Expecting Increased Content Demand... Should We Consider Investing in Related Stocks?

High Growth Potential in the Chinese Market Without Using Netflix

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[Asia Economy Reporter Kum Boryeong] As expectations grow that demand for content will increase, interest in the stock price trends of related companies is also rising.

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 2nd, Studio Dragon recorded sales of 106.3 billion KRW and an operating profit of 16 billion KRW in the third quarter of this year. While sales decreased by 19% compared to the previous year, operating profit increased by 46.8%.

Overseas performance improved as two older works were sold to Chinese online video services (OTT). Although the resumption of content sales to China has not yet been concretized, the Chinese market, which does not use Netflix, is showing high growth potential. China has implicitly banned the import of Korean content since 2016. In Korea, new OTT platforms such as Disney Plus and Apple TV Plus are expected to enter the market alongside Netflix, Tving, and KakaoTV.

Netflix's establishment of 'Netflix Entertainment Ltd.' in Korea in September is also positive for content stocks. Although there was previously a corporation called 'Netflix Services Korea,' the creation of a separate entity is expected to strengthen content procurement, investment, and management and support of production sites.

Ji Inhae, a researcher at Hanwha Investment & Securities, explained, "Netflix's actions indicate active investment in Korean content in the future. Since 2015, Netflix has invested about 800 billion KRW in approximately 70 Korean contents, and the results have been very satisfactory in terms of cost-effectiveness and global traffic." J Contentree has demonstrated sufficient production capabilities, holding the highest and second-highest non-terrestrial viewership ratings with 'The World of the Married' at 28.4% and 'Sky Castle' at 23.8%, respectively.

However, stock prices have not yet shown significant upward momentum. Studio Dragon's closing price was 79,500 KRW on the 19th of last month and rose only 1.51% to 80,700 KRW two weeks later. During the same period, J Contentree's stock price actually fell by 0.51%. Lee Hyunji, a researcher at Eugene Investment & Securities, analyzed, "If the merger between studios expected early next year takes place, it is anticipated that competitiveness in the broadcasting sector will be strengthened, so a gradual rebound in stock prices can be expected." KB Securities has raised Studio Dragon's target price from 97,000 KRW to 100,000 KRW.

This content was produced with the assistance of AI translation services.