The local cultural and creative industry faces great challenges The Korean Wave is going downhill, and South Korea is anxious

Recently, a news that "the Korean Wave generates an output value of 37 trillion won (about 206.5 billion yuan)" has attracted attention in South Korea. Is this the real state of the Korean cultural industry? The reality is that due to the large-scale entry of foreign capital such as Netflix and Disney, South Korea's local cultural and creative industry is facing great challenges. In addition, the economic downturn has also led South Korean consumers to reduce related spending, which has made the Korean cultural industry difficult. Some Korean media pointed out that the current South Korean cultural industry is in a difficult situation, to a large extent because competitiveness is declining, for this reason, South Korea must maintain a high degree of vigilance, otherwise it is not ruled out that the "Korean Wave" will decline in the future like the "daily stream" of the year.

Local films lose to imported films at the box office

According to South Korea's KBS TV reported on the 10th, the Korea Economic Research Institute pointed out in the "Hallyu Spread Economic Effect" report released on the same day that in the five years from 2017, the economic output value related to the "Korean Wave" totaled 37 trillion won. During the same period, the added value of the Korean Wave was 13.2 trillion won, and the number of jobs driven by export growth was 160,000, equivalent to 19.6% of the number of new jobs created in South Korea last year (816,000). Aki Kwang-ho, director of the Economic Policy Office at the Korea Economic Research Institute, suggested that South Korean companies should be guided to actively expand investment in the "Korean Wave" content so that the Korean cultural industry can maintain its international competitiveness.

Although South Korea's service industry and tourism industry have ushered in the dawn after the epidemic, the recovery speed of the Korean film industry has been slower than expected. "The backlog of nearly 100 films is difficult to return, and the Korean film industry is facing huge pressure to destock." South Korea's "Asian Economy" said on the 6th that the box office and audience number of South Korean films are still far from the pre-epidemic level, although the South Korean government has listed the development of high-quality cultural content as one of the economic policies in the second half of this year, but there are still nearly 100 "stock movies" that have not been released as scheduled during the epidemic. As of May this year, the overall sales of Korean cinemas were 462.7 billion won (about 2.5 billion yuan), and the cumulative number of viewers was 43.87 million, an increase of 48.8% year-on-year, but only recovered to 52.7% compared with the same period from 2017 to 2019.

The Korean film industry believes that one of the major obstacles affecting the return of audiences to theaters is the increasingly expensive ticket prices. In 2019, movie ticket prices, which remained around 10,000 won (about 56 yuan), have risen three times in a row since October 2020 to about 15,000 won (about 84 yuan). In addition, most of the Korean audience growth this year is from foreign films, and the sales of local Korean films have not increased but decreased. As of May this year, the box office of local films in South Korea shrank by 9.2% year-on-year, while the sales of imported films increased by 109.5% year-on-year.

How to digest these 100 "stock movies" became a problem. In this regard, the first official (deputy minister) of the Ministry of Planning and Finance of South Korea, Fang Ki-sun, said that a virtuous cycle of funds can only be realized after the film is released, and the film will be reinvested to remake the film, and in order to support the film industry, the Korean government will introduce a more accurate support plan.

Actor spit on "possible unemployment"

The situation in the Korean drama market is also not optimistic. South Korea's "East Asia Daily" said on the 3rd that many Korean dramas have not yet found a suitable TV channel or video streaming platform (OTT) to broadcast, and the Korean entertainment industry has increased its sense of crisis. This is due to the financial difficulties of TV stations and OTTs across South Korea, which has reduced the number of dramas and even variety shows. The side effects of serious saturation of Korean TV dramas have become more and more obvious, and some industry insiders have disclosed that more than 100 TV series that have completed the protagonist and initial shooting are currently in a standby state, including TV series starring well-known actors such as Han Seok-kyu and Cha In-biao. Many production companies said that the number of episodes shot next year may be reduced to 1/3 of this year. Some actors even complained, so that they may lose their jobs.

