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Industry Trends

2017.04.26
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[Cultural Content] The Current State and Future Prospects of Korea’s Cultural Content Industry

Introduction


The “cultural content industry” refers to the industry involved in the planning, development, production, distribution, and consumption of cultural products and services. “Cultural products” refer to tangible or intangible goods and services, or any combination thereof, which create added economic value based on a system of cultural elements with artistic, entertainment and recreational value, as well as originality and popularity. The cultural content industry is also commonly referred to as the culture industry, the content industry, the creative industry, or the media and entertainment industry.

The cultural content industry ecosystem is composed of content creation (planning), production (commercialization), distribution (marketing) and consumption (use), and works in close connection with various industrial fields up and down the value chain. Compared to other industries, the cultural content industry characteristically has a low intermediate input rate and creates high added value.

The so-called “Korean Wave” is responsible for much of the popularity of Korean cultural content overseas,” resulting in more Korean consumer goods being sold in regions affected by the Korean Wave.


Current state of the industry


Despite the global economic slowdown, cultural content markets across the world are expected to keep growing by about 5 percent, led by the emerging economies of China and India as standards of living and network infrastructure continue to improve.

The United States holds an unrivaled position in the global cultural content industry, accounting for one-third of all global markets, while China continues to grow at an alarming rate.

Korea’s cultural content market, meanwhile, grew by an average 4.2 percent in 2014, and ranked 8th. For the past 5 years, Korean cultural content markets have been growing at an annual average of 5.7 percent in sales, and 8.3 percent in exports. In particular, as the Korean Wave spreads throughout Southeast Asia, Southwest Asia, Europe and South America, raising the popularity of K-pop in those regions, Korean cultural content markets are expected to see continuous growth.

The Korean government has already designated the cultural content industry as a future growth engine, and is providing appropriate support. Throughout the years, the Korean government designated the cultural contents industry as a major industry for the 21st century (Ministry of Culture and Sports, 1997), a key industry for the 21st century (inauguration speech of President Dae-jung Kim, 1998), and a next-generation growth engine industry (Ministry of Finance and Economy, 2003). With its history of striving to make up for lack of natural resources with human creativity, Korea considers the cultural content industry as a key area that will lead the national economy in the future.


Korea’s share in the global cultural content industry by category


(Unit: USD million, %)

주요 문화콘텐츠산업 분야 한국의 세계시장 점유율
Category World United States Japan United Kingdom Germany France Korea
Size Ranking Share
Games 65,736 14,241 8,663 4,967 2,672 3,257 6,985 4 10.6
Movies 88,274 31,118 6,745 6,088 3,798 3,812 2,967 9 3.4
Music 47,415 15,077 5,041 4,110 4,316 1,817 780 11 1.6
Publishing 372,881 97,904 39,425 17,032 30,469 17,847 8,912 8 2.47
Broadcasting 445,410 182,188 24,819 19,947 25,892 14,576 6,638 13 1.5
Source: Content industry major statistics. PWC and KOCCA, 2015.

Current FDI in the industry


Currently, foreign direct investment (FDI) in the Korean cultural content industry is limited to the categories of movies, broadcasting, games and entertainment. Due to the characteristics of the industry, FDI is generally made in the form of content manufactured entirely in Korea being exported, while in some categories, such as broadcasting, the export of program and show formats is also increasing.

In recent years, Chinese businesses and capital have been actively making investments in the Korean cultural content industry. Internet value-added services provider Tencent Holdings Ltd., for example, acquired shares in leading Korean game companies in 2014 through an FDI worth about KRW 700 billion (USD 612.5 million). Since then, other Chinese businesses, such as Zhejiang Huace Film & TV Co. Ltd., Wanda Group and Alibaba Group, have also stepped forward to invest in Korean film, broadcasting and entertainment companies.

Increasing demands for Korean cultural content in China are encouraging more Chinese companies to make their investments early on in the production process, beginning in the planning phase and all the way through to the acquisition of equity shares, rather than merely importing finished products.

