This year, despite the global success of 'Squid Game,' the K-Drama industry is facing a real crisis.
Recently, as drama production costs have skyrocketed, broadcasters and production companies unable to bear the costs have significantly reduced drama production. Small to medium-sized dramas have lost their place to large-scale productions, and anticipated works have seen a decline in quality due to the logic of capital, resulting in a dilemma.
As of the 28th, the broadcast industry reports that recent drama production costs have surged to about 1.5 billion won per episode, significantly increasing the financial burden.
This spike in production costs is attributed to the onslaught of global online video services (OTT) like Netflix. Productions featuring top domestic stars and top production teams garner popularity on Netflix, making the return on investment almost a given. In this process, domestic actors have become global stars, and their fees have skyrocketed.
In fact, about half of the 1.5 billion won production cost per episode goes to the lead actors' fees. However, apart from global OTTs like Netflix, few domestic production companies and broadcasters can afford this. Considering the domestic production process where broadcasters pay a significant part of the production cost to outsourcing companies, the current per-episode cost has exceeded what broadcasters can bear.
The maximum per-episode production cost that broadcasters and production companies can afford is known to be about 1 billion won. Dramas exceeding this threshold cannot recoup their production costs even if successful. In an absurd situation, male leads, often top actors, are paid 300 to 500 million won per episode, while female leads might receive 10 to 20 million won.
If the K-Drama industry had grown within an economy of scale, it could have created a virtuous cycle of drama production. However, this economy of scale has completely collapsed.
Moreover, terrestrial broadcasters have seen a significant decrease in advertising compared to a few years ago, even when they schedule dramas. The channel dominance of terrestrial broadcasters has significantly dropped to the point where it's said that producing a miniseries can lead to losses of billions of won. Consequently, the strip programming of dramas has disappeared. For example, KBS has discontinued its Thursday dramas, and its Monday-Tuesday dramas are struggling to continue. As a result, the number of dramas produced is decreasing, and many already produced dramas often fail to get scheduled.
This has led to dramas being divided into two categories: global OTT dramas by platforms like Netflix or Disney+ with high production costs and stars, and local dramas that inadvertently became modest due to lower budgets.
The problem is that many are shifting from the former to the latter due to unsuccessful attempts. Occasionally, there is a resurgence in the quality of terrestrial dramas, not just hastily made due to lower budgets but focusing on substance.
For example, the recently concluded KBS Monday-Tuesday drama 'Marriage Battle' was produced with a low budget but achieved high quality in direction, costumes, lighting, and art, creating a fusion melodrama with rich historical scenes. The lead actors were not top stars but Rowoon and Jo Yi-hyun, and the script by writer Ha Soo-jin was impressive. The final episode (Episode 16) had a decent viewership rating of 5.8%.
Nonetheless, it's challenging to expect further growth of K-Dramas in such an ecosystem. As the number of dramas produced decreases, the likelihood of creating globally hit Hallyu content also diminishes. The space for creators to demonstrate their skills is narrowing. It's needless to ask whether more hits will come from 120 produced dramas or from 70.
Moreover, K-Dramas are increasingly straying from their original intentions, failing to meet viewers' expectations. Cultural critic Jung Deok-hyun diagnosed, "With the huge hit of the Netflix original 'Squid Game,' it was suggested as the path for K-Content. Even 'Squid Game' was a genre piece with a dense narrative," and "recently, there are many dramas that only have the genre's appearance without substance. This phenomenon has arisen due to the logic of capital."
In fact, with the logic of capital, many global OTT series with only the appearance of genres are emerging with decreasing quality. Recently released 'Sweet Home' Season 2 has been critically panned, and 'Kyungsung Creature,' which had a production cost of 70 billion won for Part 1 and Part 2 combined, has been criticized for its stretched narrative and unclear story. Critic Jung predicts, "Next year might see a counterattack from local dramas. Global dramas could become tiresome."
Overcoming these issues might require not using top stars and writers. Professor Yoo Geon-sik from Konkuk University stated, "Netflix has raised the unit cost of production, and domestic broadcasters can't follow. Considering that overseas, top actors aren't recognizable and top stars might struggle with season-based productions, dramas that succeed with actors and writers who don't demand high fees should come out frequently for a virtuous cycle of drama production."
Professor Yoo also noted, "Currently, even if a drama hits, the production company doesn't rise with it. There's no accompanying profitability, nor can intellectual property (IP) be secured," and added, "To create a virtuous cycle in the drama industry, good dramas with high quality must be made without top stars."
A drama production company representative also stated, "Even if they're newcomers, actors with excellent acting skills should be boldly cast, and a culture where newcomers can be cast in good works should be created," and warned, "Stop only talking about the high prices of stars and making dramas that rely on actors. This is advice to ponder for the growth of K-Dramas."
With OTTs, Netflix's dominance continues, while others like Disney+ and AppleTV are relatively weaker, worsening the diversity and health of the drama industry. However, this year 'Moving,' not a Netflix show but a Disney+ hit, showed the potential for various platforms to emerge. Experts diagnose that local OTTs, which are deepening their annual losses like Tving and Wavve, need to find a breakthrough, including overseas expansion.
