K-Content News

In the 2010s, Korea’s content industry grew immensely and spread across the globe. Some of the words that best describe the growth of Korea’s content industry during this period include “content,”’ “platforms,” “networks,” “devices” and “environmental factors.” These categories are connected to the keywords “BTS,” “YouTube and Netflix,” “5G mobile communications,” “smartphones,” and “Terminal High Altitude Area Defense (THAAD).”

By Shim Sang-min, Professor of Media and Communication Studies at Sungshin Women’s University and President of the Korea Association for Cultural Economics, ssmin@sungshin.ac.kr

The Korean content industry has run full speed ahead on the scale-up track for the last decade. Much like successful venture companies that go through a “scale-up phase” after they have been completely formed as a company, the Korean content industry has been getting stronger through the “created-by-Korea” brand.

The startup period, or the early period, of the Korean content industry can be considered to have begun in 2000, when the Korean boy band H.O.T. held a concert in Beijing, signaling the beginning of K-pop’s global popularity, or in 2001, when the Korea Creative Content Agency (KOCCA) was launched as the world’s first government agency in the content area. During the early 2000s, the Korean content industry introduced Korean content and communicated information to users in Korea and abroad.

The period from 2010 to 2019 is considered the “magical ten years” of scale-up, or growth. During this time, the growth of the convergence-type cultural industry accelerated in Korea, and Korean Wave contents spread globally. This led to the export of cultural content goods, creating an economic Korean Wave. Over these critical years, all the companies, people, and policymakers engaged in the content industry commercialized cultural content and actively introduced content service marketing in all possible areas and spaces. In particular, they tried to create customer-oriented content businesses.

The growth of the Korean content industry over the last decade can be understood by dividing the industry into five categories—contents (C), platforms (P), networks (N), devices (D), and environmental factors (E)—and connecting these categories with symbolic keywords that helped make the 2010s a time of phenomenal growth. ”Content” can be connected to the keyword “BTS”; “platforms” can be connected to “YouTube and Netflix”; “networks” can be connected to “5G mobile communications”; “devices” can be connected to “smartphones”; and “environmental factors” can be connected to “Terminal High Altitude Area Defense (THAAD).”

BTS debuted as a hip-hop group in 2013. All seven members of BTS are from provinces outside of Seoul, and the group’s agency was far behind Korea’s top three agencies in terms of its systems and financial strength. At the time of its debut, BTS was considered a minor band and an “underdog.” In 2012, a year before the group’s debut, Psy’s “Gangnam Style” swept through the Western market, proving the global popularity of the Korean Wave. In 2014, a year after the debut of BTS Cho Young-pil, dubbed the king of pop in Korea, released his 19th album Hello with the hit single “Bounce.” Even though Cho was 64 years old at the time of the song’s release, the song greatly appealed to young people.

BTS took the lessons it learned from Psy’s global management style and from the musical and artistic aesthetics of Cho Young-pil, and used these lessons to release the album In the Mood for Love Pt. 1. BTS has been on a roll ever since. BTS’s single ”DNA:” made it onto the Billboard Hot 100 chart in 2017, becoming BTS’s first single to make it onto the charts. When BTS released the album Love Yourself: Tear in 2018, it ranked No. 1 on the Billboard 200 albums chart, making BTS the first Korean band to ever top the Billboard 200 albums chart. BTS’s lead single “Fake Love” from the album became the first Korean song to make it to the top ten of Billboard’s Hot 100.

A Forbes article dated October 10, 2019, stated that BTS grosses a whopping USD 4.65 billion (KRW 5.5 trillion) of Korea’s gross domestic product (GDP). According to 2018 data from the World Bank, this accounts for 0.2% of the nominal GDP of Korea, or about USD 619.4 billion (KRW 1,924 trillion) of the nation’s USD 1 trillion nominal GDP. The Forbes article said, “That puts a seven-member boy band [BTS] in the same economic league as Samsung and other top conglomerates. The millions of albums and concert tickets they sell generate spoils that are even greater than the annual output of Fiji, the Maldives, or Togo.” The article also said that BTS has a large influence on Korea and can contribute to the massive global success of girl-group phenomena like Blackpink and Red Velvet. The article further stressed that “the soft power boost to Korea’s global brand [that can be attributed to BTS] cannot be exaggerated.”

Recently, Lee Soo-man, the chairman of SM Entertainment, ambitiously debuted the boy band SuperM, whose first album immediately ranked No. 1 on the Billboard’s charts for several consecutive weeks, signifying yet another miracle of the Korean Wave. The so-called “Avengers of K-pop” were the main players in the booming of the Korean content industry in the 2010s and are now stepping up as the leaders of the next “glorious ten years” of the Korean content industry in the 2020s.

YouTube, which opened the era of video streaming in the last decade worldwide, has become a super platform in Korea, surpassing portals and ranking number one in the research category. YouTube provides hybrid OTT services, combining an ads-funded free content model and a premium pay model, leading to a so-called “wag the dog” phenomenon. YouTube has led a new mega trend in which general users create and consume content, maximizing their influence in the video content market like a tail wagging a dog. Particularly, YouTube influencers have emerged as new stars as they have enjoyed the effects of connecting contents to products and have dominated the market.

The impact of YouTube has brought about the golden age of multi-channel networks (MCNs). This platform business, which is a new promotion and revenue model that induces consumers to watch commercials and purchase products, has attracted even large Korean conglomerates. The platform, which focuses on the development of content materials and storylines, is an advanced model compared to conventional product placement (PPL), which places products in separate contents.

