Acquisition Follows Warner-CJ ENM Partnership by Two Months
"Fewer Negotiation Partners, IP Moves Overseas"?Production Base Solidifies
Ted Sarandos, Co-Chief Executive Officer (CEO) of Netflix, is giving a greeting at the 'Netflix and Korean Content Meeting' held on the 22nd at the Four Seasons Hotel in Jongno-gu, Seoul. Photo by Joint Photo Reporters Group
Netflix's acquisition of Warner Bros. is bound to have a direct impact on the Korean content industry. Netflix is the largest foreign content investor in Korea, while Warner, just two months ago, entered into a strategic partnership with CJ ENM, the country's largest production company.
In April 2023, Netflix announced it would invest $2.5 billion (approximately 3.34 trillion won) in Korea over four years. This amount is double the cumulative investment Netflix has made in Korea since 2016. At the time, Ted Sarandos, Co-Chief Executive Officer of Netflix, stated during a meeting with President Yoon Suk Yeol, "We made this decision because we are confident that the Korean creative industry will continue to tell great stories."
Since 2016, Netflix has produced and invested in around 80 original and co-produced works in Korea. Notable titles include "Kingdom," "Sweet Home," and "Squid Game." In 2022, Netflix Korea's revenue reached 773.3 billion won (about $600 million), up 22% from the previous year. In 2022, Netflix also announced plans to invest over 100 billion won in Korea over six years through VFX company Scanline to establish visual effects facilities in the country.
Warner, too, has rapidly expanded its collaboration with Korea. In October last year, Warner Bros. Discovery (WBD) signed a strategic partnership with CJ ENM. The agreement includes launching CJ ENM's streaming service Tving as a branded hub within Max and co-producing K-dramas. Starting early next year, Max subscribers in 17 Asia-Pacific markets, including Southeast Asia, Taiwan, and Hong Kong, will be able to watch Tving content. At the time, CJ ENM Vice Chairwoman Miky Lee said, "This partnership will elevate K-content's global leap to a new level."
CJ ENM also signed a long-term supply agreement with Netflix in 2019. Studio Dragon, a CJ ENM affiliate, produced "Crash Landing on You," "It's Okay to Not Be Okay," and "Stranger," all of which gained global recognition through Netflix.
If this merger is completed, Netflix will inherit the partnership between Warner and CJ ENM as well. From the perspective of Korean production companies, the number of global buyers at the negotiation table will shrink. The American media outlet IndieWire warned, "As large-scale mergers progress, regional production companies will have to deal with fewer giant buyers," cautioning that this could lead to pressure to lower production costs and the entrenchment of unfavorable IP contract structures.
In fact, Netflix has typically contracted to retain most of the IP for Korean original content. The IP for global hits like "Squid Game" and "Kingdom" is also owned by Netflix. Production companies receive production costs and a certain level of fees, but the rights to sequels, spin-offs, and merchandising-secondary works-are held by the platform.
One production company official said, "To reach a global audience, platforms like Netflix are a necessity. However, the moment we hand over IP, we become fixed as subcontracted producers. This acquisition could further reinforce that structure."
The domestic OTT market is also facing challenges. According to market research firm WiseApp Retail, as of June this year, Netflix had about 13.93 million users (about 40% market share) among Korean iOS and Android users. Coupang Play follows with 21% (7.32 million), Tving with 17% (5.73 million), Wavve with 7% (2.53 million), and Disney+ with 6% (1.9 million). Most domestic OTT platforms, except for Netflix, are still operating at a loss.
Tving and Wavve have been pursuing a merger since last year, and the Fair Trade Commission has conditionally approved it on the basis that current subscription fees are maintained until 2026. However, if Netflix absorbs Warner's extensive library, the competitiveness of domestic platforms in overseas premium content will inevitably be further weakened.
Some believe there is still ample opportunity for domestic OTT platforms to target niche markets through local variety shows, sports broadcasts, news and current affairs, and regionally tailored content. However, it remains uncertain how effective this strategy will be in the face of a structure where global franchises and massive capital are combined.
There are short-term opportunities. If Netflix and Warner Studios expand global projects together, demand for Korean production staff and crews could increase. In particular, Korean production teams are already recognized for their competitiveness in genres where Warner excels, such as crime, thriller, and action.
However, the issue of IP ownership remains unresolved. A content industry insider said, "In the short term, production volume may increase, but structurally, the 'subcontracted production country' frame could become even more entrenched." Even if K-content achieves global success, if the IP is owned by overseas platforms, long-term industry leadership will inevitably weaken.
A domestic studio official stated, "Netflix's acquisition of Warner is an event that will shake up the global content market," adding, "It is essential for Korean production companies to secure IP leadership and for simultaneous policy and investment efforts to nurture domestic platforms like Tving."
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