SM Entertainment reports loss of 4 billion won from karaoke business

[kishikiari.livejournal.com]

It has been reported that SM Entertainment (SME) has lost a monstrous sum of 4 billion won (approx. US $3.7 million) in the last 4 years, which coincides with the company’s expansion into the karaoke business.

In 2006, SM Bravo, a company that specialised in karaoke machines, was incorporated as a subsidiary by SM Entertainment in order for SME to expand their operations into the karaoke industry. Additionally, SM Amusement, a different company affiliated with the karaoke industry, was added to the list of subsidiaries when SM Entertainment incorporated it in 2008.

At the time of this expansion, SM Entertainment had announced that they would revolutionize the karaoke industry with their expertise in the Korean and Asian music market, as well as their influential network-ability in Asia.

However, after four years into this expansion, there remains only two karaoke establishments that are operating somewhat effectively. Additionally, the value and worth of the subsidiary company’s are failing to increase despite continued investments.



To summarise the total loss made my SM Entertainment:

* SM Bravo has invested a total of 6 billion won, but by end of August 2010 it was reported that only 3.4 billion won was what remained of the account, resulting to a loss of 2.4 billion won.
* SM Amusement has invested a total of 1.4 billion won, but as per bi-annual report, the investment has gone down the drain with the total resulting to impaired/eroded capital.

As a result of the loss, SM Bravo will be undergoing a merge with SM Amusement, with an SME representative stating, “A remodelling of the karaoke business was necessary and hence we are in the process of merging the subsidiaries together. Once they have merged we will come up with a brand new business plan.”

Meanwhile, netizens have voiced their opinions, “Don’t they know what happens when you start carrying too many eggs in one basket?”, “So that’s where all the hard earned cash from their artists go to”, “What a waste of sweat and tears from SNSD, Suju, Shinee, F(x)”, and my personal favourite comment – “This is a classic example of a parent running down their business and making their kids earn the money for them. And when the kids hand over their hard earned cash the parents then spend it on useless things instead of paying off their debt. Once the kids start telling them to stop the nonsense, the parents then tell them not to bite off the hand that feeds them when it’s obvious that the kids are feeding themselves with their own hands.”



source: allkpop

Comments

[bulleusekat.livejournal.com]

[ayamefan13.livejournal.com]

lol golden fishery. i loved that episode xD

[dorkiilove.livejournal.com]

ngl, those comments saying its 'K.A.R.M.A" are making me LOL big time.

it's a business, you win some, you loose some.
it's not cause of "karma".

[drtrypanophobic.livejournal.com]

and add another 6 billion from the loss of jyj :)

[justhyuu.livejournal.com]

does Hangeng want some money too? if yes, then add some more to that loss...

[jasmineakaiumi.livejournal.com]

That last comment is quite possibly the most badass/hilarious thing I've ever read in my life.

[poison-cheeks.livejournal.com]

mte
they should write a drama

[notochrasy.livejournal.com]

Invest in visiting Australia.


We will pay you monies.
Honest.

[ramunerain.livejournal.com]

i know i would. /nods

[ayamefan13.livejournal.com]

“This is a classic example of a parent running down their business and making their kids earn the money for them. And when the kids hand over their hard earned cash the parents then spend it on useless things instead of paying off their debt. Once the kids start telling them to stop the nonsense, the parents then tell them not to bite off the hand that feeds them when it’s obvious that the kids are feeding themselves with their own hands."

epic comment.

[light-lee.livejournal.com]

(http://tinypic.com?ref=ddf76o)

[kuro-vyn.livejournal.com]

A+

[ari-meh.livejournal.com]

"This is a classic example of a parent running down their business and making their kids earn the money for them. And when the kids hand over their hard earned cash the parents then spend it on useless things instead of paying off their debt. Once the kids start telling them to stop the nonsense, the parents then tell them not to bite off the hand that feeds them when it’s obvious that the kids are feeding themselves with their own hands."


mte.
i don't even know if i should laugh or cry.

[amethystfeline.livejournal.com]

me neither D: it's just so hilarious and sad at the same time :(

[girlknees.livejournal.com]

what was supposed to be so special about SME's karaoke places anyway?

[apricotvodka.livejournal.com]

They run karaoke places? I thought they made karaoke machines.

Interesting.

[aishi07.livejournal.com]

are shinee going to be greatly affected because of this i mean what

[kiku-cha8-8.livejournal.com]

what in the world needs to be revolutionized in the karaoke business? the purpose of karaoke is to have fun while singing to cheaply made instrumental versions of our favorite songs.

the instrumental version to my karaoke to Lucifer was hilarious but I still had fun singing off key and butchering Minho's rap.

[umbrella-smile.livejournal.com]

Why do they keep showing pictures of LSM like he makes the decisions anymore?
He hasn't in some time.

It is business, not every idea is going to be successful.

This is a classic example of a parent running down their business and making their kids earn the money for them.
Umm isn't that what all companies are? A place where workers earn the money and the owners/managers spend it on experimental ideas to try to make more money?

