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Netlfiix co-CEO held a press conference this week in Seoul. Local media was flummoxed by the lack of details about the platform’s k-content plans. He claimed that Netflix would continue its $2.5 billion investment plan in the next four years, double the amount when it first launch its Korean OTT in 2016. But the Korea Herald calculated this current investment amount is actually 22 percent less than the projected increases from 2016 to present. The CEO mentioned the investment includes funding for training programs for the next generation of creators in front of and behind the camera, referring to an all-encompassing investment in different genres and formats. In other words, the money is not going just for TV series productions. And one in five Netflix productions will have a first-time writer or director (i.e., cheaper talent). The CEO skirted some major issues such as the litigation about network usage fees (Netflix is a bandwidth hog and ISPs have demanded compensation to upgrade systems), the global ban on password sharing, and a sore spot with local production companies on profit sharing. It was reported that in series Netflix produces 100%, it keeps 98 percent of the profits. If you start parsing his words, it seems Netflix is going to spending potentially a lot on money on training, fx firms, expensive user fee claims and other genres and formats (game shows, variety shows, streamers?) There is also a carrot-on-a-stick approach for local production companies. The CEO said “We are giving creators the best compensation in the industry. We’re calculating and paying more when Season 2 comes out.” It means producers have to work harder on a series with the promise of getting better compensation if a second season is ordered.
My take: The incentive to go for second seasons undermines the traditional Korean series model of a self contained series. The promise of $2.5 billion is an illusory figure without details; it seems a great deal of it could be spent on non-drama expenses. And the clear impression is that Korean Netflix users and producers are not happy with the company.
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