be able to follow not only artists, but other fans as well, which we expect to create a natural sense of community. Fans can interact with and influence each other as they take part in different community activities, which again, can provide a new source of enjoyment and a sense of belonging as well. Weverse, with this added layer of fan to fan interaction and connection, will deliver an even more vibrant fan experience.
Iwa dongshie geudongan Weverse-reul 이용하시는데 불편함을 드렸던 문제들을 지속적으로 파악하고 개선시키기 위한 노력도 계속하고 있습니다. 악성 게시물을 등록하여 유포하는 행위를 방지하고자 기술적, 관리적 조치에 최선을 다하고 있으며, 실시간 징계 처리가 가능하도록 하는 모니터링 시스템을 구축하였습니다. 불편을 드렸던 물류 문제들도 물류 시스템 개선과 주문 관리 시스템의 고도화를 통해 점진적으로 개선하고 있습니다. 고객들이 좀 더 간편하게 구매할 수 있도록 한국의 경우 Naver Pay를 추가하였으며, 이와 같이 국가별로 많이 사용되는 다양한 결제 수단들을 추가했습니다. 디지털 재화인 Jelly를 도입하여 다양한 국가 및 지역의 사용자가 손쉽게 Weverse DM과 아티스트의 VOD 등 서비스를 이용할 수 있게 하였으며, Weverse Japan, Weverse America를 설립하여 현지 시장을 이해하고 좀 더 빠른 대응이 이루어질 수 있도록 하였습니다. 심플하고 직관적인 사용성을 유지하는 것은 Weverse 팀에게 매우 중요한 주제입니다.
Weverse 팀은 새로운 기능들이 계속 추가되는 와중에도 팬분들이 더 직관적이고 편리하게 서비스를 사용하실 수 있도록 하는 데 많은 연구와 노력을 기울이고 있고, 그에 따라 서비스의 전체적인 UX와 UI를 대폭 개선할 준비를 하고 있습니다.
Yes. We have also been working to identify and improve upon any user inconveniences. We have built a monitoring system capable of real-time disciplining, and we'll enforce technical and administrative measures to prevent posting or dissemination of malicious content. We've also been gradually improving our logistics and order management system, which have been pain points in the past. We added on different payment methods by countries such as Naver Pay in Korea, also for greater convenience in making purchases. We adopted Weverse Jelly, which is a digital currency, so that users from different countries and regions can use the Weverse DM and artist VOD services more easily. We have established Weverse Japan and Weverse America for better understanding of the local markets and quicker response. Lastly, maintaining simple and intuitive usability is a constant and important theme for us at the Weverse team.
Even as we add on more features, we continue to conduct great deal of research and effort, to maintain this theme as we prepare for major improvement in the overall UX and UI of our offerings, going forward.
Fan-bun-deure il-sang-e haengbog-eul deurineun geot, geurigo jeon segye choegoi artist-deureui changjakgwa so-tong-eul deomneun geot은 neomu-na sojung-hago gachi issneun il-imni-da. Geurigo igeot은 online hogun offline-i eono han jjog-eul daechaehaneun geot-i anira seolo-reul bohwanhaneun janheunsseureoun gyeong-eom-eulo tonghapdoel ttae geu julgeoum-gwa gachi-ga geukdaehwa doendago mitgo issseubni-da. I gyeong-eom-ui heuleum-e community, media, commerce-reul modu auru-neun dangayo han jeonmunseong-i yogudeum-nibni-da. Ajik bojokhajiman Weverse-neun jalbun sigan an-e i neolbun bun-yeo-reul modu pogeolhan geo dongshie apchug sungjangkkaji irwoonaemyeo jigeum-ui wichkkaji oge doessseubni-da. Jeoi modu-ege-n fan-bun-deure julgeoum-i gajang jungyohagessseubni-da-man geui motji anh-kke partner label, artist-deuri Weverse-wa hamkke hago ittaemune deo swibge geulobeollo hwajanghal su itgo, deo pyonlhihage deiteoleul tamseokhal su itgo, deo julgeobkke fandom-gwa gyogamhal su issneun deoug dogbobojin platform-i dol su itdo-rok choeseon-eul dahagessseubni-da.
Yes. Offering fans happiness in their everyday lives and also helping the greatest artists in the world in their creative work and in communications is a rewarding and priceless endeavor. It's not about online or offline replacing the other side, as I believe joy and value can be maximized when the two sides come together in a natural and mutually complementary manner. Producing this kind of user experience and flow, however, requires a diverse set of expertise that encompasses community, media and commerce. Although we still have a ways to go, Weverse has grown to what it is today within a short time period, thanks to broad strength across all of these domains.
