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President Yoon Suk Yeol (left) and Netflix CEO Ted Sarandos pose for photos at Blair House in Washington on Monday. (Office of the President) |
Netflix chief Ted Sarandos’ decision to invest $2.5 billion in Korean content for the next four years made headlines across local media outlets on Tuesday. The announcement represented South Korean President Yoon Suk Yeol’s first major accomplishment on his US state visit.
According to the Ministry of Foreign Affairs, President Yoon said he “sincerely welcomed the unprecedented investment” made by Netflix.
But some speculation remains as to whether Sarandos’ announcement was welcome news to the South Korean creative content industry.
In 2021, Netflix announced that the company would invest some 500 billion won ($370 million) that year in Korean dramas, films and unscripted shows.
The global streamer did not release an official figure on its investment in Korean content for 2022, but industry insiders speculate that Netflix might have spent closer to 700 or 800 billion won as the company created 10 more original series that year compared to the year before.
If Netflix were to invest on a similar scale over the next four years, that would amount to almost 3.2 trillion won -- close to the $2.5 billion that Sarandos pledged this week.
“One of the basic principles of marketing is ‘work on your cash cow.’ I believe South Korea is Netflix’s cash cow at the moment,” Yu Hyun-jae, a communications professor at Sogang University, told The Korea Herald on Tuesday.
“If Netflix believes South Korea has such strong potential, I think the recent investment announcement does not seem surprising in terms of numbers,” Yu added.
Yu said that 60 percent of Netflix's global viewers already enjoy its Korean originals.
“And taking into consideration that Koreans are in general very mindful of what other countries think of their country ... making such an announcement official can incite blind nationalism and lead local viewers to continue showing their loyalty to Netflix's content. The announcement was a good move in many ways with low risks,” he explained.
However, Yu believes that many experts wished to hear more about Netflix’s approach to its profit structure.
“Netflix's original projects ... receive 110 percent of the estimated production costs from Netflix to produce the series. This seems to offer a safe environment for the creators to do their project with less pressure on the show’s success,” Yu said.
“But the revenue belongs to Netflix. The streamer monopolizes all intellectual property, including domestic and international broadcasting rights, rights for reproduction and control over derivative works. I don’t think this is a win-win opportunity for the local creators,” Yu said.
Another thorny issue is the internet access fee.
“While Netflix has been popular in Korea for several years, the government has not taken measures on charging the streamer for internet access, (as well as on) other issues that create an environment which disadvantages local streamers,” Yu explained.
Lee Sang-baek, CEO of Astory, the production company behind “Kingdom,” a Netflix original, and “Extraordinary Attorney Woo” shared a similar view.
“Although the company created a global zombie phenomenon with ‘Kingdom,’ we were not able to monetize the series. For small-and-medium-sized production companies, like Astory, IP ownership is one of the most important survival strategies and ways to grow our business,” said Lee, sharing his thoughts on creator-friendly opportunities.
Unlike the “Kingdom” series, Astory offered various other ways to enjoy "Extraordinary Attorney Woo” content, including a webtoon, a musical and a possible US adaptation after joining hands with local cable channel ENA.
While agreeing that the growing investment in Korean contents is exciting news, veteran documentary director Lee Wook-jung said that there are pressing policy issues that needed to be worked out in order to truly promote and develop local streaming services. These include tax, internet access fees and guidelines for self-rating, among others.
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Meanwhile, there is also a sense of optimism among industry insiders who expect the pledged investment to translate to greater opportunities for creators and for Korean contents to gain momentum in the highly competitive global content industry.
“I think we can always welcome (such) investments. Naver Webtoon has countless IPs and companies from different business sectors, like broadcasters, production studios, game developers and video streamers, can find content they like on our platform,” said Naver Webtoon CEO Kim Jun-koo in a press conference in Seongnam, Gyeonggi Province, on Tuesday.
“I am certain that Netflix’s investment will benefit Naver Webtoon creators and provide greater opportunities,” Kim continued.
Content production company Studio LuluLala -- formerly known as JTBC Studios -- said that the investment in Korean content amid rising global competition is encouraging.
“Companies will gain momentum to expand business overseas and execute different global strategies. And the fact that a creative contents-themed issue is the president’s first accomplishment during his US visit seems meaningful as well. I hope such news leads to the country’s increasing support for content businesses,” the official told The Korea Herald.
Another industry insider, who wished to remain anonymous, said the creative content industry is always in financial trouble.
“I am expecting Netflix's latest announcement to relieve a little bit of pressure. I hope the investment provides an opportunity to showcase new, lesser-known styles of Korean content and culture to global viewers,” the industry insider said.
