[Column] Can S. Korea create a Netflix of its own?

한겨레 2021. 10. 17. 09:56
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It's time to broaden our horizons and think strategically about how to participate in the international content market
(Getty Image Bank)
Lee Won-jae

By Lee Won-jae, president of LAB2050

Twenty years ago, Netflix introduced a service that delivered DVDs through the mail. They took advantage of the round-trip mail service feature offered by the US Postal Service, which allowed them to send DVDs at a very low price without any postal stamps. Despite losing tens of billions of dollars every year, the US Postal Service kept this service which benefited its only customer for this feature – Netflix. This arrangement was fostered by the government.

With its mail-delivery service, profits at Netflix rose 50 percent, allowing it to knock out its video rental competitors. This leverage allowed Netflix to jump into the streaming video sector earlier than others. Today, it is the world’s leader in video streaming.

It’s yesterday’s news that the copyrights for “Squid Game” — a sensation around the world which was produced at a quarter of the cost of most American series — are firmly in the hands of Netflix. Rubbing salt in the wound is the fact Netflix doesn’t pay any network usage fees in South Korea. Although it was the Korean people who staked their lives in this life-or-death game, that Netflix should reap all the profits minus production costs leaves a bitter taste in the mouth.

YouTube is a similar case. It’s said that anyone can upload good content and make money through advertising dollars if there are enough viewers. In reality, this isn’t the case, as very few people actually make any real money. What’s happening instead is that Koreans are staying up all night voluntarily producing content for YouTube, effectively increasing sales for Google — YouTube’s parent company — for free. Videos produced by KBS and MBC, supported by subscription fees from the public and advertising from domestic companies, are also serving to sustain and expand YouTube.

The money aspect is just one part of the problem. YouTube already functions, in part, as a news outlet. There is nothing our society can do to control the abundance of fake news and sensational violence spread by the platform. The live streaming of violence and the posting of invasively private videos are indiscriminate. And parents have no idea what videos their children are exposed to by Netflix’s algorithm.

When issues arise, these corporations point the finger at faulty algorithms produced by artificial intelligence or claim they cannot disclose the details of their policies. These shameless responses reflect an attitude of utter irresponsibility. A socially conscious answer is simply out of the question. Our societal norms are now tended to by the algorithms of foreign companies.

At this point, curiosity compels me to ask: Why is there no Netflix or YouTube operated by Korean companies?

YouTube, Google and Netflix are where they are today because they were backed by the strength of capital. Their business strategy was made possible by the machinations of financial markets through which unbelievably large sums were reaped through investments. This strategy also involves attracting subscribers initially through free or low-cost services and investing appropriately in content providers to create user dependence. After achieving dominance through market saturation, these companies have grown to monopolize their respective industries.

Is there no such startup capital in Korea? It seems that there is. Household debt has increased more than 40 trillion won (US$33.5 billion) per quarter and has cumulatively exceeded 1.8 quadrillion won (US$1.4 trillion). Most of this money is used to purchase real estate. In other words, this money that should be going to companies to innovate is instead being buried in the ground. Corporate investment may be possible in the future if huge profits are realized from real estate development projects.

Policy discussions in the field of media content must focus on regulating media companies, investing in domestic content companies, and properly collecting taxes from foreign enterprises. It’s time to broaden our horizons and think strategically about how to participate in the international content market. Platform strategies should focus on policies regarding the content industry. This is not something that individual media or content companies can achieve on their own. The state must step in and find a solution.

The potential exists. South Korea is rare in that it has a popular messenger service in KakaoTalk and a search engine portal site in Naver that are used by the entire nation. Outside of the US and China, this is a peculiarity enjoyed by no other country. The widespread success of “Parasite” (2019), BTS and “Squid Game” proves that the potential is there.

That tech companies are not limited by borders has been the prevailing mantra. However, as the influence of platform companies has risen, the issue of nationality has also increased in importance. Looking back, Samsung Electronics and Hyundai Motor developed with the support of the nation, and Naver and Kakao grew up in the dot-com bubble era supported by a favorable investment climate created by the government.

Please direct questions or comments to [english@hani.co.kr]

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