Although bringing joy to the daily lives of music fans is the number one priority for all of us, equally important is to continue to evolve into an even more unique standout platform, offering global scalability as we work together with our partner labels and artists, and offering greater convenience in searching for data and more pleasure for artists connecting with their fan base. Yes. Thank you, Joon-won. I ask that everyone look forward to a richer lineup of services from Weverse in the future. As we have just heard, HYBE continues to deliver solid performance across its label and platform business. We're committed to doing our best going forward to support our artists to grow themselves and their music IP, while also doing our best to deliver their music, performances and content to fans in a better way.
We look to you for encouragement as we make strides going forward. Thank you. Now, Mr. Lee Kyeong-jun, our CFO, will take us through our financial performance. Yes, this is Lee Kyeong-jun, the CFO. Let me share our consolidated financial performance for the first quarter 2023. In the first quarter, we recorded revenue of KRW 410.6 billion, which represents 44% growth year on year. Revenue with direct involvement from artists, including albums, concerts, advertisement, appearances, was KRW 234.5 billion, making up 57% of the total revenue mix. While revenue with indirect involvement, including merchandise, licensing, contents and fan club sales, made up the remaining 43%, recording KRW 176.1 billion.
Album releases by BTS Jimin, Tomorrow X Together, NewJeans, BSS, received an outpouring of love and support, which led to outsized growth in artist direct involvement revenue versus last year, which in turn also drove upside in indirect involvement revenue as well. First quarter operating profit was KRW 52.5 billion, an increase of 42% year-on-year, with an operating profit margin of 12.8%. We are aware that there are concerns that our continued investments into new debut artists and new business areas may potentially weaken our earnings fundamentals, I would like to take this opportunity to explain our margin profile in greater detail. Throughout BTS's growth path to date, we have internalized various capabilities such as concert planning, MD production, content creation, et cetera, have been supporting our artists and their activities with in-house solutions.
Based on our philosophy of never accepting compromise on perfect execution of content, we have set up a full set of production capacity internally, which inevitably has led to an increase in fixed costs. I know, I am aware that there are concerns that in the absence of BTS as a group, whether we'll be able to manage the cost pressure amid declining revenue. As a matter of fact, our OP margin in the first quarter this year was 12.8%, which is similar to last year's levels, despite the lack of BTS team activities. This is the combined result of our multi-label production system, leveraging a diverse pipeline of artists, coupled with efficient application of our in-house solutions. Going forward, we intend to deploy a mix of internal and external solutions for greater cost efficiency as we anticipate an increase in our artist portfolio.
Allow me to explain further about our adjusted EBITDA, which is linked to our cash generation capabilities. Although our OP margin may have declined from 18.3% in 2020 to 13.3% in 2022, on an adjusted EBITDA basis however, our OP margin was 20.2% in 2020, going to 18.5% in 2022, which is not a significant decline. Given the nature of the entertainment business, most of our D&A expenses are in the form of amortization of intangible assets coming from artist contracts acquired through M&As and artist catalog, which do not require additional CapEx, which means a different criteria should apply versus the criteria that is applied to depreciation of tangible assets in the manufacturing sector.
Over the course of last year, our cash flow from operations was KRW 347.1 billion, which is on par with our adjusted EBITDA. Please consider adjusted EBITDA as the more accurate indicator of our underlying cash generative capacity. Now moving on to a breakdown of revenue by segment. In the first quarter, among direct artist involvement revenue, album revenue recorded KRW 184.3 billion in sales, which is 185% growth YOY and 25% growth QoQ, driven by solid performance by artists including Tomorrow X Together's fifth mini-album, the first single by NewJeans, the BSS unit by SEVENTEEN, and Jimin's solo album, which all outperformed versus their prior releases. As a whole, album sales by all HYBE artists totaled 9.11 million copies, which is over fourfold growth year-on-year.
From revenue with indirect artist in, involvement, merchandising and licensing and content revenue recorded KRW 68.9 billion and KRW 87.3 billion, respectively. In Q1, the film BTS: Yet to Come in Cinemas from October last year, performed well amongst ARMY fans in theaters around the world. While tour merchandise sales and In the SEOM with BTS continued to contribute to revenue in the first quarter. Lastly, as we explained last year, we intend to carry out dividend payout and share buybacks every year within 30% of consolidated net income attributable to controlling shareholders. As a first step, a resolution to release capital surplus reserve to retained earnings was approved at our general meeting of shareholders last March, and we will seek to execute on the cash dividend and buyback policy at an appropriate timing.
