As K-Culture emerges as a new growth engine for the national economy, some experts warn that the K-content sector may be entering a decline phase, referred to as the 'peak theory.' This concern stems from an increasing reliance on foreign OTT platforms, which complicates the acquisition of essential intellectual property (IP), alongside the rapid expansion of Chinese short drama platforms into global markets, including Southeast Asia.
According to the Ministry of Culture, Sports and Tourism, K-content exports reached a record $14.9 billion (approximately 22.56 trillion won) last year. The influx of foreign tourists to South Korea also hit an all-time high of 18.94 million.
The government is expanding support to enhance the competitiveness of the content industry. In 2026, it plans to establish the largest-ever cultural and film fund, amounting to 731.8 billion won, and is preparing a global league fund based on foreign capital worth 150 billion won. In January, a new tax credit for webtoon production costs was introduced, and the expiration date for tax credits on video content production costs has been extended to 2028.
The growth of K-content is positively impacting various sectors, including tourism, beauty, and food, contributing to a virtuous cycle that enhances national brand value and increases consumer demand. According to the Ministry, when including exports from beauty and food, the total K-Culture export volume reached an estimated $71.8 billion last year, making it the third-largest export industry in South Korea, following semiconductors ($173.4 billion) and automobiles ($72 billion).
However, the industry atmosphere is not entirely optimistic. The profitability of the content sector is declining due to intensified competition with global OTT platforms, rising production costs, and the proliferation of illegal distribution. Minister of Culture, Sports and Tourism Choi Hwi-young stated at a press conference on May 28, "During my 100-day press conference, I mentioned that 'K-Culture has reached its peak.' I believe it is crucial for both the private sector and the government to seize the current opportunities and collaborate, which gives me strength and is a significant achievement."
The most pressing issue is the growing dependence on foreign OTT platforms. While the global status of K-content has risen, challenges such as reduced funding in the broadcasting industry, soaring production costs, and limitations of advertising-based revenue models are hindering domestic platform competitiveness. Notably, global OTT platforms maintain a 'buyout model' that grants them exclusive rights to content IP in exchange for full investment in production costs. Under this structure, even if a project becomes a global hit, domestic producers struggle to secure licensing revenue or secondary business rights.
Industry insiders express concern that the K-content sector could become a 'subcontracting base for global platforms.' One industry source noted, "Recently, we have seen an increase in Japanese and Chinese dramas on Netflix. These countries have lower production costs compared to Korea. For instance, the Chinese drama 'The Legend of the Condor Heroes' has exceeded expectations in viewership, highlighting the rise of Chinese dramas."
Changes in content consumption patterns also present new variables. The short drama market from China is rapidly growing, particularly in Southeast Asia, putting pressure on the existing long-form streaming ecosystem. Chinese short drama platforms like RealShot and DramaBox have begun targeting overseas markets in response to saturation in their domestic markets, resulting in over 370 million cumulative downloads globally as of the first quarter of last year.
Cultural critic Jeong Deok-hyun commented, "While interest and demand for K-content in overseas markets remain high, the internal foundation of the industry is not solid. Even when content is produced, securing sales and attracting investment are challenging. Some indicators may have reached record highs, but it does not mean the entire industry is thriving. The situation is difficult. Rising production costs and the OTT-centric market restructuring have made investors cautious about risk management, and traditional media are also reducing production, leading to a contraction in overall content investment."
* This article has been translated by AI.
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