In response to the crisis, major South Korean TV stations are exploring new themes and cultivating new talents. Some producers said that the production fee for each TV series has recently risen to 1.5 billion won, and if you don't know if you can broadcast it after the production is completed, you can only limit the theme to popular themes such as love and horror in the future, and you can't pin all your hopes on stars. Kim Kyung-suk, professor of integrated creative industries at Andong University in South Korea, said: "If there are no high-quality TV dramas that continue to appear in the future, it is difficult to expect that the Korean TV drama industry will continue to develop well, and it is time to break the existing TV drama pattern and create new revenue streams and plans."

SOUTH KOREA'S EDAILY REPORTED AT THE END OF JUNE THAT KOREAN CULTURAL PRODUCTS SUCH AS "PARASITE" AND "SQUID GAME" ARE FACING A CRISIS. Capital such as Netflix and Disney have invested huge amounts of money in order to control the Korean market, resulting in a decline in the control of local capital in South Korea. Last year, the situation of South Korean video streaming platforms can be described as "difficult years": TVING, the largest local platform, had an operating deficit of 119.1 billion won last year, an increase of 56% over the previous year; Another large platform, WAVE, also recorded a deficit of 121.7 billion won, double the deficit of the previous year. Another WATCHA is facing bankruptcy due to too large losses.

In fact, South Korea's local OTT platform can not be described as bold in investment, TVING has invested 400 billion won in the past three years, and WAVE plans to invest 1 trillion won in TV dramas and other productions by 2025. The reason why South Korean capital is willing to invest in local OTT is to expect to reap the benefits of "Squid Game" - Netflix invested 20 billion to 25 billion won in the production of the show, with an economic income of 900 million US dollars, and an investment income ratio of up to 60 times. However, to the disappointment of South Korean investors, despite investing huge amounts of capital, they have not been able to produce such a blockbuster series as "Squid Game". Some Korean media analysis believes that due to the shyness of their pockets, many consumers may only pay to watch one or two platforms they usually like, and many small and medium-sized OTTs are suffering from it. But the essence of the problem is still the core competitiveness of cultural creativity, which is why other popular dramas have not appeared.

"Settle for the status quo and you will be eliminated"

What about the current state of K-pop? According to South Korea's "JoongAng Ilbo", Fang Shiyi, chairman of the board of directors of HYBE, South Korea's largest record planning company, recently said at a public event that the growth rate of the K-POP industry has slowed down significantly. He mentioned that there are many "K-POP crisis indicators", for example, last year, the number of K-POP on the US Billboard main chart "Hot Songs 100" decreased by 53% year-on-year, the growth rate of record exports began to decline from 2020, and there was also negative growth in some parts of Southeast Asia, such as the share of K-POP on the Indonesian Spotify music platform chart decreased by 28% year-on-year. Fang Shiji also emphasized the sense of crisis, citing the example of Japanese manga that flourished in the 90s and gradually declined, saying that the value and energy of K-POP cannot only be remembered.

Some Korean media analysis believes that the main reason why K-POP, which once "ran at high speed", "turned red" was the absence of BTS. After the peak of the portfolio's activity in 2020 and 2021, K-POP's growth momentum began to slow down. Previously, K-POP's status was also exaggerated. Fang Shiye said that at present, the share of the three major record companies Universal Music, Warner Music and Sony Music is 67.4%, while K-POP's sales share in the global record market is only 2%. Reliance on "rice circle marketing" is also a factor affecting the sustainable development of K-POP. Behind the mass production of million-selling albums is the marketing trick of using photo cards or fan signatures to get fans to buy the album in large quantities. Fang warned that "if you settle for the status quo, you will be eliminated in an instant."

In order to revitalize the domestic cultural and creative industry and OTT, the Korean government decided to raise funds. On June 15, the Ministry of Science and Technology and Communications announced that it will raise 500 billion won with IBK Corporate Bank and the cable TV industry to focus on investing in the local media and cultural and creative industries in South Korea. However, South Korean industry insiders believe that taking Netflix as an example, its investment in South Korea's cultural and creative industry will reach 3.3 trillion won (825 billion won per year) in the next four years. In contrast, the self-help of South Korean companies is only a "drop in the bucket".