[The Crisis of K-Content] Urgent Need for Appearance Fee Caps and New Talent Discovery... Struggling to Find Alternatives

③How to Reduce Appearance Fees Raised by Global OTTs
100 Billion Won Production Era... Burden of Lead Actors' Fees
Alternatives Such as Daily Wage System, Fee Caps, and Discovering New Talent

Editor's NoteThe K-content market is facing an unprecedented ice age. After the COVID-19 pandemic, an oversupply of content intensified competition and production costs soared. As profitability worsened, completed films and dramas piled up in warehouses. Production companies and investment-distribution firms have run dry financially. We are now in an era of production budgets reaching 100 billion KRW and actor fees hitting 1 billion KRW. As production scales grew, investments shrank. Rising labor costs are the biggest cause of increased production expenses. In some cases, actor fees exceed the revenue generated by the work. We examined the functional relationship between actor fees and the production market’s bottleneck.

"When an actor says, 'If I shoot for an OTT, I get paid more,' you just can't help but raise their film appearance fee." This is the statement of film producer Mr. A. He sighed, saying that with the massive capital of global OTT (online video service) companies entering Korea, actor fees have risen, making it difficult to bear the costs. Netflix's The Eight Show cost 3 billion KRW per episode (total 24 billion KRW), Gyeongseong Creature cost 3.5 billion KRW per episode (total 35 billion KRW), and Disney+’s Samshiki Samchon cost 4 billion KRW per episode (total 40 billion KRW). Lead actor fees for OTT-produced dramas are around 400 to 500 million KRW per episode. On average, actors receive about 3.2 to 4 billion KRW for an 8-episode OTT series.

The image is not directly related to the content of the text. Photo by Lee Jung-jae on the red carpet at the opening ceremony of the 29th Busan International Film Festival [Photo by Yonhap News].

The rise in production costs is largely influenced by the vertical increase in actor fees. Cost reduction is a common theme in the struggling video industry. According to a report by the Korea Creative Content Agency, the three major broadcasters unanimously identified 'appearance fees' as the item that should be lowered in production cost breakdowns. The report also states that 7 out of 8 production companies answered that actor fees are the most burdensome.

Call for Guidelines: 'Appearance Fees Should Be Below 40% of Production Costs'

Entertainment agencies managing affiliated actors are the main negotiators of appearance fees. Actors and agencies split the received fees according to a certain ratio. Due to this structure, expecting actors alone to self-regulate excessive fees is unreasonable. Accordingly, in the content market, implementing a cap on actor fees uniformly or establishing government-level guidelines on fees is emerging as an effective alternative. Although markets differ, in China, actor fees cannot exceed 40% of total production costs, and lead actors’ fees cannot exceed 70% of that 40%.

Movie 'Eolgul' stills
[Photo by Plus M Entertainment]

Acting for Daily Wages? A Breakthrough in New Production Methods

There is a film gaining attention for its new working method. It is the independent film Face, directed by Yeon Sang-ho, who gained global recognition with Netflix’s Hellbound and Parasite: The Grey, made with a personal investment of 200 million KRW.

The production cost is even lower than last year’s average independent art film budget of 300 million KRW. Relatively well-known actors such as Park Jung-min, Shin Hyun-bin, and Kwon Hae-hyo appeared. They reportedly agreed with the new project and acted for daily wages. The staff was composed of about 20 people, roughly one-third the size of a typical commercial film crew (60?70 people), and filming was completed over the past three weeks.

Face is a work with a distinct auteur perspective and is likely to be submitted to international film festivals. If the project succeeds, a new path of paying fees such as 'running guarantees' could open. The industry is hopeful this could be a breakthrough amid the downturn.

From Star Dependence to Discovering New Faces

Despite the downward leveling of investment funds, actors’ soaring fees have not easily decreased. Production companies repeatedly told minor role actors to "consider the situation because the industry is struggling," but could not say the same to lead actors. Both investment and additional profits revolve around 'stars,' making reliance on them inevitable.

Director Yeon Sang-ho filming the movie 'Face'
[Photo by Plus M Entertainment]

Recently, rumors circulated in the industry that producers gathered and agreed to "focus on casting young actors and new faces," which some called a 'collusion theory.' A drama production company CEO said, "The term 'used rookie' has disappeared. Actors of various ages who have built experience become stars on multiple platforms. Discovering undervalued actors with acting skills and good images while narrowing the space for actors who cannot command high fees is also a method."

Mr. B, the lead actor of an upcoming film, said, "There are now truly many talented actors," and "I hope good actors are cast widely across various content to improve content quality." He also said, "The production market slump is a long-term loss for actors as well," and "Voices are emerging among some actors to actively seek ways to coexist with production companies."