[Asia Economy Reporter Kwon Jae-hee] There is a growing expectation that Korean content producers will actually benefit from the decline of Netflix, the number one online video service (OTT) provider. OTT companies desperately need killer content to survive, and due to the high popularity of Korean content, OTT companies are courting Korean content producers.
According to the securities industry on the 2nd, the stock price of Netflix, the world's number one OTT provider, was $190.36 (as of the 29th local time). This represents a 72% drop from the peak of $700.99 in November last year. The reason Netflix's stock price has fallen to one-third of its peak is attributed to the endemic effect and market encroachment by competing services such as Disney+ and YouTube. This is also reflected in Netflix's subscriber numbers; Netflix announced that its paid membership in the first quarter was 221.6 million, down 200,000 from the fourth quarter of last year. This is the first time since 2011 that Netflix's subscriber count has turned negative.
Meanwhile, Korean content producers are actually gaining a windfall from Netflix's decline. Despite the decrease in Netflix subscribers, the number of subscribers has actually increased in the Asian region. In particular, Korean content is gaining popularity in Southeast Asia, which has a large young population and is considered a blue ocean for the OTT industry. Therefore, Korean content has become essential for Netflix to increase its subscriber base in the future.
Moreover, various OTT platforms such as Disney+ and Apple TV are expanding into the Asian market and competitively courting domestic content producers. As a result, there are forecasts that domestic content producers will achieve record profits this year, leading to upward revisions in securities industry forecasts.
A representative example is Contentsree Joongang (formerly J Contentree). Contentsree Joongang is well known as the production company behind the Netflix original series "Hellbound." Hana Financial Investment raised the target price for Contentsree Joongang by 16% to 70,000 won. IBK Investment & Securities also newly issued a buy rating for Contentsree Joongang with a target price of 70,000 won. Additionally, Leading Investment & Securities newly issued a buy rating for Studio Dragon with a target price of 120,000 won.
Researcher Yuseongman of Leading Investment & Securities said, "Although related sectors have seen stock price adjustments and increased concerns due to the recent decline in Netflix subscribers, the shortage of content supply continues," and analyzed, "Demand for domestic content from global OTTs will continue to increase."
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