Overview

One of South Korea’s goals is to become the world’s leading exporter and importer of entertainment and media. Today, the “K-Wave” (Korean Wave or Hallyu) has gained global popularity, seen everywhere from Korean TV shows and films on media service platforms to pop artists’ videos and games. The Korean government considers the entertainment and media industry as a key driver for the future national economy.

Thanks to abundant ICT infrastructure such as high-speed mobile connectivity and diverse purchasing power in entertainment, South Korea has become an ideal test bed for new entertainment technology and media. For example, Virtual Reality has been widely adopted from gaming to sports broadcasting and many Hollywood movies are launching their world premieres in Seoul. 

Film

ITA CODE: N/A

NAICS Code: 512110

Overview

Over the past decade, South Korea’s status evolved to be a content powerhouse with popularity of “K-Wave” dramas, film, and music. “Parasite”, one of the notable examples of the globalization of K-film won the 2020 Oscar’s for best picture. In fact, this blended genre Korean movie became the first foreign language film to win the Oscar for best picture. In 2021, “Squid Game” drew fans from all over the world and became most-watched TV series on Netflix ever.   

The film industry in Korea has grown into one of the world’s most active markets through the development of multiplexes and the popularity of the movie-going culture. According to the Korea Film Council, in 2019, the Korean film market was estimated to be $2.2 billion reporting over 226 million moviegoers, surpassing the 200 million mark for the eighth year in a row. Overall, in 2019 South Korean consumers watched an average of about 4.37 films per capita, one of the highest numbers in the world compared to the U.S. average of 3.51 films according to data from IHS Markit. As of 2021, there are 542 multiplex theaters with 3,254 screens, and almost all of the theaters are operated by three multiplex chains: CGV (operated by CJ), Lotte Cinema (Lotte), and Mega Box.

For 2020-2021, COVID-19 substantially impacted the Korean film market. The Korea Film Council (KOFIC) estimated that the total size of the Korean film market contracted to $893M for a second straight year in 2021. The number of moviegoers dropped by 74 percent from 226 million to 60 million and the average films per capita also dropped from 4.37 in 2019 to 1.17 in 2021 according to the latest available data from the organization.

  Source: Korea Film Council, 2022, The figure excludes the sales for production and distribution, Unit: $ millions.

Opportunities

One of the conventional ways to export film to Korea is partnering with local independent importers.  According to the 2020 Content Industry Statistics by the Korea Creative Content Agency, there are 43 foreign film buyers and distributors in Korea. Excluding the films handled by the US direct distributors such as Warner Bros, Walt Disney, Universal Pictures, and Sony Pictures, 90 percent of films imported from the U.S. were released by local independent importers according to the Korea Box-Office Information System. The two leading Korean film companies, CJ Entertainment and Lotte Entertainment, produce and distribute films and are also the largest importers of foreign films. Additionally, JOYNCINEMA, NOORI pictures, Pop Entertainment, Mountain Pictures are other well-known film importers. Major film markets such as EFM, Cannes Film Market and AFM provide an opportunity to build business connection with the local Korean film importers. 

As Over-The-Top (OTT) services gain more popularity among Korean movie watcher, partnership with major/local OTT platforms can provide US content companies with access to local market. Competition among local and foreign OTT platforms has intensified over the past few years and these platforms are stepping up their efforts to import more contents. Netflix first entered the Korean market in 2016 and became the largest by far and fastest growing OTT service in Korea, accounting for half of the total market value.  Disney+ entered the Korean market in November 2021. The most active local OTT platforms are Wavve (co-operated by terrestrial broadcasters MBC, SBS, KBS and mobile carrier SK Telecom); TVING (operated by CJ); Coupang Play (Operated by Coupang); and Watcha. 

The popularity of OTT streaming platforms is changing the Korean film industry. Film viewing via OTT platforms took over cinema viewing and movie releases. Many movies which have had their theatrical releases postponed or canceled due to the pandemic were released on OTT platforms. Industry expects that OTT will continue to surpass cinema viewing this year. These new services are opening new opportunities for film markets as accessing a wider range of content is more convenient and easier.

