South Korean Content Market's New Media Ecosystem – Streaming Services and Rising Production Costs, Evolving Deal Structures Complete Overview

Report Source : 후후티비 

Recent South Korean drama market is rapidly shifting from a traditional broadcast channel–centered model to a digital transformation steered by the latest digital media. At the same time, content production investments have increased sharply compared to the past, and the rights, sponsorship, and partnership contracts are also undergoing significant changes. This report aims to analyze the key characteristics of production costs and transaction structures along with case studies to derive future prospects.

1. Changes in Drama Production Costs

1.1 Production Cost Increasing Trend

Initially, domestic dramas were produced primarily through internal production systems, but since the 2000s, the increasing participation of freelance producers has led to a growing trend in production costs. Currently, the average cost per episode is approximately roughly 7–10 billion KRW, while premium dramas may even exceed 30 billion KRW in certain cases. For instance, dramas based on history or streaming-exclusive content typically require substantial production investments.

1.2 Components of Production Costs

Drama production expenses include set design, filming, and editing, along with compensation for cast and crew. Notably, star casting costs often account for over 30% of the total budget, meaning that the influence of well-known actors significantly impacts the overall cost structure.

2. Case Studies: High-Budget vs. Cost-Effective Dramas

2.1 High-Budget Dramas

According to major media outlets, there has been an increasing trend in dramas with production costs in the 10 billion KRW or above. Some production companies, even in the face of high expenses, are pursuing overseas expansion through partnerships with streaming services.

2.2 Cost-Effective Dramas

In contrast, some productions are optimizing production budgets to create economical series with expenses around roughly 2 billion KRW. These budget-optimized series employ systematic production processes and have garnered positive responses on streaming services.

3. Evolution of Drama Transaction Structures and Revenue Models

3.1 Traditional Transaction Structures

In the past, domestic dramas primarily generated revenue through contracts with traditional broadcasters and cable channels, with broadcasters purchasing broadcast rights and recouping part of the production budget through additional revenue streams like advertising and placements.

3.2 Pre-Sale and Post-Sale Models

Before production, advance selling (with broadcasters or OTT platforms) and post-production post-contract agreements (through rights and VOD sales) are commonly used. Advance contracts help secure stable funding, though they offer constrained profits. Conversely, post-sales can bring in substantial extra revenue for hit shows, albeit with higher risks.

3.3 The Emergence of OTT and Digital Platforms

OTT platforms (e.g., major streaming services) have adopted production cost support through advance sales, generating additional revenue through international licensing deals. For OTT originals, production companies often secure only a minimal profit margin compared to the investment, making predictable income difficult to guarantee.

4. Challenges and Implications

4.1 Challenges

Increasing Production Costs: The surge in drama production expenses is significantly raising fiscal risks, especially when a drama fails to perform, leading to serious monetary setbacks. Some production companies have even experienced salary payment issues due to budget overruns.

Imbalanced Revenue Distribution: In traditional transaction structures, the income from rights and related deals received by production companies is relatively low, which limits the financial returns despite hefty budgets.

4.2 Implications

Need for Efficient Production Systems: To maximize cost efficiency and manage production budgets, companies must introduce structured pre-production systems, apply cost reduction strategies, and bolster teamwork.

Exploring Diversified Revenue Models: By partnering with OTT platforms, expanding global rights sales, and generating digital ad revenue, production companies can develop a diversified revenue structure.

Improving Investment Structures and Transparency: With transparent disclosure of production and rights sale data, alongside benchmarking successful models in the film industry, there is a need to revamp the Korean drama investment system.

Conclusion

The South Korean drama market is shifting from old broadcast models to a modern, streaming-based structure, facing challenges such as high investments paired with limited returns. At the same time, opportunities are emerging through new income channels in global licensing and digital advertising. With efficient production systems, transparent information sharing, and diversified transaction structures, the Korean drama industry is poised for sustainable, long-term growth.

This analysis highlights how the industry is moving from legacy production systems to modern digital frameworks, and how the changes in production investments and contract structures are setting a new industry standard

 Additional Reference Sites : Sites1 Sites2 Sites3 Sites4 Sites5 Sites6 Sites7 Sites8 Sites9 Sites10 Sites11 Sites12 Sites13 Sites14 Sites15 Sites16 Sites17 Sites18 Sites19 Sites20 Sites21 Sites22 Sites23 Sites24 Sites25 Sites26 Sites27 Sites28 Sites29 Sites30 Sites31 Sites32 Sites33 Sites34 Sites35 Sites36 Sites37 Sites38 Sites39 Sites40 Sites41 Sites42 Sites43 Sites44 Sites45 Sites46 Sites47 Sites48 Sites49 Sites50 Sites51 Sites52 Sites53 Sites54 Sites55 Sites56 Sites57 Sites58 Sites59 Sites60 Sites61 Sites62 Sites63 Sites64 Sites65 Sites66 Sites67 Sites68 Sites69 Sites70 Sites71 Sites72 Sites73 Sites74 Sites75 Sites76 Sites77 Sites78 Sites79 Sites80 Sites81 Sites82 Sites83 Sites84 Sites85 Sites86 Sites87 Sites88 Sites89 Sites90 Sites91 Sites92 Sites93 Sites94 Sites95 Sites96 Sites97 Sites98 Sites99 Sites100 Sites101