[2026 K-Drama] From 'Export' to 'Production Base'... Targeting Global Audiences

Breaking the Subcontracting Structure: Moving Toward Global Studios
Korean-Style System Cuts Production Time by 20%
Securing IP Ownership: Breaking Free from Platform Dependency
AI-Driven Production Innovation and 705 Billion Won Budget Investment
Aiming for 'Global Top 5' Cultural Powerhouse by 2030

Despite global box office success, K-dramas are facing a structural contradiction of declining profitability. The subcontracting production model, which relies heavily on external capital, has revealed the limits of industry growth. In 2026, the industry is expected to reach a turning point by securing proprietary intellectual property (IP) and restructuring the industrial ecosystem.

According to the Korea Creative Content Agency on January 15, the Korean content industry is projected to reach a scale of approximately 170 trillion won by the end of 2025. While this shows clear growth compared to 2023 (about 151 trillion won), the industry lacks substance. This is due to the increased dependence on global online video services (OTT), which has worsened the profitability of production companies.

In particular, this year marks the end of Netflix's investment plan of 2.5 billion dollars (about 3.6 trillion won) promised in 2023. The industry sees this as a critical juncture that will determine the fate of the production ecosystem. While Netflix's investment has improved the quality of productions, it has also drawn criticism for reducing production companies to mere suppliers. In response, companies such as CJ ENM, SLL, and Kakao Entertainment are shifting from a focus on selling finished works to a 'global studio' model that exports the Korean-style planning and production system overseas.

The content is not directly related. Photo is a still from the drama produced by Studio Dragon. Provided by KBS 2TV.

Expansion of Local Production Bases... Accelerating 'System Export'

The K-drama industry has entered an era of system exports by establishing production bases around the world. The key issue this year is 'system transplantation,' which involves combining Korean production capabilities with local systems. Kang Donghan, Vice President of Netflix Korea, stated, "Korea's production capabilities have become established as an industry standard recognized in the global market, going beyond simply producing works."

CJ ENM has built a production network connecting Studio Dragon, Fifth Season, and Studio Dragon Japan. In July of last year, it established a local subsidiary in Riyadh, Saudi Arabia, taking charge of production and distribution in the Middle East market. Fifth Season has entered a stable growth trajectory and has begun to generate operating profit. Korean production teams have minimized conflicts with local staff by utilizing cultural advisory committees and manuals.

Wiip, the U.S. subsidiary of SLL, announced that it reduced post-production variables by introducing a virtual production (VP) system, shortening production time by more than 20%. Kakao Entertainment is implementing a 'super IP crossover' strategy that combines webtoons and production companies. The animation "Solo Leveling" successfully converted webtoon fandom into video viewership.

Restoring IP Sovereignty... Shifting Revenue Models

The case where production companies did not receive additional revenue despite the global success of "Squid Game" symbolizes the structural issues. Global platforms have expanded production scale, but production companies have been tied to the 'cost-plus' contract practice, where they hand over IP and secure only a 10-20% margin on production costs.

The alternative is for production companies to directly own or co-own IP. According to analysis by the Export-Import Bank of Korea, if a company holds more than 50% of IP shares, its operating profit margin can rise to the mid-double digits. Showbox improved its profitability by 96 percentage points by shifting to an IP investment business, and CJ ENM's "Queen of Tears" secured an indirect export route to the Middle East and South America through a remake contract in T?rkiye.

Technological innovation is also working to reduce production costs. The historical drama "Queen's Song of Praise" combined a virtual production studio and artificial intelligence (AI), reducing costs by more than 20% and production time by more than 30% compared to traditional methods. CJ ENM has introduced an 'AI script system,' and the case of voice actor Kang Heesun being replaced by AI shocked the industry. The National Assembly's Science, ICT, Broadcasting, and Communications Committee passed a bill in November 2024 mandating watermarking of AI-generated content, establishing a protection mechanism for creators.

A still from the drama Queen of Tears, ranked among the top 10 intellectual properties (IP) owned by Studio Dragon. Provided by tvN.

The Middle East and South America Emerge as Next-Generation Markets... Government Support Expands

The Middle East and South America have emerged as next-generation growth markets. Saudi Arabia and the United Arab Emirates (UAE) have positioned K-content as a key partner, and MBC Group has achieved localization success with projects such as producing an Arabic version of "Mother." In Latin America, the market is rapidly expanding, with 19% of Brazilian internet users expressing interest in Korean dramas.

The Korea Creative Content Agency plans to open business centers in Brazil and Spain in 2025, expanding its global bases to 30. The government has set the 2026 content industry budget at 705 billion won, an 8.2% increase from the previous year, and increased the research and development (R&D) budget by 45.4 billion won to support technological innovation. The goal is to become one of the 'global top 5 cultural powerhouses' by 2030.

This year, the Korean drama industry has entered the era of 'Global Studio 2.0,' which combines system transplantation, IP acquisition, and technological innovation, going beyond simple sales. Attention is focused on whether K-dramas can establish themselves as a sustainable global industry standard, rather than just a temporary trend.