How can South Korea balance global platform growth with local industry support?

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Balancing Global Platform Growth with Local Industry Support in South Korea

South Korea is navigating the complex landscape of fostering a globally renowned entertainment industry while ensuring the sustainability and fair competition of its local streaming platforms and creators. The nation's cultural exports, exemplified by hits like Squid Game and The Glory, have achieved significant international acclaim, with 60% of global Netflix users engaging with at least one South Korean title last year. This success has spurred substantial investment, with Netflix alone committing US$2.5 billion to local content. However, concerns persist regarding market dominance and the equitable distribution of profits, prompting government intervention and calls for policy adjustments.
Government Initiatives to Bolster Local Platforms

The South Korean government has announced plans to allocate 500 billion won (approximately RM1.8 billion) to support domestic streaming platforms. This financial injection aims to enhance the competitiveness of local services such as Tving, Wavve, and Watcha against global giants like Netflix. The objective is to foster a more diverse media ecosystem where multiple platforms can thrive, thereby benefiting both content creators and consumers, as stated by Heo Seung, public affairs director at Watcha.
The Economic Impact of South Korean Content Exports

South Korea's content industry is a significant economic driver, with exports reaching US$13 billion in 2022. This figure, encompassing video games, music, and broadcasting, surpasses the export value of key industries like electric vehicles and rechargeable batteries. The phenomenon, often termed the "Netflix Effect," has catapulted South Korean actors and directors to international stardom, underscoring the global appeal and economic potential of the nation's cultural output. President Yoon Suk-yeol has acknowledged Netflix's US$2.5 billion investment as a considerable opportunity for both the country and the streaming service.
Market Dominance and Creator Compensation Concerns

Netflix holds a substantial market presence in South Korea, capturing a 38.2% market share in 2022, significantly outperforming local platforms like Tving, which had a 13.1% share. This disparity is further highlighted by Netflix's reported operating profit of 14.28 billion won in the country for 2022, in contrast to Tving's operating loss of 119 billion won. This market concentration has led some Korean politicians to advocate for Netflix to provide better remuneration to creators whose works achieve widespread success. Netflix maintains that it compensates local creators fairly at the initial production stage, irrespective of a show's ultimate performance.
Addressing Regulatory Gaps and Securing Intellectual Property

Unlike the European Union, South Korea currently lacks specific legislation mandating foreign streaming services to invest in or produce local content. This regulatory environment has fueled discussions on how to better support the local industry. Experts suggest that the government could play a more active role, potentially by implementing systems to ensure that excess profits generated from successful content are equitably returned to South Korean creators, thereby securing intellectual property rights and fostering a more balanced economic relationship.

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How can South Korea balance global platform growth with local industry support?

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