OTTs Turn to Japan for Drama Production Due to High Appearance Fees in Korea

In the past, OTT companies invested in Korean dramas with the hope of making large profits by creating top-notch content at a minimal cost. However, they have now shifted their focus to Japan as a result of the rising appearance fees and production costs in Korea.

Specifically, creating a drama in Japan is financially advantageous as it requires only half the budget compared to producing a Korean project.

The recently concluded drama “Queen of Tears”on tvN had a total of 16 episodes and was produced with a budget of 56 billion won, averaging 3.5 billion won per episode. It has been observed that even smaller-scale dramas have an average production cost of over 1 billion won per episode, even if they do not feature A-list actors. According to an industry insider in the OTT field, the average production cost for dramas used to be around 300-400 million won per episode, but it has now become more commonplace for it to reach 2 billion won per episode.

According to insiders, actors’ appearance fees make up the majority of production costs. It is common for top actors to be paid as much as 1 billion won per episode. For instance, Song Kang-ho, the male lead in Disney+’s drama “Uncle Samsik”, reportedly received 700 million won per episode, with a total of 10 billion won for the entire series. Lee Jung-jae, who starred in “Squid Game 2”, is said to have received 1 billion won per episode. Those in the drama industry have also noted that the standard appearance fee for actors currently ranges from 300-400 million won per episode.

As a result, Netflix is shifting its focus towards Japan, as evidenced by their recent production of the Japanese drama “Romantic Anonymous,”which features Korean actress Han Hyo-joo as the female lead.

According to Netflix, in the second half of last year, Korean content made up 9% of non-English content, while Japanese content accounted for 5%. It is believed by many experts that the rising production costs in Korea will lead to a greater proportion of Japanese content being produced.

According to an insider, Japan’s appeal to OTT services has increased due to its cost-effective production and the shared sentiments between Japanese and Korean cultures.

In addition, there is a growing concern about the long-term viability of Korean dramas. As production costs rise, many broadcasters have cut back on their drama output. Several major broadcasters have halted the production of dramas on Wed-Thu time slots and have made adjustments to their Mon-Tue dramas and miniseries. In 2022, there were a total of 141 dramas on Korean channels, but this number decreased to 123 last year and has further dropped by 30-40%, leaving only 100 dramas available this year.

Similarly, Korean OTTs like TVING and Wavve have decreased their investments in dramas. In fact, Wavve has not released any new dramas this year.