Netflix : Wants You to Binge Watch More Korean Dramas

By Eun-Young Jeong in Seoul and Joe Flint in Los Angeles

Netflix Inc. will invest $500 million this year in South Korean films and TV series, tapping one of Asia's cultural powerhouses as global competition for viewers attracts more rival services and expands beyond American content.

It is one of Netflix's most significant overseas investments in recent years. The spending also marks a deeper commitment to a South Korean entertainment industry enjoying heightened prominence following the surprise success of the film "Parasite," which last year won four Oscars including best picture--the first non-English-language film to do so.

Between 2015 and 2020, Netflix spent about $700 million on Korean content, on both licensing outside titles and making about 80 original films and TV series.

That includes a three-year partnership with one of South Korea's major entertainment companies, CJ ENM Co., plus its production subsidiary Studio Dragon Corp. The deal has already produced hits such as "Sweet Home," an apocalyptic suspense series. It has been watched by more than 22 million Netflix member households after its December debut, Netflix said last month, making it one of the Los Gatos, Calif.-based company's more popular Korean-produced shows.

"Our commitment towards Korea is strong. We will continue to invest and collaborate with Korean storytellers across a wealth of genres and formats," said Ted Sarandos, Netflix's co-chief executive officer, in an online press conference on Thursday.

As its U.S. subscriber growth has slowed in recent years, Netflix has been spending aggressively on original content abroad, as the pandemic keeps people at home and supercharges demand. The streaming service passed the 200 million subscriber mark at the end of 2020 and much of that growth came from overseas. In the final three months of 2020, Netflix added two million subscribers in Asia, plus 4.5 million in Europe, the Middle East and Africa--compared with 860,000 in the U.S. and Canada.

Part of the motivation for Netflix's global investment comes from increased competition in the U.S. from new services including Walt Disney Co.'s Disney+. In its most recent letter to shareholders, Netflix cited its new rivals as a primary reason for "why we have been moving so quickly to grow and further strengthen our original content library across a range of genres and nations."

Besides South Korea, Netflix is looking to boost local content in Europe, the Middle East and Africa. The company has also invested heavily in India, spending $400 million on local content during 2019 and 2020. Netflix is planning to unveil a significant programming commitment for Indian content as well next month, a person familiar with the matter said.

In Japan, Netflix has been investing in local anime films, which is gaining a broader fan base globally. Netflix said last year it had 16 anime projects in the works with a Tokyo-based anime production hub.

Global streaming services like Netflix, HBO Max, Hulu and Amazon Prime have created a paradigm shift in how content is viewed and appreciated, said John Penotti, co-chief executive officer at SK Global Entertainment in Santa Monica, Calif., who produced the 2018 box-office hit "Crazy Rich Asians." Mr. Penotti is working with Netflix on a project about the 2018 Thai cave rescue of a youth soccer team.

"We're moving in this direction where the technical capabilities of these platforms have allowed for viewer appreciation around the world" of culturally-specific shows, Mr. Penotti said.

About 3.8 million South Korean households are subscribed to Netflix, according to the company. Monthly unique viewers soared 64% in November compared with the start of 2020, according to a Nielsen Korea report, published last week.

In South Korea, Netflix has so far relied heavily on both its originals and licensed content to woo viewers. Popular South Korean series on Netflix have included a sizable selection of licensed content such as the inter-Korean hit romance drama "Crash Landing on You," featuring South Korean A-list actors Son Ye-jin and Hyun Bin, and "Sky Castle," a series spotlighting the country's private-education frenzy.

But the investment in South Korea's entertainment industry brings ambitions to attract viewers world-wide, too. The country for decades has developed a pipeline of exportable pop culture--called "hallyu" or the Korean Wave--first spreading across Asia but in recent years finding a more global market.

"Audiences around the world are falling in love with Korean stories, artists, and culture," said Minyoung Kim, a Netflix vice president of content for Korea, Southeast Asia, Australia and New Zealand, in a Thursday blog post about the fresh investment.

Beyond the success of "Parasite," South Korea has seen its other cultural exports thrive. The K-pop band BTS has topped the U.S. Billboard charts and received a Grammy nomination. Another group, Blackpink, was featured in a Netflix documentary and one of its hit songs recently passed 1.5 billion views on YouTube.

Meanwhile, global demand for Korean content is expanding beyond dramas and films to include entertainment variety and comedy shows, said Shin Su-yeon, an analyst at Shinyoung Securities Co., a brokerage in Seoul.

"Netflix also seems to be catching onto this growing demand for lighter entertainment," Ms. Shin said.

Write to Eun-Young Jeong at [e-mail] and Joe Flint at [e-mail]

(END) Dow Jones Newswires

02-25-21 0312ET