In terms of genre, the Hollywood-style action blockbusters are trending. In 2021, action movies including ‘Spider-man: No Way Home’, ‘Eternals’, ‘Black Widow’, and ‘F9’ were listed as the highest grossing films of the year. With the success of the blockbusters and the held-back releases of local films due to COVID, US films occupied a 62% total market share compared to 25% of the previous year.

Niche genres are gaining in popularity in Korea. In the past, niche genres did not receive attention or time slots at the cinemas; however, thanks to the internet-based services opportunities for niche genres are increasing.  Korea is welcoming more diverse filmmakers, importers, and distributors into the film market.  There are growing examples of films that are by-passing the cinema and being released directly through VOD/OTT platforms and are making a profit. There are opportunities for U.S. content providers in both the traditional cinema path and via the internet-based services.

Regulation and Rating

To enter the Korean film market without complications, foreign companies must understand a number of key regulations in the market.  The “Promotion of the Motion Pictures and Video Products Act” lays out the key measures governing the local film industry.   

• Screen Quota:  In 1960, to protect the domestic film industry, the Korean government introduced the screen quota system.  This quota remains in effect and stipulates that each of the country’s screens must show domestic films for 73 days per year.   
• Film Rating:  All films, videos and other motion picture must receive a rating from the Korean Media Rating Board (KMRB).  The KMBR is the public agency that provides age-based ratings. The ratings are determined with following criteria: Theme, Sex/Nudity, Violence, Language, Horror, Drugs, and Imitable Behavior.  Based on the 7 criteria, the Board rates films into 5 categories: All, PG-12, PG-15, R-18, and Restricted Rate.   

The Korea Communications Commission limits broadcast time for foreign films to 75 percent of all films for terrestrial television and 80 percent in cable and satellite television. Also, foreign animation may not exceed 55 percent of all animation for terrestrial television and 70 percent in cable and satellite television. OTT/VOD platforms are not subject of these quotas.

In 2020, the Korean government reformed the “Telecommunication Business Act” to regulate OTT platforms in the market, requiring content providers to ensure local network stability. OTT platforms are now obligated to ensure a stable connection, to share contact information for customer care, and to report to local regulator in case of service failure.  Any OTT platforms that attract an average of more than one million users per day and account for more than one percent of the country’s internet traffic are subject to this regulation.   

Resources

Trade Shows

• Busan International Film Festival (October, Busan)
• The BIFF is the largest and the first international film festival in Korea.  In 2021, 223 films from 70 countries were screened.
• Asian Content & Film Market (October, Busan)
• Hosted by the BIFF office, the ACFM is the largest local film market and conference.  In 2021, the market featured more than 200 online exhibition booths and 1,4970 representatives from 45 countries.
• Busan Contents Market (November, Busan)
• First hosted in 2006, the BCM is the trading market for local video contents. The trade show also features conference and funding sessions.  In 2021, 351 representatives from 41 countries participated.
• Jeonju International Film Festival (April, Jeonju)
• The JIFF is one of the major film festivals in Korea mainly highlighting independent and short films.  In 2021, 194 films from 110 county were screened.
• Bucheon International Fantastic Film Festival (July, Bucheon)
• The BiFAN has established its identity as a fantastic-genre film festival.  In 2021, the festival screened 257 horror, thriller, fantasy, and animation films from 42 country.

Trade Associations and Government

• Ministry of Culture, Sports and Tourism.
• Korea Creative Content Agency.
• Korea Film Council.
• Korea Media Rating Board.
• Korea Copyright Commission.
• Korea Copyright Protection Agency.
• Copyright Protection Center.
• Korea Film Producers Association.

Gaming

ITA CODE: N/A

NAICS Code: 511210

Overview

Source: 2021 White Paper on Korean Game; MSIT, KOCCA; Unit: $ millions.

