K-content had a record $15 billion in exports. So why aren't producers making any money?

The credits keep rolling for K-content overseas. But for Korean producers back home, the profits often don’t follow suit, despite K-content exports reaching a record $14.9 billion last year.

The 31st Busan International Film Festival, which closed on Oct. 15, screened 247 films from 59 countries this year, and once again showcased the high global standing of Korean films and dramas.

Yet the production companies behind those films and dramas say they have little to show financially for their success.

The problem lies in how production companies make money.

Broadcasters and global streaming platforms such as Netflix typically cover production costs for commissioned or original shows and pay production companies a fixed margin based on those costs. In return, the broadcaster or platform generally takes ownership of the intellectual property (IP) rights.

Margins on broadcaster-commissioned productions range from 5 to 10 percent, according to the Korea Investor Relations Service. Meanwhile, the margins for streaming originals hover at around 10 percent.

The set margin leaves production companies with no additional profit even if a show becomes a huge hit.

“Even if a show reaches No. 1 globally, all we get is the production cost plus a 10 percent margin,” said the head of a production company, identified only by his surname Kim.

Experts view the struggle as stemming from a systemic issue. 

“Global streaming platforms own virtually all of the IP and there is almost no revenue sharing,” Prof. Yoo Seung-chul at the social sciences department at Ewha Womans University said. “Now that the quality of Korean IP has risen, Korean producers have reached a point where they should be able to negotiate for incentives or a share of the profits.”

Broadcasting and video accounted for $1.35 billion, or 9 percent, of Korea’s K-content exports last year. Films accounted for just $50.28 million, or 0.3 percent.

Despite the revenue, however, listed production companies posted operating margin losses of 37 percent in 2023 and 32 percent in 2024.

“K-pop agencies retain control over their K-pop stars, but the film and drama industries failed to do the same,” Prof. Lee Taek-gwang at Kyung Hee University’s School of Global Communication said. “The more Korean content gains recognition, the smaller the role of Korean production companies becomes. Korea could end up following the path of Hong Kong’s film industry.”

Production companies are also undercutting one another to secure projects, industry figures say.

“Production companies keep lowering their margins by saying, ‘We’ll do it for 8 percent’ or ‘We’ll do it for 6 percent,’ and some end up getting less than 5 percent,” Kim Kwang-jib, CEO of Studio Meta-K, an entertainment production company, said. “The more work they [Korean production companies] take on, the more money they lose.”

The struggle has real-life consequences. 

“I eventually shut down the business after taking out loans just to pay employees’ salaries,” said the head of another production company, surnamed Lee.

Experts broadly agree that production companies need a system that allows them to share in the profits when a project succeeds. They also say inflated production costs need to come down.

“Revenue-sharing arrangements based on box-office performance should become standard in the film industry, with actors accepting lower upfront fees in return,” film critic Noh Kwang-woo said. “Government support also needs to reach productions more quickly so that at least mid-budget films continue to be made until audiences return.”

The government has launched a 600 billion won ($451 million) K-content fund, but some say the measure has limitations.

“There is less support for distribution and commercialization than there is for content creation,” Prof. Yoo said.

Industry sources agree. 

“Broadcasters, the government and actors need to work together to determine appropriate production budgets and appearance fees for dramas,” Studio Meta-K's Kim Kwang-jib said. “Efforts are also needed to cut costs by using generative AI to reduce the number of shooting days.”

BY WON DONG-WOOK [[email protected]]