OTTs Turn To Japan Due To Soaring Appearance Fees & Drama Production Costs In Korea

A few years ago, OTT companies invested in Korean dramas expecting high profits from producing high-quality content at low costs. However, they have recently turned to Japan due to surging appearance fees and production expenses in Korea.

In particular, producing a drama is more cost-effective in Japan as it costs only half the expenses to make a Korean project.

tvN’s recently ended drama “Queen of Tears” with 16 episodes was invested 56 billion won, which means it cost 3.5 billion won per episode. Even for dramas with smaller scales, it is said that the average production cost has exceeded 1 billion won per episode. This happens even for dramas without casting top actors. An insider in the OTT industry said, “Not long ago, the average drama production cost was still 300-400 million won per episode. However, 2 billion won per episode has become more common”.

Actors’ appearance fees actually account for the largest proportion of production costs. According to insiders, it is true that top actors are paid up to 1 billion won per episode. Song Kang-ho, who plays the male lead in Disney+’s drama “Uncle Samsik”, reportedly earned 700 million won per episode, totaling 10 billion won with the whole series. “Squid Game 2” Lee Jung-jae is said to receive 1 billion won per episode. People in the drama industry also claimed that 300-400 million won per episode is currently the basic appearance fee for actors.

As a result, Netflix is gradually turning to Japan. They recently started producing the Japanese drama “Romantic Anonymous” starring Korean actress Han Hyo-joo as the female lead.

According to Netflix, Korean accounted for 9% of non-English content in the second half of last year, while Japan was 5%. Many experts believe that the soaring content production cost in Korea will further increase the proportion of Japanese content.

An insider said, “Japan has become more attractive to OTT services not only because of its cost-effective production but also the similarities and connections between Japanese and Korean sentiments.”

Aside from this, concerns over the sustainability of Korean dramas are also growing. Due to increases in expenses, many broadcasters have reduced drama productions. Most of the major broadcasters have temporarily suspended production of dramas on Wed-Thu dramas and made changes to Mon-Tue dramas and miniseries. The number of dramas on Korean channels was 141 in 2022 but it declined to 123 last year and dropped by 30-40% to only 100 this year.

Korean OTTs such as TVING and Wavve have also reduced investments in dramas. In particular, Wavve has yet to introduce any drama this year.