In the brutal contest for streaming views, “Squid Game” has outplayed its competitors to become Netflix’s biggest hit. Beyond its own success, however, the dystopian drama also epitomizes what has become a mutually beneficial partnership between the streaming giant and South Korea’s creative industry. As KEI’s Troy Stangarone underscores, the show is an example of Netflix’s strategy of manufacturing local content to build its subscription service in foreign domestic markets and using that content to build demand for its service elsewhere.
Netflix is expected to spend $500 million on Korean content this year, up from a total of $700 million total between 2015-2020. While this is expected to account for half of all of Netflix’s spending on content in the Asia-Pacific, the company’s $7.5 million operating profit last year in South Korea alone suggests that its investments can be justified.
Investment in Korean content also benefits the company’s subscriber growth in other markets. According to a report commissioned by Netflix, 10 Korean dramas and two Korean movies were among the top 100 most-watched series or movies globally in 2020. In Southeast Asia, Korean content accounts for 34 percent of streaming viewing time, making it the most-streamed content in the region and helping boost subscriptions. The Asia-Pacific region also accounted for two-thirds of Netflix’s net subscriber growth in the second quarter of this year.
Disney+ is set to replicate Netflix’s model. And going forward, Squid Game will likely be studied by other multinational online platform providers as a case study of the potent benefits of putting forward local creative content.
This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.
Korea View was edited by Yong Kwon with the help of Janet Hong and Yubin Huh. Picture from Netflix.