How Netflix Both Supercharges and Risks Derailing South Korea's Content Industry

The Diplomat

02-07-2025

Many of South Korea's most successful global hits were released through Netflix, but its growing monopoly is stoking concern. South Korea has emerged as a soft power heavyweight over the past few decades. It consistently ranks among the world's leading soft powers across major global indices. A central force behind this ascent is the global popularity of Korean culture, known as hallyu (the Korean Wave). Since the 1990s, Korean pop culture has gained widespread popularity across Asia, becoming a regional social phenomenon. It was during this period that the term hallyu was first coined. In recent years, however, the Korean Wave has evolved into a worldwide phenomenon, propelled in part by global tech giants that have accelerated the spread of South Korea's cultural influence. Chief among them is Netflix, which has played a pivotal role in bringing Korean TV shows to international audiences.
South Korea's content industry and Netflix have formed a mutually beneficial partnership over the past decade. To begin with, Netflix opened the door to international markets for Korean content. Dramas like 'My Love from the Star' and 'Boys Over Flowers' had already achieved major success across Asia even before Netflix's arrival, but their appeal remained largely regional. Netflix's launch in South Korea in 2016 accelerated the global spread of Korean content. By offering subtitles and dubbing in dozens of languages, the platform helped Korean series overcome language barriers. Its vast international subscriber base also enabled Korean content to reach audiences far beyond Asia. Unsurprisingly, many of South Korea's most successful global hits, including 'Squid Game' and 'Kingdom,' were released through Netflix.
Netflix, in turn, benefited significantly from the partnership as Korean content's global success contributed to the platform's rapid growth across the Indo-Pacific and beyond. After launching its streaming service in the United States in 2007, Netflix experienced rapid domestic growth. But by the mid-2010s, its subscription growth began to slow. In response, the company shifted its focus to international markets, where South Korea quickly became a key part of its strategy. A string of successes, starting with 'Kingdom,' Netflix's first original Korean drama, and followed by hits like 'Squid Game' and 'Sweet Home,' helped boost global viewership and positioned Korean content as a central element of Netflix's global offerings. Today, 'Squid Game' remains the most-watched original series on the platform, and more than 80 percent of Netflix's 300 million subscribers have watched at least one Korean title.
Despite its early benefits, the partnership is now entering a more precarious phase. While Netflix initially helped accelerate the growth of Korea's content industry, it is increasingly disrupting the sector's existing production and distribution systems. One of the most pressing concerns is the rapid inflation of production costs. Before Netflix entered the Korean market, domestic audiences were the primary target for Korean content. Although the industry had started expanding into overseas markets such as Japan and China, the growth of production budgets remained relatively constrained due to the limited market size. Netflix's entry brought a dramatic increase in financial investment. As a global platform targeting international audiences, the company injected unprecedented resources into Korean content, investing $700 million over its first five years, pledging another $500 million in 2021, and committing an additional $2.5 billion in 2023.
This influx of capital has significantly driven up production costs. In 2015, the year before Netflix entered the Korean market, the average production cost per episode for a Korean drama was around $360,000. That figure has since surged. In 2019, Netflix spent $1.7 million per episode on its first Korean original, 'Kingdom.' In 2020, 'Sweet Home' cost $2.4 million per episode. Most notably, the budget for 'Squid Game' Season 2 reportedly reached $9.8 million per episode in 2024.
On the distribution front, Netflix has also disrupted existing systems. The platform has emerged as the dominant distributor of Korean content, replacing traditional broadcasters and cable networks. Since entering the Korean market, Netflix has maintained its position as the leading streaming service and remains the only one generating reliable profits. Its revenue has steadily climbed, growing from $356 million in 2020 to $629 million in 2024.
In contrast, traditional broadcasters and networks have entered a period of steep decline. As viewers shift toward streaming platforms and other digital media, television viewership has dropped sharply, reducing the influence of broadcasters in the advertising market. After peaking in 2020, average TV viewing time decreased by 24.8 percent over the next three years. During the same period, broadcasters' share of the national advertising market fell from 24 percent to 17.6 percent.
This shift has made Korean content producers increasingly dependent on Netflix. With fewer resources, traditional broadcasters have cut back on the number of Korean dramas they air. In 2019, the year Netflix streamed its first Korean original, Korean broadcasters aired 109 dramas. By 2023, that number had fallen to 77. In contrast, Netflix steadily expanded its Korean content library through original productions, co-productions, and licensing agreements. This strategy has proven commercially successful; Korean content now comprises 17 percent of the top 500 non-U.S. titles on Netflix. However, this growing reliance raises concerns about creative diversity in the industry. As production companies tailor their output to suit the leading distributor's stylistic and commercial preferences, critics warn that Netflix's dominance risks homogenizing Korean content and diminishing its creative vitality.
More concerning still is the decline in the overall volume and variety of content produced. Rising production costs and a distribution system dominated by Netflix have contributed to a sharp reduction in the number of new dramas. In 2022, South Korea produced 141 dramas. That number fell to 123 in 2023 and dropped again to 107 in 2024.
This contraction has not affected all creators equally; young and emerging artists have been hit the hardest. Netflix tends to invest in high-budget projects that favor established industry figures. Meanwhile, traditional broadcasters, under mounting financial pressure, are reducing support for smaller-scale productions. These smaller projects once played a critical role in providing entry points for new directors and writers. As a result, the evolving content ecosystem is becoming increasingly inhospitable to the next generation of talent, which threatens the future of the industry as a whole.
South Korea's content industry stands at a critical juncture. Netflix has brought global visibility and record levels of investment, but it has also disrupted long-standing industry structures. Within a decade, the streaming platform has fundamentally altered consumer behavior and reshaped the Korean content market. While the audience and market landscape have evolved rapidly, the industry itself has struggled to keep pace. Given that these changes are irreversible, the question is no longer whether to adapt, but how. Without meaningful structural reform, South Korea's content industry risks stagnation and long-term decline. The future will depend not only on how effectively the industry navigates disruption, but on its ability to proactively reinvent its production and distribution systems.