[Kulture Issue] Implications of rising global video streaming platform production fees

[0:00]Recently, global video streaming platforms have been raising their production costs dramatically, affecting the content industry around the world, including Korea. Will these higher costs lead to significantly improved content quality or just become a bigger burden to content makers and users? Let's discuss this issue with culture critic Professor Chie Hye-won at Kyung Hee University. Welcome, Professor Chie. Hello. Hello, good afternoon. So, Professor Chie, let's begin with a recent high budget drama which is in Korean, or in Jeju language I could also say, or when life gives you tangerines in English. So this is a Netflix series, uh, but how big of a budget are we talking about here? Right, just as you mentioned, Netflix is newly launched the series, when you gives you, when life gives you tangerine, actually meaning you've worked hard in Jeju Jeju language. So starring IU, Park Bogum, Moon Sori, and Park Ha-e-jun has ranked second on Netflix's list of global top 10 non-English shows. And it also made Netflix's list of the 10 most watched shows in 41 countries, including Brazil, uh, Chile, and Mexico. So, it is announced this that this series has a production cost of around 60 billion won, which is 42 US million for 16 episodes. So it was made with a large budget to bring together top creators in the industry, written by Lim Sang-chun, who also wrote When the Camellia Blooms, and directed by Kim Won-suk, who directed Signal and My Mister. So the series is a life story about A-sun and Gwan-sik, who were born in Jeju-do in the 1950s. So the background of this series is Jeju Dodong-ni, a small village, the small fishing village, but the filming took place in the set in a Gyeongbuk Andong-shi, not in Jeju-shi. So the production actually spent a lot for building up a huge set and the historic atmosphere. That's why it looks so real. And you would just think that it's actually all uh set in Chejudo Island. Right, that's right. And Professor, I'm sure you're probably gonna mention Squid Game here, but what other Korean dramas were big, uh, product, like big budget productions and how did they turn out? Were they all success, like successful? Uh, actually the Squid Game 1 cost 28 billion won to produce. And however, in the season 2, the production cost was roughly 100 billion won, which is almost four times uh that of the season 1. But the foreign media evaluation of this the series, the second, the second series reflected the mixed point. Another recent K-drama, When the Stars Gossip, has a production budget of 50 billion won. But the show, the show developed over five years and the featured cutting-edge computer graphics because it is a story of in the universe, but they, but the series faced criticism for its direction and script, falling short of the high expectations placed on it. But the Disney Plus's moving spent 50, uh, 68 billion won budget filming for 11 months, and it was a massive hit and it will be will have a second season very soon. Also, Queen of Tears also had a budget of 57 billion won. So as we can see, the production cost doesn't always guarantee a success, but the cost of producing K-dramas has been continuously increasing. So, Professor Chie, what is the reason behind these rising costs and also, uh, how is the growing investment in Korean productions from global companies, uh, actually or global producers affecting the domestic landscape when it comes to productions? Right, the average production cost of the K-drama, at least 1 billion won per episode. But just five years ago, in 2020, the average cost per episode was around 500 500 million won. So the production cost of K-drama has increased due to competition from global streaming platforms such as Netflix and Disney Plus. And those global platforms have contributed to inflating the the fees of popular actors, making it challenging for local production companies and broadcasters to afford those fees.

[5:07]So the Korean drama industry is facing concerns of, uh, construction due to sharp increase in production cost and actor fees, and coupled with a downturn in the advertising market as well. So these has led broadcasters and local streaming platforms to reduce the number of the dramas they produce. However, global streaming platforms like Netflix and Disney Plus either maintain or increase their output. You said yourself, Professor, that, you know, big productions don't, don't always equal success. But spending more money on a production surely contributes higher quality, you know, it's more special effects, et cetera. But do you think it's really necessary and what's your assessment on that? Yeah, actually after Netflix began the the Korean service in 2016, the domestic drama market, uh, reconstructed, restructured, actually, around the OTT platforms. Following the success of Kingdom, uh, Sweet Home or Squid Squid Game, so these platform allowed for like bold experiments in genres, like, um, Zombie, and the, the creature and the science fiction, but those genres were actually traditional TV networks had avoided due to their high production cost. However, as I mentioned earlier, high production costs doesn't guarantee the success. So as we and actually as we witnessed other many high cost K-dramas struggled in and the terms of the in terms of those rating success and critical claims as well. So I high budget could have enhanced visual spectacles, of course, and production quality, but I don't think it ensure entertainment solely those through those aspects. For instance, Disney Plus's successful series Moving, I believe the audience rather like the the its unique storytelling and compelling the characters, not only the visual effects. And uh, Professor Chie, you also touched upon the actors before, but let's talk about the skyrocketing actors' salaries, which actually play a major part in production costs. So how are big budgets for these superstars affecting production companies' budget allocations, also when it comes to staff members, also the staff pay levels? That's right. The significant rising appearance fees of top stars is identifies as a major factor driving up the production cost. With some actors commanding up to 1 billion won per episode. So it's because considering investment or global distributions, the production practices would would center on famous stars, like Hallyu Star, Korean Wave Stars. So in the other hand, compared to the increase in actor guarantee, the working conditions and salary level of the staff are still relatively poor. So there some producers actually said that uh the while the industry has grown, only a few actors reaped the benefits. I see. Well, uh, but this comes to our final question now. What about underfunded video streaming services or production companies? How would they keep up, uh, the competitiveness in the Korean drama industry? In the Korean drama market, the, uh, where the production companies have good enough skills through diverse experience but face limited platforms to fully showcase their talents. Uh, so the localization strategy would become a solution, so localization series in international countries. So at the, uh, as the competition in domestic market is getting intense, some of the Korean production companies are trying to expand their business to the global, uh, to the global by making partnership and producing international series with the partners. For instance, Studio Dragon co-produced Apple TV's the, uh, the Big Door prize with American production companies' guidance and CJ ENM acquired renowned US production company, Liber Content, rebranding it as a fifth season and they, and has since produced American drama like Tokyo Vice and the, the Sea, Dark Days for local platforms. So I believe the most the crucial aspect of the drama is a strength of its narrative, not just the stars or visual effects. All right. Thank you very much, uh, Professor Chie, for your insights today, and I wish you a great rest of the week. Thank you very much. Thank you. And thank you, Walter, as always, uh, we're going to see you next time as well. See you next time.