"Don't Remain a Subcontractor"... While Netflix Hits Big, Korean OTT Fails to Produce a Film in 4 Years [Challenges Left by K-Pop Demon Hunters] ①

Tving Has Not Produced a Film Since the 2021 Sci-Fi Movie "Seobok"
Weak Capital and Lackluster Box Office Performance Are Key Reasons
Emphasizing the Importance of a Global Platform to Distribute K-Content
Tving and Wavve Must Merge and Invest Strategically in IP
Adopting Technology... Need to Benchmark Overseas Local OTTs

The production cost for the Netflix animation "K-Pop Demon Hunters" (K-Pop Demon Hunters) reportedly reached 130 billion won. Considering that the ambitious science fiction (SF) action film "Seobok" (2021), starring Gong Yoo and Park Bogum and produced by the domestic online video service (OTT) Tving, had a budget of 16 billion won, this means that nearly ten times more was invested in a single animation.

While the global success of K-Pop Demon Hunters can be attributed to the meticulous production process, the overwhelming global influence of the Netflix platform also played a significant role. For this reason, experts point out that while it is important to discover unique cultural items such as K-pop and develop them into K-content, it is equally crucial to establish a powerful platform to distribute them worldwide.

According to industry sources on the 29th, the last time Tving, the domestic OTT platform, produced its own original film was in 2021. Due to limited capital and lackluster box office performance, it has not produced any since then. As a result, voices are growing that now is the golden time for domestic OTT platforms to strategize for global expansion, especially as K-content is making waves worldwide.

Owning IP is Key to Winning... Don't Remain a 'Subcontractor'

Experts cite Netflix's generous financial support, often exceeding production costs, as a key factor in its success. Park Sungcheol, head of the Broadcast Media Division at the Korea Communications Agency (KCA), said, "If you visit the Korean Netflix office, you'll see production companies lining up with movie and drama scripts, hoping for investment and distribution." He added, "For example, if a production costs 1 billion won, Netflix might invest 1.2 billion won. Even if the margin is small for the production company, it ensures a stable profit in the high-risk media market."

In return, Netflix owns the intellectual property (IP) rights generated from the content. IP is considered a core asset because it can generate sustainable revenue through secondary works and overseas sales. The IP for "Duffy," the tiger featured in K-Pop Demon Hunters, is also owned by Netflix.

For this reason, there is a growing call for a domestic OTT platform that can realistically maintain IP ownership while also keeping Netflix in check. Ryu Jemyung, the Second Vice Minister of Science and ICT, recently expressed his regret at a roundtable in Busan with domestic OTT and free ad-supported streaming TV (FAST) companies, noting that it was unfortunate K-Pop Demon Hunters was not produced under Korean leadership. He stated, "Our challenge is to create works that showcase the strength of our cultural assets with our own capabilities and to build a virtuous cycle that benefits the national economy."

Netflix's Solo Run Continues... Don't Miss the Golden Time

The OTT industry believes that achieving economies of scale is essential to strengthening the competitiveness of domestic OTT platforms. According to WiseApp Retail, as of last month, Netflix held a 41% user share. In contrast, Coupang Play (21%), Tving (17%), and Wavve (7%) followed behind.

However, even the merger between Tving and Wavve has been sluggish. Nearly two years have passed since the two companies signed a memorandum of understanding (MOU) for the merger, but no conclusion has been reached. This is due to the complex interests among shareholders, including KT and CJ ENM. Kim Junghan, Vice President of CJ ENM, said, "Ultimately, I believe KT will agree. Now is the golden time to scale up and strengthen our position to promote Korean content overseas," urging KT to make a decision. KT responded, "We are still coordinating our position." Experts agree that the creation of a unified Tving-Wavve OTT platform is one of the top priorities for restoring balance to the media market and repairing the damaged ecosystem.

Experts are also calling for national support to help K-content expand globally, following the creation of a unified OTT platform. Yoo Jinhee, adjunct professor at Chung-Ang University's Graduate School of Advanced Imaging Science, said, "Securing sufficient production budgets is an urgent task for quality content," emphasizing the need to build a system that encourages participation from external investors. She also stressed the importance of disclosing data on production costs and performance for each project to demonstrate the investment value of IP and reduce the risk of uncertainty.

The domestic OTT industry is hoping that the K-content boom will serve as a turning point for performance in the second half of this year. Choi Juhui, CEO of Tving, said, "We have been discussing overseas expansion with global partners for quite some time. It will become visible in the second half of the year." According to the media industry, Tving is planning to enter key overseas markets such as the United States, Japan, and Southeast Asia by partnering with local OTT platforms in a "shop-in-shop" model. By the end of this year, Tving plans to launch in these key regions based on B2B (business-to-business) partnerships and is also developing a B2C (business-to-consumer) application, with plans to expand into various global markets early next year.

The activities of competitive overseas local OTT platforms are also noteworthy. The Indonesian OTT platform Vidio recorded a 22% subscriber share in the first quarter of this year, surpassing Netflix (15%) to take first place in its domestic market. Vidio has maintained its top position since last year, with success factors including increased investment in original content production, exclusive sports broadcasting rights, and affordable subscription plans. Last month, Vidio partnered with the e-commerce platform Shopee to introduce a new shopping feature called "Vidio Shopping." This is the first case in the local OTT industry of directly integrating shopping functions into content. Viewers can easily add products to their cart and purchase them while watching videos. Fifteen brands, including Samsung Electronics and local cosmetics and apparel companies, have joined Vidio Shopping. By introducing this innovative feature that combines content and e-commerce, Vidio is expanding its revenue model.