As K-content gains global popularity, it has been argued that the overall production industry is fundamentally weak, per a new article recently published.
In recent years, production costs have skyrocketed, making it difficult for broadcasters to cover the costs. Additionally, with a decline in advertising revenue and difficulties in recovering production costs in both domestic and international markets, the drama production industry is facing a harsh reality.
Amid the decline of domestic platforms, including terrestrial broadcasters, there is a growing reliance on global OTT platforms such as Netflix. As the high appearance fees set by OTT platforms become the standard, the production capacity of studios that produce dramas for other domestic broadcasters or platforms is further weakened, perpetuating a vicious cycle in the drama production industry.
Points of contention
In light of this situation, the Korea Drama Production Association held a meeting recently, bringing together drama production companies and platform officials to discuss the crisis in the drama industry and possible solutions.
During the meeting, various issues were discussed, as the attendees were involved in the practical aspects of production. Particularly, the rapid increase in appearance fees for lead actors, leading to a rise in total production costs and a decrease in production quality, among other practical issues, were intensively discussed, and various solutions were proposed.
The attendees agreed that the decline in drama production inevitably leads to a crisis in the Korean broadcasting and video industry, and issues such as the increase in total production costs need to be urgently addressed.
A representative from a broadcasting company mentioned that the problem of actor appearance fees arises frequently during negotiations, stating, “The appearance fee for lead actors has now become billions of won per episode, and we need to find a solution to this problem.” They also mentioned the frustration of production companies having to pay tens of millions of won per episode to meet the demands of actors, as the reduced programming schedule puts them in a position where they have no choice but to produce dramas under these circumstances, perpetuating the vicious cycle of rising production costs.
A representative from a drama production company expressed a sense of self-doubt, saying, “Some star actors pre-select the platform on which the drama will be released and make changes to the script on-site, or even replace the director. In such situations, one wonders what a production company actually is.” They added, “Although the production companies and broadcasters have expanded the drama market, it seems that only a few actors are benefiting from this, and there is a need for urgent solutions through negotiations with management agencies or policy-making.”
Another representative from a production company mentioned the difficulty of casting due to the dominance of high appearance fees, saying, “It is a painful reality that even if we receive high appearance fees, we cannot cast actors who demand lower fees when we see that popular works receive offers more than twice the budget. However, if platform officials consider these aspects and support works that are good even without star actors, it would be great for the industry to break free from the vicious cycle.”
In conclusion, the drama industry is facing a crisis due to the rising costs of production, particularly in terms of appearance fees for actors. Urgent measures and guidelines are needed to create a sustainable and healthy ecosystem.
During the meeting another payment option for actors was suggested. Some suggested the payment method of fees to be based it on the duration, regardless of the number of episodes.
Instead of paying per episode, some propose paying the fees based on the total number of shooting days or shooting hours.
A drama production company official stated, “I think it is a problem that the fees for intermediate-level actors increase significantly, similar to top-tier actors. Therefore, when making contracts, I argue that it is better to contract based on the duration of a single work, like a turnkey, rather than per episode.” They added, “I believe it is better to consider the increase in fees from the total amount per work. I think it is unreasonable to increase the fees per episode.”
They further explained, “When negotiating fees, the difference in fees between broadcasting and OTT platforms is significant. Sometimes, an actor may receive 4 million won for broadcasting, while receiving 15 million won for OTT. From the production company’s perspective, even if actors below 50 million won increase their fees by 10%, it would not be too burdensome, but as they transition to OTT, their fees increase two-fold and do not decrease.”
The head of a drama production company expressed their frustration, saying, “It is difficult to raise the fees by 30-40 million won when the production budget per episode is already 1.2-1.5 billion won. The problem is that actors who agreed to such fees last year or the year before are now impossible to hire. Moreover, the number of broadcasting slots has decreased significantly, and there is no guarantee that it will increase next year.”
They continued, “In the past, there were many works that involved multiple actors, but now there are fewer episodes and many scripts in progress, so we currently have several works on hold. There are many cases where actors and directors only choose to work on projects that are scheduled to be aired, with 2-3 works involving the same actors and directors. The future market looks bleak.”
The issues caused by Netflix dominating the market and setting new standards was also brought up!
Another representative of a drama production company said, “When casting, it is alarming that global OTT platforms such as Netflix have significantly different production budgets compared to us, but they still apply the same standards to us. I don’t know how to measure the appropriate line for these fees.”
The production companies say, “It is terrifying that they casually mention a production budget of 2 billion won [over $1 million] per episode.”
One drama production company representative stated, “When considering that 50% of the production budget is spent on actor fees, it may be possible to cast more reasonably priced actors and allocate more budget to filming and art, creating more competitive and artistic dramas. However, on the other hand, it may be appropriate to focus on casting one actor and improve our business competitiveness.” They emphasized that this is not an easy choice to make.
The 3rd issue brought up was how actors’ fees have dramatically increased!
A participant from a drama production company said, “When the production cost per episode exceeds 1.5 billion won, there is a need for future downward adjustments. In order for actors, writers, production companies, and platforms to survive together, we need to cast famous actors, as it makes scheduling easier and overseas exports more successful. Therefore, only these actors’ guarantees increase, and we end up being fixated on them. We know that mostly commercially viable actors are sought after, but opportunities should also be given to other actors, and the casting range should be expanded.”
Furthermore, another representative from a drama production company lamented, “Even though we have discovered and employed talented actors through two years of auditions for the current production, after the preview, due to the difficulty in marketing without a star actor, there is a huge wall of reality that arbitrarily lowers the purchase price.”
The issue of over 20 dramas being tied up in post production was also brought up!
Rather than just riding on the popularity of star actors that cost hundreds of millions of won per episode, it is important to boldly employ verified actors through thorough auditions and allocate more production costs to directing, shooting, and art to increase the completeness of the content. It is a painful plea that a healthy environment, where broadcasting stations or channels boldly schedule such works, urgently needs to be created.
In addition, it was mentioned that the staff cost has increased significantly since the implementation of the 52-hour workweek system, and the art and CG service fees have also increased significantly.
The Korea Drama Production Association stated, “Under the government’s policy of encouraging IP ownership, the number of episodes of pre-produced works has greatly increased in the past two years. However, due to the worsening situation of broadcasting stations, there are nearly 20 stranded works, and about 300 billion won is locked up. This situation could have a significant impact on the industry.” They also emphasized the urgency for government-related agencies to step in and find solutions.
How do you suggest these issues be solved?
Source: (A)