2023년은 HYBE의 멀티 레이블 시스템의 성과가 가시적으로 드러나는 한 해가 될 것입니다. BTS 멤버들의 솔로 활동과 더불어 SEVENTEEN, Tomorrow X Together, ENHYPEN이 모두 대규모 월드투어를 진행할 예정이며, 작년에 데뷔한 LE SSERAFIM, NewJeans, &TEAM은 더욱 다채로운 모습으로 팬들을 찾아갈 예정이고, 올해 데뷔할 팀들을 통해 새로운 종류의 음악을 선보일 것입니다. 거기에 올해 새로운 국면에 들어선 Weverse, 퍼블리싱 사업을 시작하는 HYBE IM에서도 본격적인 성과를 보여드릴 예정입니다. 지금까지 저희를 신뢰하고 함께 와주신 투자자분들께 다시 한번 감사의 말씀을 드리며, 앞으로도 저희의 행보에 지속적인 관심과 성원 부탁드립니다.
2023 will prove to be a year when the strength of our multi-label system will translate into visible outcomes. BTS members are planning their own solo projects, SEVENTEEN, Tomorrow X Together, and ENHYPEN are all scheduled to launch large-scale world tours. LE SSERAFIM and NewJeans are new groups that debuted just last year, but they will be reaching out to their fans in fresh new ways, and our new teams slated to debut this year will deliver a completely different kind of music. In addition, Weverse is set to advance to the next level, and HYBE IM, which will be moving into the publishing business, will also start ramping up performance starting this year. We thank all of our investors for your trust in standing by us to where we are today and ask for your continued interest and encouragement. Thank you.
지금부터 질의응답을 시작하겠습니다.
질문을 하실 분은 전화기 버튼의 별표와 3번, 별표와 3번을 눌러주십시오. 질문을 취소하시려면 별표와 4번을 눌러주시면 됩니다. Now Q&A session will begin. Please press star 3, that is star and 3 if you have any questions. Questions will be taken according to the order you have pressed star and 3. For cancellation, please press star 4. That is star and 4 on your phone. 처음으로 질문해 주실 분은 Bernstein의 Bokyung Suh 님입니다. 질문해 주십시오. The first question will be presented by Bokyung Suh from Bernstein. Please go ahead with your question.
안녕하세요. Bernstein Bokyung Suh입니다. 질문 기회 감사드립니다. Weverse 대표님 귀한 발걸음해 주셔서 질문 좀 드리고자 하는데요. 장기 전략 관련된 질문인데요. 6 페이지 KPI 보니까 이게 2022년 1분기 이후로 MAU가 거의 뭐 한 40%-50%씩 증가를 했는데, 반면에 Payment Amount 오른쪽에 보면 증가폭은 지난 한 8분기 동안 크게 변화가 없는 게 보입니다. 결국 제가 볼 때는 결국 Average Payment Per User 규모는 좀 낮아지고 있을 수도 있을 것 같은데, 제가 혹시 잘못 이해하고 있으면 말씀해 주시고. 질문 첫 번째는 지금 이런 현상이, 아직 적극적으로 Monetization을 하지 않은 어떤 전략적 관점에서의 현상인 건지, 혹은 최근에 유입된 이 한 300만 정도의 유저들이 유저 자체의 세그먼트 특성인 건지 궁금하고요. 두 번째로는 Park Ji-won 대표님께서 보시기에는 이게 한 3년에서 5년 정도 후를 좀 상상을 했을 때 이 사업이 어떤 청사진으로 진화를 좀 할 건지, 뭐 이게 비즈니스적이든 유저 경험이든, 생각하시는 부분 있으시면 공유해 주시면 감사하겠습니다.
Yes, this is Bokyung Suh from Bernstein. Thank you for giving me the opportunity to ask some questions. Since we have the CEO of Weverse Company here, let me ask first regarding the long-term strategy of Weverse. I think if you look on page six, there are some KPIs. It seems after the first quarter last year, MAU has grown by about 40%-50%, whereas the Payment Amount actually has been quite flat for eight quarters or so. I would imagine the average payment per user actually might be going down. Please correct me if I'm wrong. I would like to ask, is this phenomena happening because of your strategic decision not to really move aggressively yet in terms of monetization?
