Will the Contract Terms Change for the Successors of 'Ogem' and 'Jiuhak'?

'Squid Game' and 'Jigeum Uri Hakgyoneun' Big Hits... Establishing Netflix as a Major Contributor
Revenue Sharing Changes Little Despite Proven Success "More Attention Needed on Compensation"
Hollywood Directors and Actors Receive Billions... Incubation Only in Japan

Dean Garfield, Vice President of Policy at Netflix, is giving a greeting at the Media Open Talk held on the 4th at JW Marriott Dongdaemun Square Seoul Hotel in Jongno-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

Korean content is like a golden goose for Netflix. Titles like 'Squid Game' have not only attracted viewers but also boosted the company's value. Since June 28 last year, Netflix has been compiling and announcing the top ten titles with the highest viewing hours each week.

The viewing hours for 'Squid Game' in its first week (September 13?19) were 63.19 million hours. In the second week, the figure increased about seventeenfold to 448.73 million hours. In the third week, it recorded the highest ever total of 571.76 million hours across TV and movies since tracking began. Over 19 weeks, it was watched for 2.282 billion hours, maintaining a top 10 position in the non-English TV category.

Netflix, which attracted a large number of new subscribers, saw its stock price jump more than 10 percentage points. Its market capitalization also increased by approximately 24 trillion won (as of early November last year). This is forty-four times the 550 billion won invested in Korean content last year. By securing intellectual property (IP) whose value has recently surged, Netflix has gained significant practical benefits.

This year, Netflix will release twenty-five Korean titles, ten more than the fifteen released last year. Kang Dong-han, Vice President overseeing Korean content, stated, "We have expanded our investment scale," adding, "Korean content holds significant importance for us. Last year, its internal evaluation and status also greatly improved."

The most attractive factor for them is cost efficiency. About 25 billion won was invested in producing 'Squid Game.' The movie 'Red Notice,' released two months later, cost about ten times more at 240 billion won. However, its peak weekly viewing hours were only 148.72 million (November 8?14). The movie 'Don't Look Up,' which had about 80 billion won invested, stayed at 152.29 million hours (December 27?January 2). Although the running time is relatively shorter, it generated less buzz than 'Squid Game.'

Netflix recently fell into a slump as no titles have matched the success of 'Squid Game.' The stock price plummeted from $517.75 on the 20th of last month to $400.43 the next day. It further dropped to $378.27 on the 26th, halving from its peak of $690.00 on November 17 last year. Securities firms mention global hit titles and revitalizing the gaming business as solutions to overcome the crisis. Regarding the former, they expect a role from Korea.

Titles released in the second half of last year such as 'My Name,' 'Hellbound,' and 'The Silent Sea' ranked high in the non-English TV category but all failed to surpass 100 million weekly viewing hours. However, 'All of Us Are Dead,' released on the 28th of last month, recorded 124.79 million hours in its first week (January 24?30), reaffirming the strength of Korean content. It ranked within the top five in all countries where Netflix is available, showing a rising trend comparable to 'Squid Game.'

The production companies Film Monster and Kim Jong-hak Production, which produced 'All of Us Are Dead,' do not earn much revenue. Netflix pays a fixed amount to the production companies and holds exclusive rights to all future earnings from the work through a buyout contract. Even if the title fails commercially, the production companies do not bear losses. Instead, they must be content with recovering production costs and receiving 5?10% profit sharing. There are no separate incentives for success or earnings from remake rights. Bae Dae-sik, Secretary General of the Korea Drama Production Association, pointed out, "While overseas expansion is important, it is a serious problem that global OTTs monopolize IP. This is not just an issue for small production companies; almost all producers are in the same situation."

Netflix seems unwilling to change this contract structure. VP Kang said, "Netflix is a subscription service. For a fixed fee, users can enjoy unlimited content. It is difficult to quantitatively assess the success or failure of each piece of content and to systematize additional compensation." He added, "We cover 100% of production costs and provide additional funding based on success. If a project achieves great success, compensation can be sufficiently reflected in subsequent seasons or next projects."

The compensation level is known to be about double. For example, if director Hwang Dong-hyuk received 500 million won for directing 'Squid Game,' he would receive about 1 billion won preparing for the second season. Producer A said, "Considering Netflix pays tens of billions of won to Hollywood actors and directors, this cannot be seen as fair treatment," adding, "Since success has been proven, incentives should be better guaranteed." Producer B also said, "'Squid Game' and 'All of Us Are Dead' achieved results that Hollywood productions could not, as confirmed by viewing hours alone," and "Since Netflix takes all rights and profits, it should pay more attention to compensation."

A said, "Relatively low domestic production costs also force sacrifices from staff, not just actors' and directors' fees." He argued, "Netflix's incubating system applied in Japan should also be introduced domestically." Netflix directly supervises the curriculum of an animator training academy operated by Wit Studio in Japan. It pays tuition and living expenses for students, and upon completion, deploys them to Netflix original animation production sites.

Dean Garfield, Vice President of Policy at Netflix, is giving a greeting at the Media Open Talk held on the 4th at JW Marriott Dongdaemun Square Seoul Hotel in Jongno-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

Production companies' dissatisfaction also lies with IP. They point out that Netflix should pay more attention to protecting and utilizing the IP it acquires. In fact, 'Squid Game' was used without permission in countless games, clothing, and other merchandise. The original work was even illegally copied and distributed, but Netflix took no special measures. B emphasized, "Sometimes IP is left alone to boost a work's popularity, but in the case of 'Squid Game,' it was excessive," stressing, "Netflix has a responsibility to protect IP."

VP Kang said, "We take copyright infringement seriously," but also admitted, "There was a lenient approach because we judged it to be beneficial for business." Regarding the sluggish IP utilization, he said, "The gaming service is still in its early stages. We need to observe how it develops." He added, "We are conducting various discussions related to 'Squid Game.'"

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