The largest video content distribution company in the United States Netflix strives to secure high-quality global cultural content in advance, not only by collecting existing content, but by directly investing in the production process for content that have strong potential for success. It invested USD 50 million in Okja SPC and Plan B Entertainment, covering the entire production cost for Okja, the latest film by Director Bong Joon-ho, who received global recognition with Snowpiercer in both cinematic quality and box office sales. In return, Netflix has the exclusive screening rights for the film.


Employment trends


As of 2014, the number of employees in the entire cultural contents industry was 616,459, which was a 0.5 percent decrease from the previous year. Employment opportunities in print media have continuously decline, but the number of employees in publishing was 191,033 persons, accounting for the largest proportion among all cultural contents industries (31 percent).

Recent progress in technology has caused the number of employees in games and film industries, to decrease as well. But knowledge information and content solutions industries are witnessing a continuous increase in employment numbers thanks to the growth of digital media.


Cultural Content Industry Employment Trends


(Unit: no. of persons, %)

문화콘텐츠산업 종사자 추이
Industry 2010 2011 2012 2013 2014 Proportion YoY rate
of change
Annual average
rate of change
Publishing 203,226 198,691 198,262 193,613 191,033 31.0 △1.3 △1.5
Comics 10,779 10,358 10,161 10,077 10,066 1.6 △1.1 △1.7
Music 76,654 78,181 78,402 77,456 77,637 12.6 0.2 0.3
Games 94,973 95,015 95,051 91,893 87,281 14.2 △5.0 △2.1
Film 30,561 29,569 30,857 30,238 29,646 4.8 △2.0 △0.8
Animation 4,349 4,646 4,503 4,502 4,505 0.7 0.1 0.9
Broadcasting 34,584 38,366 40,774 41,522 41,397 6.7 △0.3 4.6
Advertising 34,438 34,647 36,424 49,114 46,918 7.6 △4.5 8
Character design 25,102 26,418 26,897 27,701 29,039 4.7 4.8 3.7
Knowledge information 61,792 69,026 69,961 71,591 75,142 12.2 5 5
Content solutions 19,540 19,813 20,145 21,731 23,795 3.9 9.5 5
Total 595,998 604,730 611,437 619,438 616,459 100 △0.5 0.8
Source: 2015 Contents Industry Statistics. Ministry of Culture, Sports and Tourism, 2016.

Locational competitiveness & policies


More than 90% of cultural content companies are located in the greater Seoul area. This is because consumers, human resources, as well as manufacturing and distribution facilities are also concentrated in Seoul and neighboring areas. But the Korean government is designing policies to attract cultural businesses to different regions, establishing industrial complexes, as well as promotional districts and facilities specifically targeted for the cultural content industry. In particular, film and game companies are concentrated in Busan, broadcasting in Goyang, and animation in Bucheon and Chuncheon.

In addition, the Korean government establishes a Basic Plan for the Promotion of the Cultural Industry under the Framework Act on the Promotion of Cultural Industries every three years. Various government departments also work together establish and carry out an implementation plan every year.

The Second Basic Plan for the Promotion of the Content Industry (2014–2016) set its vision as transforming Korea into a leading creative force in the global content industry. Some of these implementation strategies include building a foundation for investment, loans and technology; promoting content-related start-ups and train creative talent; support the entry into global markets; promote the development and use of a health ecosystem; and reinforce content competitiveness and build a cooperation system for industrial growth.


Future prospects


Korea’s electronic device industry, supported by an excellent platform environment based on abundant ICT infrastructure and outstanding technology, acts as an important basis for future growth in the cultural content industry. Since late 1990s, the government has tried to promote the cultural content industry by lifting many related regulations, such as foreign investment restrictions, etc.

A global test bed for cultural content, Korea often is the country of choice for Hollywood movies to have their world premieres. The recent expansion of the Korean wave across the world in the form of K-pop and K-dramas proves the value and marketability of Korean cultural content products.


Kim Gyu Chan
Cultural Content Industry, Seoul: Invest Korea, 2017




The above article does not necessarily reflect the views or position of KOTRA.

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