Is it because the new 3 million users that you have acquired recently, is it just due to some underlying nature of that specific segment? Second question is for the CEO. When you look the next three to five years out, what kind of roadmap or blueprint do you envision for Weverse as it evolves? Just in terms of the business or perhaps UX, if you could share your thoughts, I'd appreciate it?
안녕하세요. Weverse Company Choi Joon-won입니다. 제가 먼저 답변을 드리도록 하겠습니다. Weverse에게 2023년은 더욱 공격적인 해외 확장과 다양한 서비스들을 출시하고 안정화시키는 시기로 바라보고 있습니다. 저희는 이렇게 Weverse가 지금까지 압축 성장의 모멘텀을 계속 유지할 수 있었던 게, 뭐 여러 이유가 있겠으나, 그중에 가장 중요한 것 중에 하나가 fandom에 대한 깊이 있는 이해를 바탕으로 서비스를 조심스럽게 튜닝해 왔기 때문이라고 생각을 합니다. 그래서 올해 Weverse는 다양한 신규 서비스를 출시하고 더욱 적극적으로 투자를 계획하고 있기 때문에, 그런 부분, 올해는 성공적인 출시와 안정화에 집중을 하면서 이것들이 팬들에게 혜택으로 잘 자리가 잡고, 서비스에 안착이 됐을 때 본격적인 수익화는 내년부터 일어날 수 있지 않을까라고 기대를 하고 있습니다.
Yes, this is Choi Joon-won. Let me take your first question. For Weverse, we look at 2023 as a year where we really initiate more aggressive global expansion and where we launch a diverse lineup of different new services and actually stabilize the services as part of our platform. Of course, there are many reasons why we've been able to maintain the compact growth momentum to date. I think most fundamental is our deep understanding of the fan base as we really fine-tuned the services to fit the fandom and the users. This year we will be launching a variety of new services and really are planning a lot of proactive investments.
This year, again, the focus will be on successful launch and stabilization of our new offerings to really anchor and land the benefits in the minds of the users. And we anticipate that perhaps starting next year will be when we really ramp up in terms of monetization. This is the CFO. Let me just add a few more comments to what Mr. Choi Joon-won has just explained. I will confirm that the payment amount per user is also trending upward, as is ARPU. It's just that compared to the speed of increase of MAU, the rise is actually a bit slower. I think that was the point of your question. It's not just our artists, but we're seeing increase in traffic from other artists as well.
With that huge portfolio of artists, we are going to add on different services, like Mr. Choi said, for monetization purpose. I think going forward, as the conversion rate of traffic to paying users, what we think that will increase, which will be helpful in terms of monetization. Yes. This is the CEO. I think you asked about our mid to long-term plan or blueprint looking out the next three, five years. I wasn't quite clear whether you were asking for the blueprint of our label business or Weverse, but let me start off with Weverse anyhow. Technology is advancing very quickly, so it's really hard to say exactly, you know, how technology will have evolved surrounding our services in the next three, five years.
This is why we are actually maintaining our mid to long-term plan, very flexibly and making adjustments as required. What is quite certain is that, although we are mostly focused on K-pop artists at the moment, three, five years from now, as we start expanding into the global markets, including the US, Europe and Japan, et cetera, we will definitely have established greater balance in terms of our geographical coverage. Second, as Weverse further develops, I think more entertainment, more things that our fans can enjoy will be onboarded onto Weverse, and I think that will mean that three, five years from now, the UX and UI will have also changed and advanced. Right now it's mostly physical services, but we're working on transitioning that more toward digital service offerings.
I think 3, 5 years from now, I think those types of digital-driven changes will have been incorporated into our mid to long-term plan.
The following question will be provided by Ahn Jin a from eBEST Investment & Securities. Please go ahead with your question.
Yes. Thank you. This is Ahn Jina from eBEST Investment & Securities. Let me also ask about Weverse. I think, compared to other entertainment companies, I think your Weverse platform does really represent a differentiated source of momentum unique to HYBE. In terms of actual performance relative to the business plan that you published last year, I think although top line sales have grown about 30% year-on-year, on the other hand, your profits actually have declined by a wider margin versus business plan.
Despite top line growth, what is the reason behind the poor profits and the loss? This year, what kind of plans do you have in place to improve upon the profitability of the Weverse platform? Can you provide some guidance in terms of when there might be a turnaround to a positive profit level? You said that this year you're going to make some active investments into the platform. Will that potentially mean widening loss?
Yes. Thank you for your very good question. This is Choi Joon-won from Weverse. So, there were many factors at play that have driven the fast growth of Weverse to date. And I think behind the scenes there were a lot of preparations that were and are required.
