Netflix's 'Ojingeo Game' Success... Domestic Production Companies Left as Subcontractors

3rd Quarter Paid Subscribers Increase by 4.38 Million
Asia-Pacific Region Grows Significantly to 2.2 Million

Need to Improve Content Value Assessment System
Unfair Contract System Must Be Reformed

Reed Hastings, co-CEO and founder of Netflix, attended the third-quarter earnings conference on the 19th (local time) wearing the green tracksuit from "Squid Game." Photo by Netflix capture

[Asia Economy Reporters Minyoung Cha and Eunmo Koo] "'Squid Game' is Netflix's greatest TV show ever."

Netflix co-CEO Reed Hastings highly praised the Korean original series 'Squid Game,' which brought a bright smile to Netflix in the third quarter. However, concerns have also been raised that domestic content producers could become subcontracting bases for global platform companies backed by massive capital.

On the 19th (local time), Netflix announced in an investor letter released alongside its earnings report that global paid subscribers increased by approximately 4.38 million in the third quarter compared to the previous quarter. This significantly exceeded Wall Street's prior estimate of 3.84 million. The total cumulative paid membership reached 214 million. Notably, the Asia-Pacific (APAC) region, including Korea and Japan, contributed the most with an increase of 2.2 million subscribers.

This is attributed to the success of the Korean original content, Squid Game. Netflix co-founder and co-CEO Hastings appeared at the earnings conference dressed in the green tracksuit from Squid Game and showered praise on Korean content. Since its release on September 17, Squid Game has been watched by approximately 142 million households worldwide over four weeks and ranked number one in 94 countries, including the United States. Netflix stated, "There is no better example than Squid Game, a Korean story that captures the zeitgeist of the world following Korea," adding, "This program, released on September 17, has become our biggest TV show." Merchandise is already in production, and there is potential for the intellectual property (IP) to be used for secondary works such as games in the future.

The problem lies in the fact that domestic production companies providing the content may become subordinate to massive capital rather than being the main agents. According to Bloomberg and other sources, the revenue Netflix earned from Squid Game is estimated at about $900 million (1 trillion KRW). This profit is 39 times the investment amount known to be $21.4 million (25.3 billion KRW).

Within the domestic cultural content industry, there is a consensus that Netflix's IP exclusive contract strategy allows it to monopolize not only the success of primary works but also the secondary copyright revenues. Netflix, which generates enormous sales based on Korean content, has also been criticized domestically for controversies over free-riding by avoiding network usage fees and tax evasion. These issues have been intensively addressed in the National Assembly's audit sessions.

Experts have pointed out the reality that the value of completed content is not properly evaluated. In particular, they emphasize that relevant government agencies such as the Korea Creative Content Agency and the Ministry of Culture, Sports and Tourism should provide legal and institutional support to realistically prevent domestic small and medium-sized production companies from entering into unfair contracts with overseas platforms.

Sung Dong-gyu, professor at the Department of Media Communication at Chung-Ang University, said, "Our country has well-established infrastructure for story composition, directing, and acting, but lacks platforms and capital, limiting scalability," adding, "Not only Netflix but also Disney Plus and Chinese platform companies inevitably create a structure where domestic producers become subcontracting bases for massive capital."

Yu Byung-han, president of the Korea Software Copyright Association, said, "A proper content valuation system must be established so that investments can be made with detailed analysis of future profits and success potential," and added, "It is necessary for government agencies such as the Korea Creative Content Agency and the Ministry of Culture, Sports and Tourism to provide legal support so that production companies can negotiate contracts more favorably."

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