“Queen of Tears” Earned Enough Money Even Before Broadcast?
According to “Queen of Tears”s producer, the K-drama has earned enough money to cover all costs even before broadcast.
Due to the profit structure of the K-drama industry, production companies can recover a portion of production costs even before the drama airs through broadcast fees or advertising revenue. Previously, about 70% of production costs were typically paid in the form of broadcast fees, with the remaining portion covered by indirect advertising profits (PPL), sponsorships, and OSTs.
In the case of large-scale production costs like “Queen of Tears”, the revenue via broadcast fees is estimated to account for around 50% of production cost. This means, besides the expected revenue, the K-drama’s producer had to ensure a minimal revenue of 30 billion won (approx 22 million USD).
For “Queen of Tears” as well as many other K-content, the amount of profit that can be made is determined by how much additional revenues through other sources, such as PPL, are generated, and the most important part here is the rate paid by Netflix.
Generally, big-budget productions (Major IPs) received broadcast fees extremely early on. Studio Dragon, for example, signed contracts to supply content to Netflix from 2020 to 2022 and got paid beforehand.
Under the contract terms at the time, the capital recovery rate was 60% of production costs.This contract was extended earlier this year with undisclosed details, but was signed with improved conditions.
Considering that Netflix bought the rights to “Mr. Sunshine” in 2018 and “The King: Eternal Monarch” in 2020 with a 70% recovery rate, “Queen of Tears” is estimated to have ensured at least 70% of production costs from Netflix. In other words, broadcast fees and pre-sale fees from Netflix have exceeded the break-even point for this K-drama even before it aired.
In addition to such payments, the producer of “Queen of Tears” can earn additional revenue through domestic PPL, OST, and VOD sales. As the viewer rate increases, they will receive additional benefits from contract terms.
Revenue is also expected through the future sale of the “Queen of Tears” IP. In the case of “Arthdal Chronicles”, the game “Arthdal Chronicles: Three Forces” based on the IP of the drama was released, while the “Crash Landing on You” IP entails a musical production in Japan.
Source: The Bell
