"Yeonjin is Coming Back"... Will Content Stocks Revive?

'The Glory Part 2' to be Released on Netflix on the 10th

The Netflix hit series 'The Glory Part 2' will be released today (the 10th). Accordingly, there is growing interest in the stock price trend of the production company Studio Dragon. The securities industry expects this to be a positive factor for the overall content sector, which has lacked rebound opportunities for some time.

According to the Korea Exchange, on the 9th, one day before the release of 'The Glory Part 2,' Studio Dragon's stock price closed at 79,900 KRW, up 1.91%. Although the drama gained sensational popularity, Studio Dragon's stock price has shown a sluggish trend, falling about 7% since the beginning of this year. This was due to poor performance, such as barely avoiding an operating loss of 1.2 billion KRW in the fourth quarter of last year. One-time costs such as purchase price allocation (PPA) and amortization related to the acquisition of Gil Pictures in September last year also had a significant impact.

This year, a turnaround atmosphere is being sensed. Studio Dragon has been recognized for its content competitiveness and is known to have recently renewed its contract with Netflix under better terms than before, including supply conditions and duration. In addition, sales negotiation power is expected to be strengthened through deliveries to new global online video service (OTT) platforms such as Disney.

Hwang Seong-jin, a researcher at Heungkuk Securities, said, "From this year, it will be a year in which strong external growth due to structural changes in the management environment and the accompanying expansion of the profit base will be further strengthened," adding, "They are currently pursuing similar supply contracts with other global OTTs, so a trend of profitability expansion through platform diversification is expected."

The success of 'The Glory' is expected to stimulate investors' interest not only in Studio Dragon but also in the entire media content-related industry. The preference for Korean dramas among global OTT companies continues. The reopening of China's economic activities (reopening) and the lifting of the Hallyu ban (Korean Wave ban) are also expected to act as a tailwind for the Korean content industry.

Lee Hwa-jung, a researcher at NH Investment & Securities, said, "'The Glory Part 2' will be 'a rain in a drought' for the sector, which has lacked momentum for some time," adding, "As the broadcasting indicators of Korean dramas in China are improving, expectations for the resumption of simultaneous airing of new works remain valid."