"Even if a piece of content is a huge hit, the production company that makes it is the one that earns the least." A company proposing a revenue structure different from before has appeared in the midst of the K-content boom. It is K-Wave Media (KWM), which aims to create a new job pool based on joint ownership of IP with global OTTs.
Although interest in K-content has recently reached a peak, the industry continues to be described as "recession." Production companies still rely on channel platforms such as global OTTs or broadcasters with abundant capital, and global OTTs pay only pre-agreed production revenues and a fixed commission of about 10–20% regardless of a content's success. As a result, domestic production companies have found it difficult to secure IP ownership of their own content and a long-term revenue structure. Increased dependence on platforms is cited as a factor that constrains the industry's overall creative capacity and the virtuous cycle of investment.
Against this backdrop, K-Wave Media set out to overcome structural limits and build an industry ecosystem that can protect the rights and interests of domestic content producers. K-Wave Media is a comprehensive media holding company formed by an alliance of film and drama production companies, content investors and a K-pop merchandising specialist. It was established by six companies joining forces, including content-focused venture capital Solare Partners, film producers The Lamp and Bidanggil, Apegeitda, drama producer Studio Anzailen, and K-pop merchandising company Play Company.
K-Wave Media, which in May became the first company from the domestic entertainment industry to list on the U.S. Nasdaq, has internalized capabilities across the entire content value chain — discovering, planning and developing IP (intellectual property), production, distribution and merchandising — securing its own content business competitiveness. In addition, as a Nasdaq-listed company it aims to present a new paradigm for Korea's content IP industry.
To that end, after listing it is focusing on securing original IP for one to two years while gradually pursuing revenue diversification, expansion into adjacent content areas and global market strategies. Currently, as it aggressively expands its tentpole lineup, the company is actively pursuing a bitcoin treasury and M&A strategy, and is accelerating efforts to build a securities token platform with the aim of digitizing content assets.
K-Wave Media's chief strategy officer (CSO) Kim Yang-tae and Deputy Minister of content Lee Jae-ha, who recently met with OSEN, said they plan to raise large-scale capital and use it to take a leading role in content production and investment. By directly investing about 30–40% of total production costs, they plan to jointly own IP with global OTTs and create a structure that fairly splits revenue. Furthermore, by securing authority as investors in content, the ultimate goal is to create a virtuous cycle in which domestic production companies can be guaranteed rightful rights and revenue.
Kim Yang-tae, who was in charge of media investment at an accounting firm, has entered the content industry in earnest through K-Wave Media. He said the media content investment market was booming in 2019 and that many production company sales and acquisitions took place then. "What I felt in 2021 was that demand channels for film and drama content were sharply decreasing," he said, explaining the sense of crisis that became the starting point. He added, "The 13 trillion won broadcasting advertising market shrank to 8 trillion won. Channels earn revenue there, and I thought broadcasters would find it very difficult to intervene in content. By 2022 OTT power had already strengthened. In Netflix's case, deals that transferred IP as originals were marked up to 115%. Half-originals — six to 12 half-original contracts a year — were signed with two companies, Studio Dragon and SLL."
He went on, "Even back then, OTT war was fierce and things were being reorganized, and advisory firms like ours felt that the Korean content market would become very difficult. Several companies shared our concerns. VC Solare Partners, which drove the effort, and operators such as film companies and drama companies empathized with the problem. As the COVID-19 market worsened, the box office, which was 1.5 trillion won in 2019, fell to 800 billion won and the market collapsed. The view was that if external capital did not flow in, the market would suffer."
He continued, "In 2023 another phenomenon occurred: private equity invested 400 billion won in SLL, but investors including BIFOM and TME group got stuck. There is no corner for money to enter the domestic capital market. Six companies, including Solare Partners, thought investing in Korea was difficult and that K-content has global demand so they needed to get investment from the U.S. To create a content value chain, IP investment must happen and follow-up businesses must arise. Under our umbrella there are four film companies like MD, and even Play Company's MD company creates a value chain, and we believed we could be recognized in the U.S., so we established the company. Solare Partners took the lead."