MCN companies do not simply rely on YouTube ad revenues and instead actively use branded content and PPL. YouTube content creators typically use sponsored products in one-person broadcasts. Recently, more Youtube content has been created that focuses on products. For example, Cuckoo Crew, a YouTube creator group that has a partnership with CJ E&M's DIA TV, produced a video about Jachwi Box, a food box launched by GS SHOP, and the video received a lot of views. This trend of product-focused broadcasting is also noticeable among foreign MCNs. StyleHaul, a US-based MCN, entered a partnership with Maybelline and was offered courses on cosmetics; and Machinima, a game MCN, ran a new car promotion in partnership with Honda.

What is unique about MCNs is that the people featured in each video double as marketing curators. Many YouTube creators actively participate in the product planning stage and launch the brands themselves, going beyond mere product promotion.

Netflix, which, unlike YouTube, adopts a pure OTT subscription revenue model, entered the Korean market in 2016. Netflix currently (as of 2019) represents 30% of the global video streaming market. The company makes annual investments as large as KRW 9 trillion in contents in all countries except for Syria, North Korea, and Japan, competing with old media groups such as Disney and Time Warner. Netflix is also taking on Amazon Prime Video and Apple TV, which provide ICT convergence services, in the super platform market that encompasses content production and services.

Netflix has gained much attention in recent years for its original content and unique worldviews. It is known for giving birth to the “binge-watching” culture, and the phrase “Netflix and chill,” reflecting a new lifestyle.

Last April, Korea launched the world’s first fifth generation (5G) commercial services, and Korean companies in related fields are now seeking to develop and secure contents that can be deliver on 5G networks. Not only telecom companies but also IT companies, such as platform businesses, game companies, and manufacturers, are busily preparing for the 5G future. Naver has been strengthening its video content division by focusing on V Live, a global OTT service. Naver’s V Live service will be used to air 8K ultra-high-definition videos and will apply related technology to facilitate audience cheering and singing at concert halls. Naver is also planning to provide immersive contents using virtual reality (VR) apps.

The Korean gaming industry has also been actively engaged in content development and investments in 5G mobile services. In April 2019, Nexon released Traha, a MMORPG game for mobile devices that has the same high level of graphics as PC games. The company also recently signed a contract to provide IPs for Crazyracing Kart Rider for the production of the game Kartrider VR. Other video game publishers, such as Netmarble, NCSoft, and Smilegate, have also been producing mobile games with high-quality graphics as well as augmented reality (AR) and virtual reality (VR) games.

SK Telecom’s “telepresence” service, which is a 5G telecommunications technology, uses immersive technologies to allow for interactions that go beyond spatial limitations. These new technologies are demonstrated in the SK Telecom commercial in which Son Heung-min is in the UK and is interacting with a boy in Korea. As 5G mobile networks increasingly allow for content services that are not bound by spatial limitations, telecom companies are adopting strategies that are focused on services that go beyond the static concept of content.

Apple’s launch of the first iPhone in 2007 rocked the content industry. With the release of the iPhone, Apple gave birth to a global smartphone market, transforming the cultural norms of content watching, use, and consumption. With the advent of the smartphone, users who used to simply watch and absorb created contents began to lead a new world in which they could react, experience things, and express themselves.

Samsung is planning to invest USD 22 billion (KRW 26 trillion) in 5G and AI startups over the next three years and is holding discussions with global companies to secure contents for 5G mobile smartphones. LG is investing about USD 20 million (KRW 23.6 billion) in AmazeVR and other startups through LG Technology Ventures, which is funded and was established by five LG affiliates including LG Electronics and LG U+. It is expected that new media content, such as cloud gaming services and VR content, which up until now could not be commercialized due to speed and bandwidth limitations, will be actively distributed and dominate the market in the next decade.

When the Korean government announced its deployment of the Terminal High Altitude Area Defense (THAAD) system in July 2016, a problem occurred on the Korean Wave front. In China, fan meetings with Korean Wave stars and K-pop concerts were canceled one after another, and TV shows featuring Korean Wave stars were taken off the air. Jointly produced Korean-Chinese films, many of which had long since been in the making, were canceled or their premiers were delayed. Deliberations ensued and regulations were eventually implemented to block the distribution of Korean internet/mobile contents in China, and the number of Chinese tourists visiting Korea fell sharply. The Korean content industry faced a serious crisis as an axis of the Korean Wave market collapsed.

Problems also occurred in the Japanese market, which was considered relatively stable. Korean-Japanese relations have worsened since late 2018, and these souring relations have dealt a heavy blow to the Korean content industry; these changes come at a time when it is the most critical for Korean contents to go beyond the limited domestic market. In the Korean market as well, the “gaming disorder issue” and the 52-hour workweek system implemented in 2019 also had a negative effect on content production conditions, collectively turning into a “domestic THAAD crisis,” which continues to threaten the Korean content industry.

The ”soft power” of new, stylish, and relatable Korean content is the driving force that has enabled the Korean content industry to enjoy a “magical ten years” despite difficulties. The Korean content industry has made remarkable achievements in a variety of difficult environments. In Korea, people and companies in the content sector have continued to spread the impact and power of the Korean Wave through mergers and convergence.

As the Korean content industry enters a new decade, now is the time to increase efforts to create a global brand, while maintaining the identity of Korean contents. In its startup and scale-up phases, the main task of the Korean content industry was to present cultural products, that is, to industrialize cultural contents. The Korean content industry has clear strategic tasks that it must carry out in the next decade. These tasks include the creation of contents based on existing services and the manufacturing industry, of the creation of a culture using daily economic activities, and the creation of attractive styles of soft power that will increasingly attract new audiences.

In the upcoming 2020s, the Korean content industry will hopefully continue to see miraculous achievements and solidify its original brand status, rivaling the likes of Hollywood in the USA and the telenovelas of Latin America.