Yeah1 Group (YEG)'s board of directors recently announced the transfer of a 49% stake in its subsidiary, 1Label, to Sony Music Entertainment Hong Kong. Both parties have signed capital contribution and cooperation agreements for future digital music distribution projects. However, the deal value and completion timeline were not disclosed.

Within the Yeah1 ecosystem, 1Label is responsible for owning, producing, and distributing music. Additionally, this entity also owns 1Talents, which manages artists. Both play a crucial role in optimizing the commercial value derived from Yeah1's content production and talent development activities.

Sony Music Entertainment Hong Kong is a member of Sony Music Entertainment, which is one of the "Big 3" companies dominating the global music industry, part of Sony Group. The company's history includes significant milestones, such as establishing the world's first record label and inventing the flat vinyl record. They are also renowned for nurturing many iconic artists and producing highly influential recordings. Sony Music currently operates in over 100 countries.

Yeah1's leadership stated that the capital injection from Sony Music provides strong financial potential for its ecosystem. Furthermore, YEG will receive technology transfer and expertise, adopting international standard processes for creator development, artist management, and content production. They can also leverage Sony Music's global distribution network to bring their products to international audiences.

A band trained by Yeah1 performs at the Vietnam iContent 2025 awards ceremony organized by VnExpress. *Photo: Tung Quynh*

This deal represents a strategic move for Yeah1 to address its over-reliance on advertising revenue. Following a downturn caused by the YouTube incident in 2019, the company diversified into television production, launching shows such as "Chi dep dap gio re song" and "Anh trai vuot ngan chong gai". They also organized numerous concerts for these two shows, attracting tens of thousands of attendees each night.

As a result, the company reported a profit after tax of over 122,5 billion VND in 2024, a 4,6-fold increase year-on-year. This profit is the highest since 2019 and the second highest since the company first disclosed information in 2013. However, Yeah1's revenue structure still indicates a significant dependence on advertising. Last year, this business segment accounted for 82% of total revenue. Yet, advertising yields a thin gross profit margin, contributing only 20% to the overall company's profit. The gross profit margin for this segment was a modest 4%.

Yeah1's advertising activities primarily involve soliciting brand sponsorships for the television programs it invests in and produces. In its report from september, Vietcap Securities highlighted several risks for Yeah1, particularly concerning its business model's heavy reliance on advertising from these shows. Key concerns include intense competition and the inherent volatility when a business model depends on audience preferences.

In an interview with VnExpress in october, CEO Ngo Thi Van Hanh acknowledged that while advertising revenue is crucial, it is also highly volatile. The company is actively seeking ways to reduce this dependence, including expanding into new business areas such as artist training and management, exemplified by the launch of a boy band following the "Tan binh toan nang" program.

With exclusive management of the boy band, the leadership anticipates revenue streams to extend beyond in-program advertising. These are expected to include concerts, music releases, international copyrights, artist-linked advertising, and commercial image exploitation. They aim to foster a team of artists capable of sustained long-term careers, generating economic value and fostering audience loyalty within the company's ecosystem.

Tat Dat