How was K-content's unusual Nasdaq listing process? Kim Yang-tae said, "It took about a year. More than 20 billion won was spent," expressing astonishment. Despite recent sharp stock price fluctuations, he said, "The share price decline is a short-term issue. Existing shareholders engaged in swaps, reportedly for reasons such as capital gains tax payments, so selling pressure appeared as a short-term event. There is no change to the company's fundamentals. In fact, we are currently working on a U.S. company acquisition deal, and once that is completed we will recover without problems," he asserted.
He said, "We are raising capital on the Nasdaq market. We are also in a stage of pursuing additional IP acquisition. IP comes in more varieties than expected: film, drama, music and even games. We want to expand that direction as much as possible. While we are focused on films and dramas held by our parent and affiliate companies, our goal is to expand to all intellectual property, even into the beauty sector." Kim Yang-tae emphasized, "Our difference from typical production companies is that we are functionally equipped to secure IP and create revenue. They relied on one-off revenue from distribution of a single IP. We have subsidiaries and an MD division. From the start we can maximize revenue from IPs that will be monetized over the long tail."
What is K-Wave Media's content direction? K-Wave Media's first disclosed investment after listing on Nasdaq was Park Chan-wook's film No Other Choice, which is in the midst of an Oscar race. Deputy Minister Lee Jae-ha said the company is looking beyond artistic merit toward season-based models. He said, "If a story has a world that can support seasons, whether as drama or cinematic content, it can have continuity that yields additional revenue when released as a season. We look at whether the content has expansion potential and whether there are materials for continuity. We evaluate whether there is business expansion potential, like Taxi Driver continuing as a series, and whether the video's production and distribution can generate models beyond just added revenue." He added, "There are suitable stories, such as those that can be linked with K-pop like 'K-pop Demon Hunters,' or various video drama main works that can be developed from a business perspective."
He also said, "Two things are important for season-based content expansion. The other is a 'global orientation.' The portion of domestic dramas can be revitalized by injecting tremendous liquidity from overseas capital into the current situation. Because multiple industry structures are intertwined with the advertising industry and investment environment, the limited number of production investments may not return to pre-COVID-19 levels. Ironically, as production volume has decreased, value in the global market has reached its peak. Since Bong Joon-ho's film Parasite and films like No Other Choice pursuing the Oscars, K-content's commercial viability and box-office potential in the global market have been proven. It can be seen as a peak, and by supplying liquidity to interested foreign capital we can increase the number of productions."
K-Wave Media assessed the overseas market's potential highly, separate from the domestic market's "recession." "It's still the starting stage," Deputy Minister Lee said. "Take animation as an example: the global animation market has long been divided between the U.S. and Japan. Japan has had strong pride in its domestic content, but recently more than 10 Korean webtoon IPs have been adapted into animation in Japan. Various factors are involved, but this shows that original IP from Korean works can work there. If Korean companies used to operate at the level of Japanese subcontractors, Korean original creators can now go to the local market and work directly in a flexible production system." He added, "Although Korea still has strong IP, domestic investment is not smooth, so by bringing in U.S. capital to invest we want to create an environment for rightful revenue generation and have a positive impact on the industry."
Deputy Minister Lee said, "If this settles, I believe it will have a very positive effect on the Korean market. In dramas, although not always, high-quality dramas with a high probability of success inevitably have high production costs. Korean terrestrial and general programming channels long ago lost the capacity to absorb such production costs. Viewer expectations have risen, and the advertising market has been leaving TV. Without channel-driven models, a vicious cycle emerges, but through STOs we can invest in production companies so they can attempt projects without going to Netflix. They can sell broadcast rights to channels while retaining production control. Production companies are concentrated where production budgets are filled, but after selling broadcast rights they can split and sell the rest. For example, when K-pop peaked in Korea, a transparent system that provides appropriate compensation could be made public to blockchain companies, attract liquidity and create options for content that previously had to go exclusively to Netflix. That cycle would clearly have an impact."
Kim Yang-tae said, "Showing a work on Netflix is certainly a huge success. But until now there was no alternative. Even if Netflix's compensation fell or the number of works decreased, if a content became a huge hit the production company that made it remained the least compensated. Creators' perspective on content must change so they can earn in a premium market. What gives production companies the stamina to negotiate is investment and financial strength. How to supply liquidity requires creating initial investor success cases that make money. We plan to offer opportunities to overseas investors who want to invest in Korea and recruit them to create successful cases."
[Photo] Provided by K-Wave Media and work posters.
[OSEN]