South Korea puts content industry investors on trial with U-Knock Forum

South Korea is one of the world’s hottest markets for exports across the entertainment spectrum, from K-pop stars to films and TV shows to social media content creators and webtoons.

But South Korea also has work to do to further open its content marketplace to outside investment and larger partnerships with media and entertainment giants in the U.S. and elsewhere. That was one of the key takeaways from the U-Knock: International Content Investment Forum 2024, held on November 7 in Las Vegas and sponsored by the South Korean Ministry of Culture, Sports and Tourism and the Korean Creative Content Agency.

The meeting brought together producers, distributors, investors and technology companies to discuss the turbulent state of the global content industry and how South Korea can rapidly grow its sector. The aim is to help state officials and business leaders “build lasting connections to attract investment in the content industry,” said Jin Jae-Young, director of the content industry financial support department of the Ministry of Culture, Sports and Tourism.

Sung Chul Paul Patrick LaValley, director of Redbird Capital, told the audience that South Korean leaders should help “demystify” the process of doing business in the country for Western executives.

“It’s just easier for people to imagine themselves doing business in Britain, France or the Netherlands,” LaValley said during a conversation with Ian Park of venture capital firm Primer Sazze Partners. “On behalf of South Korea, we need a Chief Marketing Officer. We need to explain why it is a good ROI in terms of time and investment.”

LaValley pointed to the experiences of car manufacturer Hyundai, which proved the seriousness of its intention to become a player in the US by setting up production facilities in South Carolina and other places.

“The American automotive ecosystem said, ‘They’re here to stay,’” LaValley said. “The more [South Korea] brings the best people and the best companies here, the more people will say, ‘They’re here to stay.’ ”

On the plus side, South Korea has the advantage of youthful energy, LaValley said. Most of the entertainment infrastructure is dominated by companies that have been in business for 20 or 30 years at most. That’s an asset when you’re competing with age-old giants like Disney and Warner Bros.

“K-content companies have an embedded advantage: you have to use that youth to your advantage,” he said.

Vania Schlogel, founder and managing partner of Los Angeles-based Atwater Capital, pointed to industry trends that will make K-content even more valuable in the coming years. It has now been proven that South Korean dramas and telenovelas are popular all over the world. They also attract a highly engaged and loyal fan base.

“It’s a win-win situation right now for anyone who buys Korean content because it is produced on average at a lower economic cost per unit than Los Angeles-produced content. And if you’re a streamer, you’ll see this drive engagement numbers,” Schlogel said. “Advertising is the next wave of growth for these platforms, and advertising is based on engagement. So if you have shows like ‘Squid Game’ or ‘Hellbound’ that drive engagement, that actually drives ad revenue.”

Additionally, South Korean companies with resources are moving deeper into content production at a time when streaming dealmaking standards and templates are changing. There is more negotiation about rights and the types of side activities that allow producers to make a profit.

“It is very important for the sustainability of the independent content market that producers and creators can retain at least some level of additional rights or rights retention, so that when you create a successful show for a technology platform, you also participate in the value that is transferred to that technology platform,” Schlogel said.

Simon Pulman, partner at law firm Pryor Cashman and co-chair of the media and entertainment practice, emphasized the importance of companies being prepared to do business on the global stage. Simply put, it’s easy to get rid of the fine print that ties the hands of creators and owners for years.

“Hollywood’s job is to try to take away as many rights as possible,” Pulman warned during a lively session that also included CAA agent Kara Petit, a specialist in K-content, and Sebastian Lee, president of Entermedia Pictures and co-executive producer were present. in Apple TV+ drama ‘Pachinko’. Lee also moderated a session with “Pachinko” stars Justin Chon and Minha Kim.

When making deals with the biggest studios and streamers, the standard offering will inevitably be something all-encompassing and restrictive, Pulman explained. He emphasized that content creators are better off with a project based on an established value rather than a pitch or even a spec script.

“You can’t do a pitch or spec and keep the rights. It’s much easier to do this if it comes from something that already exists,” Pulman said.

Petit reinforced Pulman’s advice. Before you make a transaction, “call me,” she said, noting that she had to deliver bad news to clients who didn’t realize they had canceled their ability to make remakes or local-language versions of their shows.

The U-Knock discussions were a mix of a 30,000-foot look at the global content sector and specific case studies of innovation from South Korea. Despite all the shared warnings and constructive criticism, participants remain optimistic about South Korea’s ability to substantively expand its “soft power” to become a force in business and a cultural influencer.

“I don’t think we’re even close to the top. There is more growth to come,” said Pulman.

Among other highlights:

Sunggoo LeeCEO of Vlast, offered a glimpse into the future of entertainment with its “Plave” franchise that creates “virtual idols” – aka K-pop stars who are trained by humans but live only in virtual reality. The VR technology opens the door for fans to interact directly with the characters, like a dance competition.

The virtual K-pop group “Plave” offers live broadcasts twice a week via YouTube. Vlast is busy building using AI tools and real-time graphics rendering tools to build out a host of virtual games and elements to enable fan engagement.

“They will get better and better over time,” Lee said.

WonWoo Parkthe creator of ‘The Masked Singer’, discussed his experiences watching the show become a huge hit in the US and other countries. He also came up with a few ideas for new shows, including a show that challenged groups to take part in singing competitions while riding a roller coaster, and a VR singing competition where participants sang a song to an older, VR-generated version of himself.

Park said he often turns to a decidedly old media source for inspiration. “I browse through book titles. I can explore ideas,” Park said through a translator.

Maria ParkVP and head of business development for video game maker Krafton, made a pitch for South Korea’s gaming infrastructure and the innovation it brings to mobile and online gaming. Gaming is the rare form of media that gives users “a sense of satisfaction and achievement,” she noted. South Korean storytelling in gaming benefits from “a familiar yet unique” approach that combines Eastern and Western sensibilities. “Games involve high risk and high reward,” she said.

Jay AhnVP of IPX Line Friends America, talked about the company’s retail success for the Line Friends collection of 11 animated animal characters. The company is producing animated series and games involving the Line Friends. It has stores selling all kinds of merchandise in Seoul, Tokyo’s Shibuya shopping district, New York, Hollywood, and a second location in LA, CityWalk in University City.