The Netflix original series "Squid Game" is cited as a prime example demonstrating the global competitiveness and impact of K-content. Although it achieved unprecedented box-office success on a scale that sparked a global syndrome, critics point out that Netflix took the lion's share of the actual rewards. This is because while Korea's content production competitiveness is world-class, it relies on foreign companies for global distribution. The investment model of global over-the-top (OTT) services also acts as an obstacle to K-content expansion. Netflix and Disney+ take global distribution rights and IP usage rights in exchange for investing in production costs. Domestic production companies can secure stable production funding, but even if a work is a hit, the IP belongs to the platform.
The problem is that the core revenue source of the global content industry is IP-based expansion businesses. In fact, more than 60% of Pokémon's total revenue is analyzed to come from merchandising (MD), while "Demon Slayer" also recorded revenue of about 1 trillion yen (2020), of which 90% is known to have come from character goods and licensing. Video content is merely a starting point for raising IP value, and long-term revenue is determined by brand utilization capabilities. In Korea as well, attempts to strengthen the competitiveness of domestic OTT are underway with merger discussions between Tving and Wavve, but compared to global platforms, the gap in economies of scale is analyzed to be large.
Chinese short-form dramas, which have recently been rapidly expanding their influence in the global market, are also a potential threat. China has already fostered short-form dramas as an independent industry, building dedicated platforms and production systems, and is expanding its reach into Southeast Asia and parts of the North American market. As ultra-short dramas of one to three minutes in length have established themselves as a routine form of content consumption, pressure is mounting on the long-form-centered K-content ecosystem. Concerns are growing particularly because Chinese short-form content goes beyond simple consumption-type video, with a revenue structure that combines advertising, payments, and IP expansion. The industry is offering the analysis that long-form content centered on dramas and variety shows, in which Korea has strengths, is being exposed simultaneously to platform competition and changes in the consumption structure. Recently, the FAST (Free Ad-supported Streaming TV) market, which provides video content for free based on advertising, is drawing attention in Korea as well, but critics point out that practical measures to build a Korean-style FAST ecosystem are urgently needed.
Given the growing importance of the K-culture industry, some diagnose that active cultural financing must follow. The share of cultural financing in total government expenditure exceeded 1% in 1999 under the Kim Dae-jung administration, reaching 1.72% in 2016, but shrank to 1.31% last year. The Lee Jae-myung administration, having set "cultural powerhouse" as a goal, rebounded somewhat to 1.32% (about 9.642 trillion won) this year, but it is still assessed as insufficient. In particular, considering that the cultural financing of Organization for Economic Cooperation and Development (OECD) countries averages 2%, critics point out that active support for the cultural sector must be backed up.
Furthermore, experts share the view that the content industry should be approached as a single value chain connecting production, distribution, platforms, data, and artificial intelligence (AI). "If government support remains focused on individual works, the limitations are clear," said Kim Jung-sup, a professor in the Department of Cultural Industry and Arts at Sungshin Women's University. "Only by revitalizing a cultural finance structure combined with private capital can we avoid losing promising IP to foreign capital and, furthermore, lead to enhanced value-added for the entire industry."