In 2021, the size of the Korean game industry was estimated to be $17.5 billion and is considered one of top four largest gaming market worldwide, according to the 2021 White Paper on Korean Game published by the Ministry of Culture, Sports and Tourism and the Korea Creative Content Agency. Over the last five years, the Korean gaming industry recorded an average annual growth of 11 percent, and the industry is optimistic that this growth rate is sustainable for the next few years thanks to the increased accessibility of playing games through multiple platforms.

The penetration rate of gamers within the general population in Korea is among the highest in the world.  According to a survey by the Korea Creative Content Agency, more than 71 percent of Koreans between 10-65 years old play games on a regular basis. Thanks to the high-speed internet connection and a culture of internet cafés, Korea had earned its name in the global game industry with PC games. Recently Korea has diversified its profile into mobile gaming. In 2021, more than 68 percent of Korean gamers used their mobile phones as their main gaming device. Because of the COVID pandemic, more gamers played at home, causing many internet cafes to close. This resulted in the growth of the local console market.

Market Demand

For the first time, in 2017 the industry generated more sales from mobile games than PC games. As of 2021, mobile games were expected to account for 59 percent of the total market in Korea, an estimated $10 billion in revenue, with 13 percent growth from the previous year. PC games which accounted 23 percent of the market, generated an estimated revenue of $4.1 billion in 2021. Console games and arcade games accounted 6 percent and 0.1 percent respectively.

Most mobile games are released through app stores like Google Play Store, Apple App Store and ONEstore, a local app store which was established by Korea’s three mobile carriers (KT, SK Telecom and LG+). In addition, local portal operators such as Kakao and Naver also distributes mobile games through their own platforms. Many times, mobile games are serviced through local publishers. These publishers provide funding for development, marketing, and operational resources. PC games are distributed by both local game publishers and global game distribution services like Steam and Epic. 

In terms of genre, massively multiplayer online role-playing games (MMORPGs) are leading the trend. In addition, Multiplayer Online Battle Arena (MOBA), simulation, strategy, puzzle, and board games are also popular genres in Korea.

Regulation and Rating

To enter the Korean game market without complications, foreign companies must understand a number of key regulations governing the market. Since the mid-2000s, the Korean government introduced the “Game Industry Promotion Act,” which implemented several measures and regulations on the gaming industry.  For example,

• Limits the amount of money that can be bet within online board and card games. 

• Pending legislation would impact the sales of probability items and other randomized in-game purchase system. The government is claiming the black box nature of the probability item makes it difficult for users to trust the value of their spending. The legislation is currently pending in the National Assembly.

• Rating of game contents. All games released in South Korea should receive a rating for the contents of game product. There are a few rating entities: The Game Rating and Administration Committee, the Game Content Rating Board, and the Independent Rating Classification Business Entity. Sony, Apple, Google, ONEstore, Oculus, Samsung, Kakao, and Microsoft are all businesses which provide independent ratings to game companies.

Opportunities

While domestic games might be the preference for Korean gamers, U.S. developers can jump into trendy genres and seize opportunity in the Korean market. International Gaming companies have successfully developed certain titles within genres, like strategy and casual games where there has been limited supply from local brands.  Local brands have continued to focus on role playing games (RPGs). In order to be successful in the Korean market, it is important to comply with local regulations and invest in the localization process such as translating games and content into Korean.

Trade Shows

G-Star (November, Busan):

Organized by KOTRA, a trade promotion organization operated by the South Korea government, G-Star is the largest trade show for game industry in Korea. Major Korean game developers as well as international companies participate in this event.

Play X4 (May, Goyang) 

Hosted by the Gyeonggi Provincial government, Play X4 is an exhibition focusing on small and medium developers in the Korean game industry.

Trade Associations and Government

• Ministry of Culture, Sports and Tourism.
• Ministry of Gender Equality and Family.
• Game Rating and Administration Committee.

            Rating Guide: https://www.grac.or.kr/english/ebook/GRACRatingsGuide.html

• Korea Creative Content Agency.
• Korea Association of Game Industry.

