SM Entertainment (041510) Corporate presentation summary

Growth strategy

• Four pillars: multi-production-center and label system, IP monetization, expansion in Japan, the Americas and SEA, and investment in publishing, labels, fandom and metaverse.

• Growth model shifts from organic development alone to external investment alongside stronger internal capabilities.

• Investment rationale includes technology-entertainment convergence, offline business recovery, K-pop globalization and a more conservative valuation environment.

Regional expansion

• K-pop physical album exports grew 38% in Japan, 78% in the Americas and 46% in SEA from '17-'22; export values were KRW106.5B, KRW54B and KRW43.9B, respectively.

• Japan plan: increase concerts featuring existing IPs from 11 in '22 to 60 in '25, establish a local production center in '23, and debut NCT Tokyo tentatively in 2H'23 and another Japan-based team in 2H'24.

• Americas plan: establish a production center through a JV with a strategic partner, review local management-company acquisition, debut a US-based artist in 2H'24 and expand commerce and fan-platform activity.

• SEA plan: focus initially on existing IPs and local members, operate a media/promotion center, debut a team mainly comprising SEA members in 2H'25, and develop a production center after '25.

• Regional approaches reflect market differences: faster entry in Japan and the Americas, versus gradual investment in SEA as the market develops.

Production model and revenue plan

• Three-step expansion: global activity supported by Korean HQ, local business-unit setup, then completion of a local production center with its business unit.

• 2025 network plan includes seven domestic centers—five multi-production, one virtual and one global—and three local production centers; target additional revenue is KRW260B.

• The Korean global production center is planned to lead establishment and support of regional production centers in the Americas, SEA and Japan.

• Global expansion is projected to add KRW260B in 2025 sales; the SEA local IP debut expected around end-'25 is excluded from that estimate.