[Click eStock] "Studio Dragon Overcoming Weak Market Conditions"

On the 14th, Kiwoom Securities analyzed that expectations are high for Studio Dragon's tentpole projects and seasonal series in the second half of the year.

Namsoo Lee, a researcher at Kiwoom Securities, stated in a report on the same day, "The second-quarter performance is expected to fall short of consensus," forecasting "sales of 149.5 billion KRW and operating profit of 14 billion KRW, representing decreases of 5.1% and 48.3%, respectively, compared to the same period last year."

He analyzed, "The decline in the number of aired episodes compared to both the same period last year and the previous quarter is the cause of the performance drop," adding, "There is also a negative base effect from the sale of older titles to Disney Plus in the same period last year."

He continued, "The sluggish advertising market is reflected in domestic broadcasting scheduling, which affects content scheduling sales," but explained, "Despite the decrease in domestic scheduling, sales revenue from diversification into global Over-The-Top (OTT) platforms is being maintained steadily, so top-line defense is possible."

He predicted that challenges related to rising actor guarantees due to the global hit of K-dramas, inflation-driven production costs, and accumulated amortization expenses will continue for the time being.

The worsening business conditions in the first half of the year, including the suspension of content business by OTT platforms entering the domestic market and slot changes on some channels reflecting poor advertising performance, are expected to continue into the second half. However, he believes that Netflix and Disney Plus, through binding agreements and prior discussions on scheduling, will partially provide a defensive effect by reducing the burden on scheduling.

He forecasted, "In the second half, improvements are expected due to an increased tentpole lineup compared to the first half, OTT sales, and simultaneous airing drama scheduling," and analyzed, "There is also momentum expectation to offset scheduling decreases, such as plans for content expansion into China."

Furthermore, he said, "Leverage effects from launching seasonal series of major productions like Sweet Home Season 2 and Arthdal Chronicles Season 2 are also possible, so efforts will focus on achieving performance stability."