'Netflix Effect' lifts Korean content but market control worries grow
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[June 20, 2023]
By Hyunsu Yim
SEOUL (Reuters) - When Netflix co-CEO Ted Sarandos visits South Korea
this week he will find an entertainment industry that has achieved
global fame through hits such as "Squid Game" and "The Glory", but also
growing worries about the service's effects on the local market.
South Korea has created some of Netflix's biggest shows, which have
become synonymous with the broader international success of the
country's cultural exports and spurred the Californian company to invest
$2.5 billion in local content.
Sarandos is expected to arrive in Seoul on Tuesday, according to
industry sources, and meet with film students during his first visit as
co-CEO. He will also meet Prime Minister Han Duck-soo on Thursday to
discuss the video streaming market.
But while Korean shows are hugely popular on Netflix, with 60% of global
users watching at least one title last year, calls are growing for the
government to support locally funded projects and secure the rights for
content.
The government last week announced plans to provide 500 billion won
($390.09 million) to help local streaming platforms compete with global
rivals such as Netflix amid soaring production costs.
"The media and content industry will thrive when various platforms
compete instead of being dominated by only a few, which will benefit
both creators and consumers," said Heo Seung, public affairs director at
South Korean streaming platform Watcha.
![](http://archives.lincolndailynews.com/2023/Jun/20/images/ads/current/debbiesfloral_lda_060123.png)
South Korea exported $13 billion worth of content in 2022 including
video games, music and broadcasting, according to the Korea Economic
Research Institute, eclipsing electric vehicle and rechargeable battery
shipments.
The "Netflix Effect", a term coined for the phenomenon that launches
actors and directors from obscurity to instant stardom when their shows
appear on the platform, is a part of South Korea's success.
Against this backdrop, President Yoon Suk Yeol welcomed Netflix’s $2.5
billion investment as a "big opportunity" for both South Korea and the
U.S. streaming giant.
Netflix's market weight in South Korea dwarfs that of local platforms
such as Tving, Wavve and Watcha.
In 2022, the U.S. firm reported an operating profit of 14.28 billion won
in South Korea, a stark contrast to Tving's operating loss of 119
billion won.
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![](../images/062023PIX/ent_a.39.jpg)
The Netflix series "Squid Game" is
played on a mobile phone in this picture illustration taken
September 30, 2021. REUTERS/Kim Hong-Ji/Illustration
![](http://archives.lincolndailynews.com/2023/Jun/20/images/ads/current/bees_lda_HEROES_2023.png) Netflix boasted a 38.2% market share
in South Korea last year, according to Mobile Index, overshadowing
Tving's 13.1%.
Unlike the EU, South Korea does not have laws requiring foreign
streaming services to produce or invest in local content.
That has prompted some Korean politicians to call for Netflix to
better reward creators when their projects succeed.
Netflix said it aims to compensate local creators fairly at the
initial production stage, regardless of how well their shows
perform.
"Compensation is an important part of that, but so is the creative
expression our local team supports, along with the global audience
reach of our service," a Netflix spokesperson said in an emailed
statement.
Creators who have worked with Netflix say the company has taken a
chance on them when others did not. "Squid Game" creator Hwang Dong-hyuk
said in various interviews in 2021 the series was rejected multiple
times before being picked up by Netflix.
Aditya Thayi, a London-based filmmaker who directed upcoming Netflix
documentary "King of Clones", told Reuters Netflix is changing the
game by "evening the playing field for Asian filmmakers."
While the project was commissioned by Netflix UK, it centres on
genetic cloning fraud in South Korea and includes file clips from
broadcasters’ archives. Such footage alone can cost up to$40,000 to
acquire, Thayi said, making it prohibitively expensive for
independent producers without funding.
Lim Jong-soo, a professor at Sejong University, said Netflix has
given South Korean producers more opportunities but that the
government could do more to help, such as by securing IP rights for
creators.
![](http://archives.lincolndailynews.com/2023/Jun/20/images/ads/current/charrons_bch_2022.png)
"The government needs to come up with a system to ensure that excess
profits can be returned to South Korean creators."
($1 = 1,281.7400 won)
(Reporting by Hyunsu Yim; Editing by Sam Holmes)
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