[K Changers]② 'Yeonjin, So Excited' Studio Dragon, the Leading Force Behind K-Drama

No.1 Domestic Drama Production Company
Over 300 Creators
Diversified Sales Channels and Expansion into the US and Japan

The Netflix drama 'The Glory' is gaining tremendous popularity. Since the release of Part 2 on March 10, it has held the number one spot worldwide (non-English category) for three consecutive weeks. In terms of cumulative viewing hours, it has risen to 6th place of all time (413.05 million hours). Following 'Squid Game' and 'All of Us Are Dead,' the K-drama syndrome is once again sweeping the world. Kim Eun-sook, the writer of 'The Glory,' said, “I could never thank you enough, even until I die. To viewers in South Korea and around the world, I am so excited right now.”

K-dramas are one of the two pillars of K-content alongside K-pop. The production company behind 'The Glory' is Hwa&Dam Pictures, a subsidiary of Studio Dragon. Studio Dragon is a leading K-drama company that has consecutively produced hits such as 'Goblin,' 'Crash Landing on You,' and 'Sweet Home.' Last year, it achieved record-breaking results (sales of 697.9 billion KRW, operating profit of 65.2 billion KRW), ranking first in sales among domestic production companies.

Studio Dragon originated from the drama business division of CJ ENM and was spun off as a separate entity in 2016. Riding the wave of the K-drama boom, it has grown even larger. As of the closing price on March 30, its market capitalization was 2.1071 trillion KRW, surpassing CJ ENM’s 1.9035 trillion KRW. The secret to its success is simple. Studio Dragon is a company that excels at the essence of a content business: ‘making good content and selling it well.’

Good Content Comes from a Good System

Studio Dragon’s competitiveness comes from its studios. It has expanded its size through years of M&A of small and medium-sized production companies and now oversees a total of eight studios. The studios handle direct production, while Studio Dragon acts as the ‘control tower’ for them. Former CJ ENM executives serve as co-CEOs. CEO Kim Young-gyu, a former PD, oversees production, and CEO Kim Je-hyun, who has experience as head of IP operations, manages business operations. CEO Kim Young-gyu has produced works such as 'Mr. Sunshine' and 'Sweet Home,' while CEO Kim Je-hyun led tvN to its best-ever business performance.

With CJ ENM as its largest shareholder, Studio Dragon has solid financial backing. The company contracts with 304 ‘creators’ including writers, PDs, and directors through its studios. These creators produce about 30 dramas annually. Thanks to this, Studio Dragon owns 207 IPs (intellectual properties). IPs are rights to exclusively profit from content, meaning they hold the drama rights. It is truly a drama kingdom.

Particularly, Studio Dragon invests heavily in writers who create stories. Through acquiring small and medium-sized production companies, it secures star writers while simultaneously nurturing new writers through a two-track system. Kim Eun-sook was affiliated with Hwa&Dam Pictures, Noh Hee-kyung with GTist, and Park Ji-eun with Munhwa Broadcasting Corporation. Although exact figures are not disclosed, the industry estimates that some writers receive over 100 million KRW per episode. Producing just 10 episodes can earn more than 1 billion KRW.

The O’PEN project, operated in cooperation with CJ ENM, plays an important role in nurturing new writers. It is a program that selects new writers and provides training for one year. Over 200 writers have been produced through O’PEN so far. Many debuted through Studio Dragon, including Shin Ha-eun of 'Hometown Cha-Cha-Cha,' Park Bara of 'Shuroop,' and Lim Chang-se of 'Detective Records.' Industry practices make it difficult for new writers to be entrusted with projects that require huge investments from the start. This is possible only because Studio Dragon has accumulated over 10 years of production know-how.

Maximizing Profits through Diversified Sales Channels

Studio Dragon’s overseas sales (368.5 billion KRW) now exceed domestic sales (329.4 billion KRW). Last year was the first time annual overseas sales surpassed domestic sales. Considering the past heavy reliance on sales from CJ ENM, this is a remarkable change.

Studio Dragon has diversified its sales channels by riding the OTT (over-the-top) video service boom. In addition to existing platforms like Netflix and TVING, it added four partner channels last year: Disney+, Amazon Prime Video, Apple TV+, and Coupang. It did not just increase channels; it also diversified sales strategies.

There are exclusive sales where the entire IP is sold, package sales bundled with older works, and non-exclusive segmented sales. Segmented sales involve selling to multiple small- and medium-sized OTT platforms by region. This strategy can sometimes yield higher profits than exclusive sales to major OTT platforms like Netflix or Disney. The company chooses sales strategies by comparing which method is more profitable. For example, 'Shooting Star' sold rights separately to U-NEXT, Viki, and tvN, and was broadcast in 160 countries.

Studio Dragon also directly enters overseas markets. It has established local subsidiaries in the U.S. and Japan. It is the first domestic production company to produce a ‘mid’ (American drama). ‘The Big Door Prize,’ which will air on Apple TV+ starting March 29, is such a work. Lee Mi-kyung, Vice Chairman of CJ Group, is credited as the executive producer. A locally produced drama will also be broadcast soon in Japan.

Kim Je-hyun, CEO of Studio Dragon, said, “Last year, we laid a solid foundation for growth through the global deployment of premium IPs. This year, we will improve our corporate management environment by building on last year’s achievements. Especially this year, many premium IPs and season-based works with strong fandoms that will captivate the world are waiting to be launched.”