Talent in Korea, Money at Netflix
The Economics of “Glorious Subcontracting”

Squid Game, Netflix’s biggest hit in its history, attracted viewership from 142 million households worldwide within just four weeks of its release, with its estimated value reaching approximately 1 trillion won. Yet the production company behind the series received only the contracted production budget—roughly 25.4 billion won—and management fees. Director Hwang Dong-hyuk’s words were calm but brutal: “Netflix simply paid as stipulated in the contract.”

Here lies a structural contradiction within Korea’s content industry. The more world-class content is produced, the less its creators benefit from it. The greater the box-office or viewership success, the more revenue from sequels, merchandising, and secondary copyright rights flows entirely to the platforms. We call this “the glory of the Korean Wave,” but in economic terms, it is closer to “glamorous subcontracting.”

Netflix’s accounting method is straightforward: it covers 100% of production costs in exchange for exclusive rights to the IP, while adding a fixed margin of 3–10% of the production budget for the production company. By avoiding risk, the production company secures stable revenue—but that stability is also a ceiling. Whether the work generates 1 trillion won in value or flops at the box office, the amount the production company receives is predetermined and sealed in advance. The entire upside potential of its success belongs entirely to the platform.

Of course, counterarguments are possible. A “buyout” deal—where the production company receives full funding—represents a risk-free transaction for the producer, with virtually zero financial risk; and without a global distribution network, reaching 100 million households would have been impossible in the first place. This is a valid point.
Yet it remains an unchanging fact that while such safe subcontracting continues, not a single self-sustaining IP asset is being accumulated.

The even more painful truth is that this exploitative practice is not a “global standard.” Netflix pays “fair compensation” in the form of re‑run revenue shares to creators in Europe and South America, and it shares secondary copyrights with Japanese animation. Only Korean dramas are trapped in this exploitative structure, handing over the entire IP.

This discrimination is a matter of bargaining power. In 2023, Netflix's domestic market share reached 42%. When a single platform holds half the market, the negotiation table disappears. In a structure where “if it’s not here, there’s nowhere else to go,” it is difficult for creators to assert their rights. The discrimination is not malicious; it is simply a natural equilibrium created by an asymmetry of leverage.

Another engine accelerating dependency is the soaring production costs. The budget per episode jumped from 900 million won for 2016’s *Goblin* to 3 billion won for *Kingdom*, and reached around 7 billion won for seasons 2 and 3 of *Squid Game*. Disney+’s *Polaris* received about 70 billion won, and *The Glory* about 50 billion won. Lead actors’ fees are 300–500 million won per episode, accounting for 30 % of the total production cost. Compared with Japan, where fees are in the 10 % range, the overheating of the structure is evident at a glance.

The result is polarization: the market has split into two camps—tentpole productions capable of handling capital investments in the tens of billions of won, and works that cannot even film a single episode without platform capital. The number of K-drama slots scheduled for broadcast dropped by roughly 30%, from 141 titles in 2022 to between 80 and 107 in 2024—the lowest level on record. When mid-budget dramas disappear, the very soil for diversity and experimentation dries up as well. In July 2025, the Ministry of Culture, Sports and Tourism revised its standard actor contract for the first time in 12 years, and even Netflix slashed its per-episode actor fee cap—from the 800-million-won range down to the 300-million-won range—a clear signal that this overheated market is no longer sustainable.

Dependence has permeated not only capital but even the grammar of creation itself. Behind the crumbling of Korea’s long-standing drama standard—16-episode series—and the rising trend of 8-episode formats and segmented-part releases lies Netflix’s cumulative viewing-time ranking algorithm, which favors shorter episode counts. Consequently, narrative pacing and length are being reshaped to align with the platform’s metrics.

This is not merely a change in format. It means algorithms—not creators—are now the first to answer the question of what to tell and how to tell it. Handing over an IP ultimately means surrendering the right to determine the story’s format as well.

It’s not that there’s no exit. The Japanese-style “production committee” model—where multiple companies invest equity to jointly own the IP—could serve as one experimental platform. This structure entails sharing both the upside potential of box-office success and the downside risk of losses. The endpoint of Netflix’s $2.5 billion investment plan in 2026 will be a turning point where this cycle of dependency can be restructured.

However, illusions must be avoided. The counterargument—that “it’s realistically difficult to shoulder production costs exceeding 1 billion KRW per theater ourselves, given the current structure”—remains weighty. Rights are never granted for free. If you want to reap the rewards of box-office success, you must also bear the losses from failure. There is ultimately only one way to end the phrase “Korea does the work, Netflix provides the money.” To become the country that owns the most content—the one watched most widely—you must first become the country that assumes the greatest risk.