[MZ Tech]⑦ I Invested in 'Beomjoedoshi 3'... K-Content Investment Heats Up

Direct Investment in Films, Dramas, and Musicals through Financial Securities
Average Returns Around 4%, Gaining Attention by Directly Participating in Favorite Content

Editor's NoteFinancial technology for the MZ generation (Millennials + Generation Z) is both an investment and a culture. While the goal is to make money, when attention rises among peers, everyone rushes to 'prove' their involvement. This is why resell tech (securing scarce items and reselling them at a premium) and fractional investment (multiple people investing together in one asset and sharing profits) have become popular. We explored the investment methods of the MZ generation, who engage in financial technology with ingenious approaches that older generations could not imagine.

Office worker Kim Yesul (30), who usually enjoys movies, watched "The Outlaws 2" last year and, after enjoying it, challenged herself to invest by participating in the online public offering for "The Outlaws 3" through internet research. The public offering was a project investing in the movie "The Outlaws 3," with a target fundraising amount of 500 million KRW and a minimum investment amount of 500,000 KRW per person. Kim said she found the structure, which distributes profits and losses to investors based on the movie's box office performance, interesting. As a fan who enjoyed the "The Outlaws" series featuring the monster-type detective Ma Seok-do subduing villains, she trusted the success of the third installment and readily invested.

Actors Ma Dong-seok and Son Seok-gu from Crime City 2.

As the influence of K-content has become a global phenomenon, online investment platforms in the content field are gaining attention among the fast-moving MZ generation. Platforms that allow direct micro-investment in movies, dramas, and performances are steadily increasing their number of investors because they enable people to invest directly in content they like and receive dividends based on its performance, making it a part of 'fan-tech' where one can participate in content production and investment.

Last year, the K-content securities investment platform 'Funderful,' which conducted the online public offering for "The Outlaws 3," previously attracted attention by recruiting 1,000 first-come-first-served investors through a special investment week for "The Outlaws 2." Investment was not limited to movies. For example, investment in the drama "Love (ft. Marriage and Divorce) Season 2" yielded an 8% return, and the musical "Jack the Ripper" recorded an 8.08% return, proving the potential of content investment. A company representative explained, "Through the online micro-public offering system, film production companies can secure independent financing capabilities, and investors can support their favorite movies while expecting financial returns, which we believe will also benefit the overall film industry environment."

How was micro-investment possible in the existing large-scale content industry rather than individual content? They focused on securitization. A special purpose company holding the content IP (intellectual property rights) and the rights to profit distribution issues securities, and the company intermediates so that investors can achieve investment effects through these securities. While previous fractional investment platforms involved purchasing products where the company guaranteed profit distribution, content investment enhances investment stability by purchasing securities issued by the special purpose company actually producing the content.

Typically, the direct investment market, which accounts for about 10%, has become the stage for micro-investment in content. Micro-investment has begun to penetrate this 10% market, which was funded by venture capital companies or VCs. The rapid growth of the OTT market due to COVID-19 increased the number of content productions, but the financial market froze, leading to a tightening of inflows. Micro-investment began to fill the shortage in the total investment amount, activating content fractional investment.

Musical 'Jack the Ripper' conducted online investment in 2021.
[Photo by Global Contents]

Following movies and dramas, the musical market, which has flourished with the endemic, has also emerged as a good investment destination. The MZ generation is at the center of the musical resurgence. According to Interpark, the proportion of women in their 20s and 30s among all ticket buyers increased sharply from 54% in the first half of 2019 to 81% in the same period of 2020. The overall MZ generation proportion also expanded its presence in the performance market, rising from 69.1% in 2019 to 91% in 2020.

The MZ generation does not save all their salary to buy a home. Instead, they invest time and money generously in what they like. In this context, 'revolving door audience' and 'solo performance tribe' have become important pillars of the performance market. 'Revolving door audience' refers to viewers who repeatedly watch the same performance. According to Interpark, in 2018, 6% of viewers booked the same performance three or more times; among them, 10% rewatched more than 10 times, and about 150 viewers watched more than 30 times. The proportion of solo viewers also increased from 11% in 2005 to 46% in 2018.

According to Funderful, which invested in the musical "Jack the Ripper," women investors in their 20s and 30s accounted for 32%, about one-third. Notably, they provided ticket discount coupons with the industry's best discount rates to investors who invested above a certain amount, attracting actual audience members.

While demand for 'cultural finance,' referring to content investment, steadily increases, voices calling for government policies that meet the expectations of investment startups facing difficulties due to regulations are also growing. Along with this, various discussions are underway to create a virtuous cycle connecting creators, consumers, and investors. At last month's cultural finance startup meeting hosted by the National Assembly startup research group Unicorn Farm, the industry emphasized that unlike general investment, cultural finance investment involves non-financial judgment factors such as the desire to enjoy culture itself, which should be considered when designing regulations.

On that day, Kim Dong-hwan, a lawyer at the law firm Delight, pointed out, "Cultural finance business models are only possible under current regulations through regulatory sandboxes, or face distribution restrictions, or have limits on investment amounts per transaction or per individual, which significantly limits market expansion. There are two amendment movements for the Capital Markets Act and the Electronic Securities Act, and efforts are needed to subdivide requirements according to the nature of each business model and to expand special cases first to test them."