[porandojin.livejournal.com]

thank you! people here are so naive

[mirror-shot.livejournal.com]

"What a waste of sweat and tears from SNSD, Suju, Shinee, F(x)”, and my personal favourite comment – “This is a classic example of a parent running down their business and making their kids earn the money for them. And when the kids hand over their hard earned cash the parents then spend it on useless things instead of paying off their debt. Once the kids start telling them to stop the nonsense, the parents then tell them not to bite off the hand that feeds them when it’s obvious that the kids are feeding themselves with their own hands.”

A+ netizen.

[ramunerain.livejournal.com]

"This is a classic example of a parent running down their business and making their kids earn the money for them. And when the kids hand over their hard earned cash the parents then spend it on useless things instead of paying off their debt. Once the kids start telling them to stop the nonsense, the parents then tell them not to bite off the hand that feeds them when it’s obvious that the kids are feeding themselves with their own hands."

win.

[ahxian94.livejournal.com]

nice icon.

re: that gif

[summanaro.livejournal.com]

OH I'M SORRY. DID YOU GET ADDICTED TO CRACK? DID SOMEBODY GET ADDICTED TO CRACK?

Re: that gif

[kishikiari.livejournal.com]

sm crack is money

[kurogoma.livejournal.com]

the comments seemed ignorant of the world of big business and how that works

[oncloud999.livejournal.com]

IKR?
“Don’t they know what happens when you start carrying too many eggs in one basket?”
I thought the idea of having subsidiaries was the opposite of putting all the eggs in one basket...?

[noirsama.livejournal.com]

Sadly, I'm not surprised by this news. Their company expansions are tends to flops right?

So yeah,

[hiddenbytears.livejournal.com]

"Do they ever learn from failures?"

doubt so... xD

[rinn1e.livejournal.com]

SME has a lot of useless subsidiaries...

[vizallati.livejournal.com]

Oh. I thought this was gonna be an article about SM artists like, spending too much on karaokes. LOL.

[death-folder.livejournal.com]

didn't they also have plans to build an amusement park? O___O wonder if it's still happening... yea, it probably will. it's SM, they never learn <_<

[byronsbitch.livejournal.com]

I love that gif

[moronicus-kyla.livejournal.com]

Oh I didn't know SM had a karaoke business 8D What does that have, exactly?

Well, it doesn't look like they took care of this well. It seems badly promoted and it does say that the business is run just ~somewhat effectively~ Ah well, not all ventures are meant to be I guess (especially weird random karaoke ventures) XD I would have wanted them to develop SM Pictures instead even after they flopped once. It's still seems more lucrative than karaoke :))

About the k-netizen comments, I don't think they have a right to comment negatively on things they don't fully understand :\ It just didn't click, that's all and it's not completely the company's fault. If this thing succeeded, it would have meant more money for their idols (who don't seem to care that SM is investing in other things) and other things :\

[fifi-moon.livejournal.com]

........i am pretty sure the artists on SM's roster do not see a cent from any other aspect of the SM business.

Everyone is entitled to their opinions, I am pretty sure the profits made by the artists after they are paid their salaries and then their living expenses, the cost of the productions/concerts/mvs & merchandise (because you can rest assured that the company uses all revenue made by the artists themselves because that is how the music industry works) are defintely used to prop up other areas of SM that arent doing well.

Additional revenues made by senior artists (dbsk, BOA etc) are then used to develop the next level of trainees and then so on as well.

There is a big huge picture and the person who made the comment that was psoted to start this thread had a point.

[bea-chan22.livejournal.com]

“This is a classic example of a parent running down their business and making their kids earn the money for them. And when the kids hand over their hard earned cash the parents then spend it on useless things instead of paying off their debt. Once the kids start telling them to stop the nonsense, the parents then tell them not to bite off the hand that feeds them when it’s obvious that the kids are feeding themselves with their own hands.”

Geez. I'm a business major and I'm smh over this right now. In business, no matter what company you are, whether it is as big as Apple or as small as your lemonade stand out there, there's a risk of expansion and sometimes what might be the company's projected risks maybe smaller or higher than the actual ones. You can never really tell what happens next. Unpredictable world is unpredictable. As for SME, what they can do is a.) make another business plan for it to at least offset with whatever sunk costs that they incurred or b.)scrap the expansion altogether and suffer w/ the losses and try to find on a more lucrative venture that will recover these losses.

[fifi-moon.livejournal.com]

if they diversfy themselves too much then they won't do well at anything, they would be much smarter perfecting their core business and branching that out into other markets, trainee schools in other countries etc.

[jasmineakaiumi.livejournal.com]

Apparently people don't go because it's expensive and they don't give you extra time like other karaoke places do.

The only benefit about them is that they have the original instrumentals for all songs coming from SME, I believe.

[rinn1e.livejournal.com]

So all SME has to do is lower the price? Hm...