This year, as we have mentioned many times, we are planning to launch many new types of services. Again, in the backdrop, the in domains that may not necessarily be visible to the eye, there are many requirements in terms of investments into the enabling technologies. We do provide services, directed towards the entire global market, which increases the technology or the sophisticated nature of the technology that is required. Also given the nature of our service, we have to be able to handle a surge in peak traffic, as we transmit live feed, live streaming. Again, this will necessarily require technological investments.
In order to maintain growth, we said we're going to launch new services, equally, if not more important, is to establish this kind of a safe or stable underlying system of technology. You saw that last year or compared to last year, we have been maintaining that kind of top line growth momentum.
In order to continue to do so, in the next two, three, five years out, again, we think that this year will also call for additional investments into that underlying technology base. Which is why we think that this year will be a turning point because actually we look at the business in terms of a phased ramp-up approach, where last year with the integration of V LIVE, it really provided a very important layer of that kind of underlying enabling technology base. As we add on new services this year and stabilize them, throughout the second half of the year, that will really put us in a good position to see really a big buildup in growth or in momentum for monetization next year. That is the kind of phased evolution that we are envisioning.
The following question will be provided by Kim Junyeon from HSBC. Please go ahead with your question.
Yes. This is Kim Junyeon from HSBC. Thank you for the detailed explanation regarding Weverse. I also have two questions. You said you have already launched the DM service, and I'm interested in what the fandom metric looks like, just because I would like to have some color to calculate contribution to earnings. What is your fandom metric looking like? I believe that, starting in the third quarter this year, you're going to continue to scale up your membership subscription service. What do you have in mind in terms of the listing plan or the onboarding plan of new artists?
I know that recently Japanese artists have joined, what is the overall onboarding plan for other artists?
Yes. This is the CFO. You asked about the fandom indicators or metrics, I'm afraid they are not subject to the scope of disclosure, I cannot share them with you at this time. Regarding the earning attribution or the contribution of DM, well, because we do not provide DM just as a single standalone service, as it is just 1 part of our overall membership service, it's hard to just split out the earning contribution specifically just for DM only. I seek your understanding that we are not able to share that with you at this time. Regarding the new artist onboarding plan, as Mr. Choi and Mr.
Park have both said, globalization or global expansion is a key objective for Weverse this year, and so we will be progressing proactively to onboard new artists. At present, I can just tell you that AKB48 and other Japanese artists are expected to come on board. I can say that in the second half, we do expect some artists from North America, but I seek your understanding I cannot divulge more.
The following question will be provided by Lee Sun-hwa from KB Securities. Please go ahead with your question.
Yes. Thank you for the detailed presentation on your performance and also some part of your future plans. I had a question about a Joint girl group debut collaboration that I know you have underway.
What is your strategy in terms of perhaps incorporating the HYBE platform with that project? Do you intend to carry out these types of global auditions on a regular basis going forward? Second, my question has to do with dynamic pricing. I understand it's a pricing method that is applied in Europe mostly. In your case, what artists would be eligible for dynamic pricing? Do you think you could expand that to concerts beyond the U.S. market? Yes, this is Park Ji-won.
Regarding our JV with Kakao, I think perhaps it would be toward the end of the second quarter, early third quarter, where we will be more prepared to share with you greater details about how exactly the girl group will make its debut, and in what form, with the timing perhaps being sometime this year or early next year for the debut. In terms of the overall performance, the directions have been set. Our producers or directors have already gone over, they're over working with Kakao, and formulating the how and when the details of the debut. As our YouTube presence increases, we do plan on continuing with these global auditions. Yes, this is the CFO. Let me take your question regarding dynamic pricing.
We currently do apply dynamic pricing to the US market for performances by Suga and TXT. If any of our other artists do perform in the US, the same dynamic pricing will apply. Basically, to be able to apply the scheme, you have to have sellout ticketing power, and we think that all of our artists have that, so it could apply to them if they are performing in the US. What about dynamic pricing in non-US countries? We are considering our options, not just in terms of the pricing scheme, but we're also looking at whether what type of schemes best fit the different characteristics of different markets. It doesn't necessarily have to be dynamic pricing, but we are looking into diverse different means to somehow boost concert or performance revenue overall.
For example, in Japan, the venues tend to have very sub-segmented seating arrangements, so potentially we can differentiate ticket pricing to achieve a similar effect that is actually quite consistent with dynamic pricing.
Yes. With that, we will conclude the first quarter 2023 earnings call for HYBE. Thank you very much for joining us today.