A visual effects producer. An engineer trained in robotics and automation. A businessman who has dabbled in shipping and audio-visual equipment sales.
Despite their different backgrounds, all three share a common vision: to build their own empire in the music and entertainment industry. Their approach? Through karaoke.
The way they see it, karaoke has reclaimed its spot as a popular pastime for the masses after being pummelled to the brink of annihilation a few years ago by the pandemic. Investors, they reckon, should take heed of what it can offer now that it’s business as usual.
Flint Lu, founder and CEO of Goodwill Entertainment Holding, is the latest among the three to tout the trade. His company, which operates 11 karaoke outlets across Singapore, filed a draft prospectus on Sept 27 for a listing on the Catalist board of the Singapore Exchange S68 (SGX).
Before devoting all his energy to Goodwill Entertainment, which opened its first joint in 2015 and expects to have its 12th outlet sometime this quarter, Lu owned and ran a shipping company. He also sold China-made karaoke equipment in Singapore.
About a month before Goodwill Entertainment lodged its prospectus, Vividthree Holdings OMK announced a joint venture with local karaoke chain KStar to roll out automated karaoke lounges in Singapore. KStar, which has been in business since 2017, has four outlets of its own in the city-state.
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The joint venture, 55%-owned by Vividthree, marks the computer animation specialist’s foray into the direct-to-consumer market, according to co-founder and CEO Charles Yeo, who has been creating visual effects for a living for over two decades. Vividthree’s first karaoke lounge with KStar is slated to open this quarter.
If Goodwill Entertainment’s IPO takes off, SGX will be home to three companies that have set their sights on making it big in the karaoke business. The other company besides Goodwill Entertainment and Vividthree is 9R.
Formerly known as Viking Offshore and Marine, 9R entered the karaoke trade in 2022 under the watch of Ong Swee Sin, a Malaysian engineer trained in robotics and automation. The company owns and operates nine karaoke outlets in Malaysia.
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Business dynamics
How attractive is karaoke as a business? Should investors start paying attention to these three companies? How do these operators stack up against each other? With the pandemic over, are these firms in better shape now and ready for growth?
As the new kid on the block, Vividthree is the underdog among the three, even though it’s no stranger to the entertainment industry as it’s part of mm2 Asia 1B0 , a well-known film and TV content producer and distributor.
Still, running a karaoke business is something Vividthree hasn’t done before. It will have to take its cue from its partner, KStar, even though it’s the larger shareholder in their 55:45 joint venture.
Apart from its marketing collateral, there’s not much public information on KStar, given that it’s a private company. However, since all four of its outlets are based in Singapore, some of the things disclosed in Goodwill Entertainment’s IPO prospectus, especially about industry dynamics and risk factors, would also apply to KStar to a certain degree. The more obvious of these include stiff competition, low entry barriers and notoriously fickle consumer palates.
Beyond opening more outlets and broadening their range of service offerings (Goodwill Entertainment, for example, is developing its own craft beers), setting up shop in other countries should also be a natural progression for the Vividthree-KStar joint venture and Goodwill Entertainment, given the small market in Singapore.
Goodwill Entertainment has already identified Malaysia as a market to get into. That, too, can be a new spot for the Vividthree-KStar joint venture, as Malaysia was Vividthree’s second-largest market by revenue for its core business in its last financial year.
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9R expanded its reach in Malaysia quite significantly within just a couple of years. From a single outlet in 2022, it now runs a total of nine, the latest of which is at The Exchange TRX, a key development of the Tun Razak Exchange, the country’s first dedicated international financial district.
Gangbuster results? Unlikely
In terms of financials, all three companies are unlikely to deliver gangbuster results any time soon.
9R, in the red for the last two years, incurred a net loss of about $0.6 million for the first six months of 2024. Revenue for the first half amounted to $5.3 million.
Vividthree has been losing money for the last five years, during which revenue had not grown much except in the most recent year, when it started recognising contributions from its newly acquired public relations business.
Goodwill Entertainment was profitable in 2022, 2023 and the first three months of 2024, with earnings of $1.1 million, $2.9 million and $0.4 million respectively. However, it expects compliance costs and IPO expenses to dent its overall bottom line for this year.
From the looks of it, karaoke’s allure will likely stay where it has always been — with singing enthusiasts. As far as investors are concerned, it just doesn’t seem to be something to crow about for now.
The writer is a former financial journalist and runs an investor relations consulting practice. He is also a part-time business journalism lecturer at a Singapore university. All views expressed are solely his
