South Korea Courts Investors to Turbo-Charge its Content Industry: ‘There is More Growth to Come’

South Korea is one of the world's hottest markets for exports across the entertainment spectrum, from K-pop stars to movies and TV shows to social media content creators and webtoons.

But South Korea also has some work ahead to further open up its content marketplace to outside investment and larger partnerships with media and entertainment giants in the U.S. and other territories. That was one of the key takeaways from the U-Knock: International Content Investment Forum 2024, held Nov. 7 in Las Vegas and sponsored by South Korea's Ministry of Culture, Sports and Tourism and the state's Korea Creative Content Agency.

The gathering brought together producers, distributors, investors and technology firms to discuss the turbulent state of the global content industry and how South Korea can continue to keep its sector growing at a fast clip. The aim is to help state officials and business leaders "build lasting connections to attract investment into content industry," said Jin Jae-Young, director of content industry financial support division for Ministry of Culture, Sports and Tourism.

Sung Chul Paul Patrick LaValley, managing director of Redbird Capital, told the audience that South Korean leaders need to help "demystify" the process of doing business in the nation for Western executives.

"It's just easier for people to imagine doing business in the U.K. or France or Netherlands," LaValley said during a conversation with Ian Park of venture capital firm Primer Sazze Partners. "We need a Chief Marketing Officer on behalf of South Korea. We need to explain why it's good ROI on time and investment."

LaValley pointed to the experience of automaker Hyundai, which proved the seriousness of its intention to be a player in the U.S. by establishing manufacturing facilities in South Carolina and other spots.

"The U.S. auto eco-system said 'They're here to stay,' " LaValley said. "The more [South Korea] brings its best people and its best companies here, the more people will say 'They're here to stay.' "

On the positive side, South Korea has the benefit of youthful energy, LaValley said. Most its entertainment infrastructure is dominated by companies that have been in business for 20 or 30 years at most. That's an asset when competing against century-old legacy giants such as Disney and Warner Bros.

"K-content companies have an embedded advantage – you should use that youth to your advantage," he said.

Vania Schlogel, founder and managing partner of Los Angeles-based Atwater Capital, pointed to industry trends that will make K-content even more valuable in the coming years. South Korean-produced dramas and telenovelas are now proven to be popular around the world. They also attract a highly engaged and loyal fan base.

"It's a win-win right now for anyone that buys Korean content, because it is produced on average at lower unit economic cost than Los Angeles-produced content. And if you're a streamer, you see it drives engagement numbers," Schlogel said. "Advertising is the next wave of growth for these platforms, and advertising is predicated on engagement. So when you have shows like 'Squid Game' or 'Hellbound' that drive engagement, that actually drives advertising revenues."

Moreover, South Korean companies with resources are going deeper into content production at a time when the norms and templates of dealmaking in streaming is changing. There's more negotiation over rights and the kind of ancillary activities that allow producers to turn a profit.

"It is very important for the sustainability of the independent content market that producers and creators can retain some level of ancillary rights or rights preservation at a minimum that if you create a successful show for a technology platform, you are also participating the value that is being conferred to that technology platform," Schlogel said.

Simon Pulman, partner at the law firm Pryor Cashman and co-chair of its media and entertainment practice, emphasized how significantly companies needed to be prepared for doing business on the global stage. Simply put, it's easy to get fleeced by fine print that ties the hands of creators and owners for years to come.

"Hollywood's job is to try to take as many rights as possible," Pulman warned during a lively session that also included CAA agent Kara Petit, a specialist in K-content, and Sebastian Lee, president of Entermedia Pictures and a co-executive producer on Apple TV+ drama "Pachinko." Lee also moderated a session with "Pachinko" stars Justin Chon and Minha Kim.

In dealmaking with the largest studios and streamers, the default offer will inevitably be something all-encompassing and restrictive, Pulman explained. He stressed that content creators are better off walking in the door with a project that is based on an established property rather than a pitch or even a spec script.

"You can't do a pitch or a spec and retain rights. It's much easier to do when it's coming from something that already exists," Pulman said.

Petit reinforced Pulman's advice. Before entering into any transaction, "call me," she said, noting that she's had to deliver bad news to clients who didn't realize they'd signed away their ability to do remakes or local-language versions of their shows.

The U-Knock discussions were a mix of a 30,000-foot view of the global content sector and specific case studies of innovation coming out of South Korea. For all the cautionary notes and constructive criticism shared, participants remain bullish on South Korea's ability to expand its "soft power" in content to make it a force in business force and a cultural influencer.

"I don't think we're anywhere near the peak. There is more growth to come," Pulman said.

Among other highlights:

Sunggoo Lee, CEO of Vlast, offered a glimpse into entertainment's future with its "Plave" franchise that creates "virtual idols" – aka K-pop stars that are trained by humans but live only in virtual reality. The VR technology opens the door for fans to interact directly with the characters – such as having a dance-off contest.

The "Plave" virtual K-pop group offers live broadcasts twice a week via YouTube. Vlast is busy building using AI tools and real-time graphic rendering tools to buid out a host of virtual games and elements to allow for fan engagement.

"They'll get better and better over time," Lee said.

WonWoo Park, creator of "The Masked Singer," discussed his experience seeing the show blossom into a big hit in the U.S. and other countries. He also reeled off a few ideas for new shows, including one that would challenge groups to engage in singing competitions while riding a roller coaster and a singing competition involving VR in which contestants sing a song to an older VR-generated version of themselves.

Park shared that he often turns to a decidedly old-media source for inspiration. "I look through titles of books. I can discover ideas," Park said through a translator.

Maria Park, VP and head of corporate development for video game maker Krafton, made a pitch for South Korea's gaming infrastructure and the innovation that it is bringing to mobile and online gaming. Gaming is the rare form of media that gives users "a sense of fulfillment and achievement," she noted. South Korean storytelling in gaming benefits from "a familiar yet unique" approach that combines Eastern and Western sensibilities. "Games are high risk and high return," she said.