Per-Episode Fee of 1 Billion Won Is Burdensome... Netflix Chooses 'Cost-Effective Japan' Over Korea

Lee Jung-jae's Appearance Fee 1 Billion KRW per Episode, Song Kang-ho 700 Million KRW
Drama Investment Reduced as Production Costs Soar

As the high appearance fees of famous actors in Korea increase production costs, global online video service (OTT) companies are turning their attention to the Japanese market. In Japan, dramas can be produced at half the cost of domestic production, making Japan an emerging 'cost-effective' market among video producers.

According to the industry on the 16th, actor Song Kang-ho, who appeared in the Disney Plus drama 'Samsiki Samchon,' receives 700 million KRW per episode. Actor Lee Jung-jae reportedly received 1 billion KRW per episode for his role in 'Squid Game Season 2.'

Netflix is producing the Japanese drama "Romantic Anonymous."
[Photo by Netflix]

Actors' appearance fees are cited as a cause of rising OTT content production costs. Recently, the production cost for domestic dramas starts at a minimum of 1 billion KRW per episode. Even this is possible only when there are no famous actors receiving several hundred million KRW per episode.

Until recently, the average drama production cost was 300 to 400 million KRW, but it has recently soared more than fivefold, with production costs of around 2 billion KRW per episode becoming common, according to industry views. The recently concluded tvN drama 'Nunmul-ui Yeowang' (Queen of Tears) had a total production cost of 56 billion KRW for its 16 episodes, about 3.5 billion KRW per episode.

Due to the burden of high production costs, major OTT companies such as Netflix are turning their eyes to the Japanese market, where dramas can be produced at about half the cost and which shares similar sensibilities with Korea.

Recently, Netflix began producing the Japanese drama 'Romantic Anonymous,' starring Korean actress Han Hyo-joo.

As of the second half of last year, Korean content accounted for 9% and Japanese content 5% of Netflix's non-English content. The industry expects the proportion of Japanese content to increase further in the future.

With the surge in production costs, many broadcasters are reducing drama production, raising concerns about the sustainability of Korean dramas.

While 141 dramas were scheduled on domestic channels in 2022, this year the number dropped by about 30% to 100. Most Wednesday-Thursday dramas have been temporarily suspended, and the scheduling of mini-series as well as Monday-Tuesday dramas is also being reduced.

Wave is not releasing any dramas this year, and domestic OTTs such as TVING are also cutting back on drama investments.