South Korea’s television industry is experiencing a post-“Squid Game” bump as the country becomes a content battleground for the global streaming wars. Now it has to keep delivering.
“Squid Game,” the dystopian drama that became Netflix Inc.’s most watched show, reached new heights for South Korean content and created expectations for repeat success. That came last month when “Hellbound,” a dark fantasy series, topped Netflix’s global charts upon its debut. Four of Netflix’s six most watched non-English-language TV shows in recent weeks have hailed from South Korea.
Those successes secured South Korea’s reputation for making high-quality shows with low production costs, a formula that is tempting rivals in the streaming business to jump in. Apple TV+ and Walt Disney Co.’s Disney+ have recently launched in South Korea, with ambitious plans to develop Korean-language content. AT&T Inc.’s HBO Max is also staffing up in the country, according to job postings on LinkedIn, suggesting that it might be readying a debut. AT&T’s WarnerMedia, which oversees HBO Max, declined to comment.
Feeding a growing number of streaming platforms, however, threatens to drive up acquisition costs as companies seek to outbid one another for top shows. It also puts pressure on South Korea’s entertainment industry to consistently crank out global hits.
“There’s a lot of stuff to produce over the next couple of years,” said Vivek Couto, executive director at Singapore-based Media Partners Asia, which advises media and telecom companies. “Will quality be sustained?”
Streaming platforms have been relying more on the Asia-Pacific region for growth, and viewers in the U.S., U.K., Australia and Europe are warming to non-English-language content.
There are now about 1.7 billion users of subscription-video services world-wide, up from 457 million in 2016, according to research firm Insider Intelligence. In 2016, Asia had about 30% of total users, compared with 60% today.
U.S.-based streaming platforms have also tapped other countries, from Latin America to the Middle East to Europe, making global stars from locally produced telenovelas, heist shows and crime thrillers.
South Korean shows—which span a variety of genres including rom-com, zombie and historical drama—draw a diverse audience and have proved effective at persuading people to sign up for a streaming service, retain them and get them to watch more, industry executives say.
“We believe that markets like Korea will soon become global content powerhouses for the media and entertainment industry,” said Luke Kang, Walt Disney’s Asia-Pacific president. In October, Disney+ unveiled 28 new original titles from the region, including seven from South Korea.
Local production costs can be as low as one-tenth those of Hollywood, said Jung Kyung-moon, CEO of JTBC Studios, a South Korean studio behind “D.P.,” a military drama, which hit Netflix’s global top 10 list this year. JTBC Studios also has a growing presence in the U.S., recently acquiring a majority stake in Wiip, a Los Angeles-based company behind drama series, such as HBO’s “Mare of Easttown.”
“From the perspective of streaming platforms, it’s a great bang for the buck,” Mr. Jung said.
Acquisition costs are already rising. Studio Dragon Corp., which has production deals with Netflix and Apple TV+, said its average selling price for streaming content on global platforms rose 24% in the third quarter versus the year before. Two of its shows this year have hit Netflix’s global 10 most-watched list.
Next Entertainment World Co.’s Studio & New, one of South Korea’s hit-producing production houses, has a five-year production partnership with Disney+. The onset of streaming services’ offering new channels for reaching viewers will strengthen the industry and spur more high-quality shows, said Jang Kyung-ik, president of Studio & New.
“All we needed was a global platform,” he said. “I think the popularity of K-content will not wane easily.”
In 2017, about 15% of the world’s 100 most popular streaming titles were made outside the U.S., according to Ampere Analysis, which has a proprietary metric for global viewership. Now the proportion has grown to 27%, it said.
Global investment in streaming content is expected to reach $50 billion this year, an increase of 20% from 2020, according to Ampere Analysis, a market research firm.
Netflix has spent roughly $1.2 billion on developing Korean films and television shows since entering the South Korean market in 2015—including half a billion dollars this year. The company says it has introduced more than 130 Korean television shows and films.
Don Kang, Netflix’s vice president for South Korean content, previously worked at a local media company exporting the country’s content. He said the success of “Squid Game” shattered his prior notions for how popular a South Korean show could become.
South Korea’s TV and movie successes in recent years have enabled Korean content to gain the trust of a global audience, said Yeon Sang-ho, the director of “Hellbound.”
Mr. Yeon said the quick pace of decision-making in South Korea has also helped it develop hit shows. The country’s entertainment industry can green light new projects in as short as a week, compared with half a year in other countries.
“It paves the way for more experimental content in diverse genres,” Mr. Yeon said.