K-pop powerhouses such as Hybe and SM Entertainment have recently shown increasing interest in the music market of the Middle East.

Hybe Chairman Bang Si-hyuk last week met with United Arab Emirates President Mohamed bin Zayed Al Nahyan to discuss possible cooperation in K-pop ventures, upon his request.

SM Entertainment, led by its founder and former chief producer Lee Soo-man, got its feet in the door early, signing a memorandum of understanding with the Saudi Arabian Ministry of Culture to cooperate on establishing a studio for content creation and hosting a large-scale K-pop concert in Saudi Arabia in November 2022.

When Kakao Entertainment acquired SM Entertainment in 2023, it met with Saudi Arabia Tourism Authority officials to discuss enhancing cultural exchanges utilizing its intellectual property.

However, K-pop companies' efforts to develop the market for K-pop in the Middle East have been met with doubts from many 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,” a local entertainment company official said Tuesday.

According to the International Federation of the Phonographic Industry's 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 $44.06 million as of 2022, according to Statista. Australia, the country that ranks 10th, is said to have generated a total revenue of $216.9 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 percent, trailing sub-Saharan Africa’s 24.7 percent at the top. Latin America ranked second at 19.4 percent, while Asia ranked third at 14.9 percent. 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 percent of the market’s estimated 32.2 million residents under the age of 30. The country also has an internet penetration rate of 98 percent. 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.

"There are two annual K-pop concerts in the Middle East: Hyperound K-Fest in Abu Dhabi, the UAE, and KCON in Riyadh, Saudi Arabia. I heard they both got canceled this year," a K-pop concert promoter said under condition of anonymity on Tuesday.

"The second KCON festival held in Saudi Arabia was not very successful. It didn’t have a good lineup of K-pop artists that the local fans wanted. You need BTS, Blackpink, Stray Kids, Seventeen or Ateez to sell tickets, but they won’t go to the Middle East, because they are not making enough money (there)," the promoter continued.

Unlike its star-studded 2022 festival that featured NewJeans, Ateez and Oneus, KCON's 2023 list featured Super Junior and Riize among the high-profile names, and included lesser-known bands such as Everglow, Kard and Oh My Girl.

"K-pop artists can visit once or twice to meet their fans in a new region, but they won’t return for the third time just to hold a 'fan meeting.' Moreover, I heard the Saudi Arabian government has recently downsized the budget for future K-pop concerts. Nowadays, it is only approving 1 out of 3 K-pop projects proposed, whereas before it granted all of them," the promoter added.

Another industry source said the Middle Eastern market is the fourth option for K-pop entertainment companies, after the US, Japan and Latin America.

"The US owns about 40 percent of the global music market and achieving success there automatically leads to a K-pop band becoming popular in other regions. Japan is the second-largest market in the world after the US, and it still generates the second most revenue for K-pop. Latin America is a new growing market that K-pop companies have to target along with the US," one industry source said Tuesday.

"For now, there is no good reason to choose the Middle East over the former three."