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Entertainment

S.Korean content shares surge with global success of Squid Game

Major production houses Studio Dragon and Jcontentree to lead the long-term growth of the entertainment industry

By Sep 27, 2021 (Gmt+09:00)

Squid Game has topped the global Netflix chart for the first time for a Korean drama series.
Squid Game has topped the global Netflix chart for the first time for a Korean drama series.

South Korea’s major content production houses have made a big comeback in the local stock market on Sept. 27 after a period of downhill over the past few months. Analysts noted that the global success of the recent drama series Squid Game, as well as the launch of Disney Plus in November, were major drivers.

A CJ ENM affiliate Studio Dragon Corp. on Monday closed at 89,500 won a share ($75.83), up 5.17% from the previous trading day. Jcontentree Corp., a content production unit under the country’s major newspaper conglomerate JoongAng Group, also enjoyed a 6.85% rise to 49,900 won ($42.28) a share on the same day.

Smaller content producers Chorokbaem Media Co. and KeyEast Co. also saw their prices rise by 2.29% and 1.83%, respectively. Another noteworthy movement in the market was that the TV broadcaster Seoul Broadcasting System (SBS) rose by 7.02%.

The price surge of Studio Dragon and Jcontentree stocks was driven by institutional investors. The institutions on Sept. 27 bought 10.4 billion won (8.8 million) worth of Studio Dragon shares and 7 billion won ($5.9 million) worth of Jcontentree shares.

As Studio Dragon and Jcontentree are not producers of the global hit Squid Game, their stock prices only rose by around 1-2% a day right after the launch of the drama series. Market watchers note that the sudden hike of the two stocks roots from higher expectations on Korean-made drama series in general, after the tremendous of Squid Game.

Squid Game has topped the global Netflix chart right after its launch and is maintaining top spots in most of the major countries.

DISNEY PLUS LAUNCH TO PROVIDE ANOTHER POSITIVE MOMENTUM

As the global streaming service Disney Plus is set to launch in the Korean market on Nov. 12, the demand for Korean-made content is projected to be higher among the industry players.

“In the long term, Apple TV Plus, HBO Max and other streaming players will enter Korea and secure more Korean-made original content series,” said Korea Investment & Securities Co.

Netflix already provides a good example of such a scenario of global firms rushing to secure more Korean content. The company has been increasing investment in Korea by more than 50% every year over the past few years. Its investment in Korea this year will reach 550 billion won ($466 million), up by 65% from 2020.

Experts highlight that the content produced by the Korean production houses is cheaper to make than in most of the developed countries yet has a high rate of success globally.

Some analysts highlight that the two largest production companies in Korea, Studio Dragon and Jcontentree, benefit from their business ties with parent companies. Studio Dragon supplies its content to CJ ENM’s cable channels tvN and OCN, whereas Jcontentree supplies its series to the JTBC channel.

While such stability is a great advantage over the smaller producers whose revenue streams are not so secure, other financial analysts note that the smaller companies are the ones that will benefit more as more global streaming players enter Korea.

Korea Investment & Securities highlighted ASTORY Co., Next Entertainment World Co. (NEW) and Samhwa Networks Co. as small-cap companies that are likely to benefit from the rising competition in the streaming market.

Write to Ui-myung Park at uimyung@hankyung.com

Daniel Cho edited this article.

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