April 14, 2024

Netflix,

The rise of streaming platforms has plagued the traditional media business around the world including in South Korea. South Korean media moguls are finding it hard to compete against Netflix, whose popularity has taken K-drama global.

Some of the most popular streaming platforms in South Korea are Tving and Wavve. At the time these streaming platforms launched, they had market dominance, with Netflix having a very small market reach. However, the reserve is now true.

According to a Bloomberg report, Tving and Wavve are finding it hard to retain and attract new customers. Netflix currently dominates half of the South Korean market. In contrast, Tving has a 13% market share while Wavve has around 8.6%.

South Korean Film Industry Struggles To Compete Against Netflix

A Reuters report published last year said that Netflix’s growing popularity in South Korea has prompted the government to provide 500 billion won to help local streaming platforms compete against giants like Netflix.

However, government support is doing little to make these companies attain profitability. In 2022, Netflix posted an operating profit of 14.28 billion won in South Korea, a stark contrast to Tving’s operating loss of 119 billion won.

To boost their competitive edge, Wavve and Tving are considering a merger that will give them the scale to compete against Netflix. If this merger goes through, it will create a single service featuring shows from leading local studios and three leading broadcasting stations.

The inability of Tving and Wavve to compete against Netflix mirrors what is being seen in other countries including the US. Streaming services and TV networks are finding it hard to keep production alive while realizing profits. In some cases, streaming platforms have been forced to transfer the high costs to the consumers.

Netflix Brings Korean TV Shows to a Broader Audience

Korean TV shows, also known as K-dramas have become a global sensation because of the heavy investment made by Netflix in the market. Netflix is investing in the production of original content in the South Korean market.

The streaming giant entered South Korea at a crucial time when the industry needed support. The Korean entertainment industry was dealt a blow after China halted the importation of Korean entertainment after the South Korean government signed a missile defense system deal with the US government.

Korean shows are some of the most-watched on Netflix. “Squid Game” became a global sensation after launch, and currently holds the title of the most-watched TV series on Netflix. Another Korean TV show known as “The Glory” ranked as the third-most watched TV series in 2023.

Before Netflix entered the South Korean market, the broadcasting industry was worth 15.3 trillion won. By 2022, it had grown to 19.8 trillion won, with the increase largely having to do with Netflix.

Last year, Netflix announced plans to spend $2.5 billion in South Korea over the next five years to support Korean series, films, and shows.

Double-Edged Sword

The boom of the Korean film industry saw local studios turn towards big-budget productions for streaming sites. The boon raised the cost of shows to as high as $5 million. Korean production studios, CJ ENM and SLL also expanded their production abroad.

However, the trend also affected other parts of the business. Local media companies are now forced to pay a high amount for their shows despite a drop in advertising sales due to the decline in viewership.

Increasing interest rates and the growing macroeconomic risk affected the global economy. Top US entertainment companies announced layoffs and trimmed production. The trend saw South Korean companies that invested heavily in US studios start posting losses.

South Korean TV networks and streaming platforms are now reducing expenses. The local film industry wants to sell series to Disney and Netflix, but the two streaming services cannot buy as many films to meet the high supply in the market.


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