(Translated from Press Article)
The Ministry of Science and ICT (MSIT) is pushing for the expansion of policy financing and overseas support for domestic digital media content, including OTT services, in order to discover new growth drivers in the domestic digital media industry.
On the6th, Yoon-kyu Park, the Vice Minister of the MSIT, held the 5th on-site meeting for the 2023 Digital National Agenda, with the theme of "Changes and Responses in OTT and Digital Media," at the 1-person Media Complex in Seoul.
The meeting was attended by approximately 30 experts from OTT companies such as TVing, Wavve, and Watcha, production companies such as Studio Dragon and AStory, post-production companies like FurmoDT and Twigfarm, as well as representatives from the finance sector, academia, and research institutions. The experts emphasized the need to strengthen the global competitiveness of digital media by establishing an investment circulation structure and transparent settlement structure.
Chang-nam Ko, the director of TVing, stated, "TVing recorded a deficit of about 70billion KRW in 2021 and about 120 billion KRW in 2022." He further added, "In this situation, survival is the top priority, but in order to thrive, government budget support is ultimately necessary."
Heo Seung, a director at Watcha, pointed out that platforms like Netflix and Disney have a global presence, enabling diversified investments, whereas domestic OTT platforms and production companies have to rely on the success of 1-2 content pieces for immediate returns. He stated, "In order for domestic companies to bear failures, there is a need for institutional and policy improvements, which are currently lacking."
He emphasized the need for investment tax deductions to attract external investments in media content. If investment tax deductions are implemented, it can encourage investment in content from outside the industry. Furthermore, content platforms such as production companies and OTT platforms will make efforts to attract investments. Such a structure is essential for creating a cycle of content investment. Currently, there are production companies that transfer their intellectual property rights to receive financial support.
Fund management companies and banks also agreed on the need to expand investment in the media content industry to promote its growth. However, they suggested that before that, the government should ensure flexibility in the policy objectives of the state-owned fund and transparency in the settlement of media content.
Yun-seok Heo, a director at Daesung Venture Investment, stated, "When forming funds, the policy objectives should be operated flexibly," and added, "When hearing the term 'metaverse fund,' it is easy to think of technologies such as extended reality (XR) or blockchain, but there can be various other technologies as well."
He continued, "As content can evolve from one-way to two-way and from long-form to short-form, the policy goals should be flexible enough to encompass these changes," and emphasized the need for content companies to undergo a specialized evaluation process suitable for the content industry rather than being assessed based on technology standards.
Sung-hee Jung, Head of the Culture and Content Finance Department at IBK Bank, stated, "Among financial institutions, only IBK Bank handles culture and content professionally, likely due to the lack of transparency in the settlement of the content industry." He further added, "Once the transparency of settlements is improved, the nature of capital will naturally lead to a circulation of funds."
In response to these discussions, Jung-ryeol Kim, an official from the Broadcasting Policy Promotion Division of the MSIT, revealed that they conducted a survey on the average support amount provided by the government for production costs and found that it is approximately 300 million KRW. He mentioned that recently, the production costs have increased, and the support of 300 million KRW is becoming inadequate. He stated that the government is considering various other options as direct production support has its limitations, and they will discuss and improve regulations that cause cost burdens.
Yoon-kyu Park, Vice Minister of the MSIT, stated, "Many discussions took place during this meeting, and we will continue to work diligently until the day when no more discussions are needed," and added, "To enhance the global competitiveness of digital media content, we will coordinate with relevant ministries and discuss institutional improvements."