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K-pop giants eye Middle Eastern market

ANN/THE KOREA HERALD – K-pop entertainment giants such as Hybe and SM Entertainment have recently shown growing interest in the Middle Eastern music market.

Hybe Chairman Bang Si-hyuk recently met with United Arab Emirates (UAE) President Mohamed bin Zayed Al Nahyan to explore potential collaborations in K-pop initiatives at the president’s request.

SM Entertainment, under founder Lee Soo-man, made early strides by signing a memorandum of understanding with Saudi Arabia’s Ministry of Culture. This agreement aims to establish a content creation studio and host a large-scale K-pop concert in Saudi Arabia in November 2022.

Following Kakao Entertainment’s acquisition of SM Entertainment in 2023, discussions were held with Saudi Arabia Tourism Authority officials to explore opportunities for enriching cultural exchanges through its intellectual property.

Nevertheless, the endeavours of K-pop companies to expand the market for K-pop in the Middle East have faced skepticism from numerous industry insiders.

“The Middle East, without a doubt, is now one of the interesting markets in the world and it has a large population of young people, which is attractive to K-pop companies whose customers are mostly young fans. Still, the profitability of the music business there is too low at the moment. Its market size is small, too. Hybe and SM Entertainment are just leaving their doors open for the business,” said a local entertainment company official.

K-pop girl band NewJeans performs at KCON 2022 concert in Saudi Arabia. PHOTO: THE KOREA HERALD

According to the International Federation of the Phonographic Industry’s (IFPI) latest Global Music Report released in March, no country in the Middle East was among the top 10 largest music markets in the world last year.

The Saudi Arabian music market was estimated at USD44.06 million as of 2022, according to Statista. Australia, the country that ranks 10th, is said to have generated a total revenue of USD216.9 million in the same period. The Middle East and North Africa ranked fourth among seven in the study showing the regions with the fastest growth of recorded music revenues in 2023. Its growth rate reached 14.4 per cent, trailing sub-Saharan Africa’s 24.7 per cent at the top. Latin America ranked second at 19.4 per cent, while Asia ranked third at 14.9 per cent.

The Middle East and North Africa region was ahead of Europe and North America in revenue growth rate, though its market size is much smaller. Saudi Arabia, one of the key music markets in the region, has a young population, with 63 per cent of the market’s estimated 32.2 million residents under the age of 30.

The country also has an Internet penetration rate of 98 per cent. These are crucial factors that K-pop companies take into consideration when exploring a new market.

CJ ENM, one of the country’s biggest entertainment firms, staged the world’s biggest K-pop concert under the banner of KCON in Saudi Arabia for two consecutive years in 2022 and 2023 to test the market.

A third such concert might not be held this year. CJ ENM said it intends to hold the festival in Saudi Arabia in the future again, but it did not know when.