Music

ITA CODE: N/A

NAICS Code: 512250

Overview

South Korea is the sixth largest music market in the world and is the second largest market in Asia after Japan according to the IFPI Global Music Report 2021. In 2021, the total value of the Korean music market was estimated to reach $6 billion. Despite the continuing cancellation or postponement of live music events in 2021, K-pop is expected to continue to grow in popularity thanks to the global success of the bands like BTS and Blackpink. 

Similar to other countries, the Korean music market is rapidly shifting from the sales of physical copies to digital streaming and download services. According to the Korea Creative Content Agency, in 2021 more than 65 percent of Korean listeners answered that they paid for digital services. In contrast, only 37 percent responded that they purchased physical copies during the past year.

In South Korea, there are four organizations responsible for collecting license and royalty payments for music rightsholders. Through the reciprocal licensing agreements between the local copyright trust organization and overseas trust management organizations, any music played or performed in South Korea is subject to monetary compensation.

In support of Korea’s ever-growing popularity of “K-pop”, the government continues to strengthen its IP protection regime. Ever since its WTO membership in the year 1995, South Korea has observed the WTO TRIPs agreement and actively participates in multilateral discussions on copyrights and other IP issues. Also, South Korea is a signatory to the following international IP agreements: the Bern Convention, the Universal Copyright Convention, the Geneva Convention, the Rome Convention, the Brussels Convention, the Beijing Treaty on Audiovisual Performances, and the World Intellectual Property Organization treaty. Industry assessed the South Korea authorities to be generally effective in monitoring and enforcing copyright infringements.

Opportunities

By Music Genre

In 2021, ballad, dance, R&B and hip-hop were the main trending genres in Korea. A new trend, trot is growing in popularity. Trot, known for its upbeat tempo, repetitive rhythm, and vocal inflection, used to be ridiculed as music for older people, is making a comeback thanks to the popularity of TV audition shows. Some other popular niche genres in the market include classical music, rock/metal, Jazz and Electronic Music.

In terms of the language, according to the survey by KOCCA, most Korean listeners responded that they prefer to listen to songs recorded in Korean and English.

By Medium of Listening

With the increasing popularity of digital music platforms, Koreans use smartphones as their main music player. Listening to music with smartphones was generally preferred by the younger generation.

Digital music services are further divided into video streaming platforms and music streaming/download platforms. As of 2021, Kakao’s Melon had35 percent of the market share of Korean digital music platform, representing the largest market share followed by YouTube (29 percent), Genie (10 percent), YouTube Music, Vibe, and FLO (6 percent respectively). Other digital music platforms in Korea include Bugs, Soribada and Apple Music. The competition among music platforms is expected to heat up as Spotify, the world’s largest music streaming platform entered the Korean market in 2021.

By Distribution Channel

Global distributors such as Warner Music, Universal Music, and Sony Music Entertainment distributed most of American music directly to the local music platforms. Another option for overseas artists and labels is partnering with local distributors. Major local distributors including Kakao M (Melon), KT Music (Genie), and NHN Bugs (Bugs) operate their own music streaming platforms. These companies provide a company with access to more local listeners and promotional resources. There are many mid-size local distributors in the Korean market such as Danal Entertainment, Music Island, C&L Music and Music Caroma. In addition, there are new online distribution services including Sound Republica which help overseas artists, agencies, and distributors to access local music platforms.

Resources

Trade Associations and Government

• Ministry of Culture, Sports and Tourism.
• Korea Creative Content Agency.
• Korea Copyright Commission.
• Korea Copyright Protection Agency.
• Copyright Protection Center.
• Korea Music Copyright Association.
• Recording Industry Association of Korea.
• The Korean Society of Composers, Authors and Publishers.
• Federation of Korean Music Performers.

Contact

U.S. Commercial Service Korea   
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 03141, Korea
Tel: 82-2-397-4535
office.seoul@trade.gov

https://www.trade.gov/south-korea