© Reuters. The Netflix series “Squid Game” is shown on a mobile phone in this illustration photo taken Sept. 30, 2021. REUTERS/Kim Hong-Ji/Illustration
by Hyunsu Yim
SEOUL (Reuters) – When Netflix (NASDAQ) CEO Ted Sarandos visits South Korea this week, he will find an entertainment industry that has achieved global acclaim with shows like “Squid Game” and “The Glory,” but also growing concerns about its impact 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 prompted the California 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 Prime Minister Han Duk-soo on Thursday, his first visit as co-CEO.
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 content rights.
Last week, the government announced plans to provide 500 billion won ($390.09 million) to help domestic streaming platforms compete with global rivals such as Netflix amid rising production costs.
“The media and content industry will thrive when many platforms compete instead of being dominated by just a few, which will benefit creators and consumers alike,” said Hyo Sung, director of public affairs at South Korean broadcast platform Watcha.
South Korea exported $13 billion worth of contents in 2022 including video games, music and streaming, according to the Korea Economic Research Institute, surpassing shipments of electric cars and rechargeable batteries.
The “Netflix Effect,” a term coined for the phenomenon that launches actors and directors from obscurity into instant stardom when their shows appear on the platform, is part of the South Korean success.
Against this backdrop, President Yoon Sok Yul welcomed Netflix’s $2.5 billion investment as a “huge opportunity” for both the South Korean and US streaming giant.
Netflix’s market weight in South Korea dwarfs that of local platforms such as Tving, Wavve, and Watcha.
In 2022, the US company reported an operating profit of 14.28 billion won in South Korea, a stark contrast to Tving’s operating loss of 12 billion won.
Netflix accounted for 38.2% market share in South Korea last year, according to the mobile index, which eclipsed Tving’s 13.1%.
Unlike the European Union, South Korea does not have laws that require foreign broadcasting services to produce or invest in local content.
This has prompted some Korean politicians to call on Netflix to better reward creators when their projects are successful.
Netflix said it aims to fairly compensate local creators in initial production, regardless of how well their shows do.
“The compensation is an important part of that, but so is the creative expression that our local team supports, along with the global audience reach of our service,” a Netflix spokesperson said in an emailed statement.
Content creators who have worked with Netflix say the company has taken advantage of them, while others have not. Hwang Dong-hyuk, creator of “Squid Game,” said in various interviews in 2021 that the series was rejected several times before it was picked up by Netflix.
Aditya Thayi, the London-based filmmaker who directed the Netflix documentary “King of Clones,” told Reuters that Netflix will change the game with “an evening on the pitch for Asian filmmakers.”
While the project was commissioned by Netflix UK, it focuses on genetic cloning fraud in South Korea and includes file clips from the broadcasters’ archives. This footage alone cost $40,000 to use, 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 the government can do more to help, such as securing intellectual property rights for creators.
“The government needs to put in place a system to ensure that excess profits can be returned to South Korean creators.”
($1 = 1,281.7400 won)
(This story has been corrected to fix the spelling of the South Korean President’s name in paragraph 9)