K-Content Production Induced Effect 113.7 Trillion Won... "Need to Strengthen Intellectual Property Rights Protection and Response"

K-Content Industry Sets New Export Records Every Year
Quantitative Expansion and Qualitative Improvement Drive Growth

The K-content industry has been found to generate an economic ripple effect exceeding 113 trillion won across the domestic economy. As K-content has established itself as a growth industry supporting the national economy, advice has emerged emphasizing the need to strengthen intellectual property rights protection and infringement response while exploring export diversification.

On the 25th, the Korea Development Institute (KDI) released a report titled 'KDI Focus: The Rise of K-Content: Industry Characteristics and Growth Factors.' This report was written to examine the structural changes and growth trends of the K-content industry, analyze its impact on the national economy and factors driving corporate growth, and suggest future policy tasks.

In December last year, a sculpture of 'Young-hee,' a character from the Netflix drama 'Squid Game,' was installed at Gwanghwamun Square in Jongno-gu, Seoul.

The total sales of the domestic content industry increased by 139.8%, from 57.3 trillion won in 2005 to 137.4 trillion won in 2021. The sector that contributed the most was the knowledge information industry (centered on portals, internet information intermediary services, and online information provision), with sales increasing by 16.9 trillion won from 2005 to 2021. This accounts for 21% of the total content industry sales increase (80.2 trillion won) during the same period.

Content industry exports increased 3.9 times, from 3.23 billion dollars in 2010 to 12.45 billion dollars in 2021, setting new records every year since related statistics began to be compiled. Notably, the main driver of export growth was the gaming sector, which was subject to various regulations. Games accounted for 77% of the export increase (9.23 billion dollars) during this period. The music and broadcasting sectors grew at an average annual rate of 19% and 5%, respectively.

It is also noteworthy that while K-content exports surged, imports steadily decreased. Content imports, which were 1.7 billion dollars in 2010, fell by 29% to 1.2 billion dollars in 2021. This reflects a clear trend of reduced importation and localization of overseas content, especially in advertising, character, and film sectors, and an increasing tendency to produce world-class content domestically, reducing overseas dependence.

The content industry's self-industry input coefficient was 0.112, a considerably high level. The self-industry input coefficient tends to be high in manufacturing industries that reuse their own products. However, despite the content industry’s strong service sector characteristics, it recorded a higher level (ranked 13th out of 33 industries) than most service industries as well as some manufacturing industries.

This indicates that the content industry is capable of creating repetitive and continuous added value based on strong internal linkages. Furthermore, the content industry has developed organically by integrating with various industries that constitute the CPND (Content, Platform, Network, Device) ecosystem.

The production inducement coefficient of the content industry was 1.572, meaning that when the final demand for content goods increases by one unit, production across all industries increases by 1.572 times. When converted into monetary terms, the production inducement effect of the content industry generates a total economic ripple effect of 113.7 trillion won across the domestic economy. Effects were observed not only within the content industry itself but also in manufacturing and service industries.

The background for the growth of content companies includes qualitative improvements alongside quantitative expansion. In 2023 and last year, the share of K-content on the global online video streaming service (OTT) platform Netflix (including TV shows and movies) was about 7%. Particularly, when limited to non-English works from various countries such as Japan, China, India, Spain, and France, the share reached approximately 20%.

Export trends by sector in the content industry (left) and table of changes in exports, imports, and net exports. KDI

This trend is also clear in the film industry. The number of international film festival awards won by Korean films steadily increased, reaching 212 in 2020 and 173 in 2022. Notably, about 40-50% of Korean films are submitted to international film festivals, and the award-winning rate of submitted works has been steadily rising.

KDI emphasized in the report that since the K-content industry has established itself as another growth engine of the national economy, support for the growth of the content industry and companies is necessary. In particular, it stressed the need to strengthen intellectual property rights protection and infringement response, promote digital transformation of small and medium-sized enterprises, and provide policy support for export diversification and industrial linkage.

Lee Jin-guk, senior research fellow at KDI’s Industry and Market Policy Research Department and author of the report, explained, "Recently, illegal copying and unofficial distribution have continued mainly online," adding, "To effectively reduce illegal activities, it is essential to increase detection probability or strengthen punishment levels."

He continued, "To protect copyrights efficiently, it is necessary to strengthen monitoring systems and activate copyright infringement reporting systems to quickly and systematically identify infringement cases, thereby enhancing national response capabilities," adding, "It is desirable to strengthen overseas copyright enforcement and investigation capabilities while building and expanding a cooperative system with export destination countries to ensure smooth local responses."

Regarding exports, he pointed out, "About 70% of total exports are concentrated in Asian regions such as China, Southeast Asia, and Japan." He added, "Korean dramas, movies, and entertainment are gaining popularity in Western countries through global OTT platforms, and demand for K-pop, webtoons, and animation is also increasing," emphasizing, "While continuing to expand exports to Asian regions, it is time to implement policy responses to diversify markets into North America, Europe, and other regions."

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