The Government's Bold Promise to Raise 600 Billion Won Content Fund This Year... Only 200 Billion Won Raised So Far

‘K-Content & Media Strategy Fund’
Plan to Raise 1 Trillion Won by 2028
Delay Inevitable Due to Private Investment Contraction

The government's plan to establish a strategic fund worth over 1 trillion won by 2028 for large-scale K-content investment is stumbling from the start. Facing difficulties in attracting private investment, the goal of raising a 600 billion won fund this year has effectively fallen through. The plan to create the fund was announced in March this year, but criticism has emerged that the government failed to grasp the industry's realities and only presented rosy prospects. Disappointment is expected to grow among the broadcasting and film production sectors, which had hoped to secure stable funding through the fund.

Minister Yoo Sang-im of the Ministry of Science and ICT and Minister Yoo In-chon of the Ministry of Culture, Sports and Tourism are taking a commemorative photo with officials at the "K-Content Media Strategic Fund Establishment and Cooperation Project Agreement Ceremony" on the 2nd of last month. Photo by Yonhap News Agency, provided by the Ministry of Science and ICT

According to the government and the National Assembly on the 22nd, eight institutions including IPTV and content-specialized companies recently agreed to contribute about 200 billion won as the main fund for the strategic fund. The government's plan was to raise a 'K-Content and Media Strategic Fund' worth 600 billion won, including a sub-fund of 400 billion won, within this year, but only the main fund was barely agreed upon before the year-end. Even this is subject to final approval by each company's board of directors, so the outcome may change. The plan to raise 400 billion won in private sub-funds has not yet even begun.

The idea to create a strategic fund worth 1 trillion won was announced in March this year. The Media and Content Industry Convergence Development Committee (Chairman: Prime Minister Han Duck-soo) announced at the time that a new K-Content and Media Strategic Fund worth 1.02 trillion won would be established by 2028 through a public-private partnership. The government planned to provide seed investment to mobilize private funds and raise a total of 600 billion won within the year. Unlike the foundational fund targeting small and venture companies, the K-Content and Media Strategic Fund is a private-centered fund that can also invest in large production companies. It was newly established to cover soaring production costs and secure content intellectual property (IP). To this end, the Ministry of Science and ICT allocated a budget of 35 billion won and the Ministry of Culture, Sports and Tourism allocated 45 billion won this year, securing a total government investment of 80 billion won.

However, finding private investors to invest in content production such as broadcasting and film was not easy. The freezing of the investment market due to economic uncertainty had a significant impact. Only last month did eight institutions, including the three IPTV operators KT, SK Broadband, and LG Uplus, CJ ENM, Korean Broadcasting System, the JoongAng Group consortium, the Korea Development Bank, and the Small and Medium Business Bank, sign a memorandum of understanding. The representatives of these eight institutions promised to contribute around 10 billion won each, but the final decision by their boards regarding fund management details remains pending.

The National Assembly Budget Office also expressed concerns, stating, "It is feared that it will be difficult to achieve the purpose of this project, which aims to increase the fund size and attract large-scale investments by creating a private-centered dedicated fund."

The plan to raise 400 billion won from the private sector has been postponed to next year. The Ministry of Science and ICT plans to start the selection process for sub-fund operators within the year and complete the sub-fund formation by the third quarter of next year.

A Ministry of Science and ICT official explained, "It was a painstaking process to explain and persuade regarding the operational purpose and direction of the strategic fund, which aims to secure K-content produced with domestic capital, not foreign capital, and to hold the IP." He added, "Investment in the content sector is highly uncertain, and the economic instability with high interest rates made it difficult to recruit investors." A content production industry official said, "The media and content market has contracted this year, and the production environment has become difficult. The strategic fund must be supplied to the market on time to act as seed money and provide relief to the media and content industry."