Since the record-breaking performance of Squid Game two years ago, it’s been apparent that Korean dramas are capable of driving significant global audience for Netflix.
Netflix signaled last year that it would allocate more of its annual $17 billion content budget to local Korean productions. And with Hollywood’s writers’ strike in full effect, the platform has worked to aggressively surface its Korean shows for users in recent weeks. Last week, for example, Korean gangster drama Bloodhounds was the top TV show on Netflix’s global platform.
With the Korean government pledging last week to invest $395 million to help local streaming companies compete with Netflix, it wasn’t surprising to see Netflix co-CEO Ted Sarandos visit Seoul this week in an attempt to protect the streaming company’s golden goose, which has also produced other recent Netflix hits including The Glory and Extraordinary Attorney Woo.
According to Sarandos, Netflix is set to majorly scale up its spending in the market with a $2.5 billion investment toward producing more Korean drama series, reality shows and movies. This hefty sum marks a doubling of Netflix’s previous spending since entering the market in 2016 and is five times more than the $500 million invested in 2021.
Speaking at a Thursday press conference (which was covered by the Penske Showbiz press), Sarandos emphasized to Korean officials that more local writers, directors and actors are working more and catching more career breaks because of this investment.
“Between 2022 and 2025 for example, one in five of our titles made for Netflix will come from a first-time writer or first-time director,” Sarandos said.
He noted that 90% of viewing for Korean romance titles comes from outside the region.
“In the longer term, we need to learn, adapt and innovate together,” Sarandos said. “It’s not always going to be easy as the audiences are incredibly demanding … but we are committed to the partnership because we have seen first-hand how much our members love K-content.”
However, this ambitious plan has raised concerns among local filmmakers and other industry denizens, who fear that such a substantial investment could marginalize local filmmakers and hinder their ability to compete with the streaming giant.
Some question if Netflix is compensating its producers fairly. Despite the astonishing success of Squid Game, for example, director Hwang Dong-hyuk and the production crew received no additional incentive bonuses or income to acknowledge the show’s unexpected global dominance.
“Content creators are concerned about how to distribute profits,” Climax Studio CEO Byun Seung-Min said in an interview with Deadline. “I hope we can work together to double them.”
In response to these concerns, Sarandos has tried to reassure stakeholders that Netflix is committed to providing fair compensation to creators, producers and studios.
“It’s a very competitive market, so any deal that we make, we’re typically in competition with others for the same projects,“ Sarandos said. ”So we compensate at the very top of the market.”
However, there are lingering apprehensions among locals about Netflix's insistence on securing exclusive intellectual property rights, which could potentially limit the rights and opportunities available to Korean creators.
“It is important to note that Netflix’s possession of intellectual property rights has been a source of controversy,” said associate professor of East Asian popular culture Kwon Jung-Min in an interview with DW.com. She said the streaming company’s monopoly also threatens local streaming services such as Watcha, Tving and Wavve.
Recognizing the need to level the playing field, the Korean government has pledged to support local streaming platforms with a substantial infusion of $390 million. While this injection of funds is significant, it falls short when compared to Netflix’s monumental budget.
Unlike the European Union, South Korea currently lacks legislation mandating foreign streaming services to invest in local content, exacerbating the concerns of local filmmakers.
“The government needs to come up with a system to ensure that excess profits can be returned to South Korean creators,” said Lim Jong-too, a professor at Sejong University, a private school in Seoul.
The company Netflix has already come into legal conflict with South Korean mobile carrier SK Broadband over a refusal to pay network usage fees. The Seoul Central District Court ruled in favor of the broadband company in April, saying Netflix must make restitution payments. Netflix has since appealed the decision.
