Discussion on "Industrializing K-Media Content as a National Strategic Industry: Direction and Policy Tasks"

Discussant: Yonghee Kim (School of Business Administration, Sunmoon University)

1. Significance and Overall Assessment

Professor Lee Sang-won’s presentation provides a systematic diagnosis of the structural contradiction facing the K-media content industry: expanding global success alongside weakening domestic industrial accumulation. It persuasively argues for a national strategic response. In particular, it makes policy challenges tangible through concrete cases such as The Glory and Squid Game Season 2, including issues around IP ownership, secondary rights, access to viewing data, and domestic value recirculation.

The data-based diagnosis is also compelling. The decline in broadcasting revenue relative to GDP (from 0.93% to 0.74%), the sharp contraction in broadcast advertising revenue (down KRW 1.1 trillion), a 26.7% drop in total operating profit among broadcasters, and the simultaneous decline in original drama supply with rising production costs all point to a structural crisis. The reported 91.04% revenue share held by three global platforms (YouTube, Instagram, Facebook) in Korea’s online video advertising market further highlights the severity of offshore leakage of advertising resources.

The core rationale for strategic industrialization is logically sound: constitutional legitimacy (Article 9 and Article 119(2) principles), fit with a 21st-century growth model (high value-added, strong employment effects, low environmental burden), and media sovereignty. I broadly agree with this direction. To improve policy executability in real legislative and administrative settings, however, several refinements are needed.

2. Securing IP Sovereignty: Why Incentive-Centered Design Matters More Than Mandates

The presentation proposes policy tools to ensure that original and secondary rights remain with domestic actors so value can be shared domestically. I agree with this objective, but in implementation, incentive-centered design is likely to be more practical and effective than mandatory regulation.

First, policy must reflect actual deal structures. In Netflix’s Korean content transactions, full IP assignment under cost-plus contracts appears to account for less than 15%, while the rest are licensing deals in which broadcasters/producers retain IP. High-profile cases like Squid Game should not be treated as representative of the entire market. Since cost-plus models are often voluntarily chosen in exchange for risk-free guaranteed returns, designing stronger alternatives is preferable to imposing blanket restrictions.

Second, meaningful co-ownership requires producer financing capacity. Many smaller producers cannot shoulder 30% of production budgets. If residual rights or reversion rights are legally mandated without solving that financing gap, global investment may pull back. A more workable approach is a government-backed matching fund for domestic IP equity acquisition. This would improve domestic negotiating leverage. A global co-production fund could also encourage minimum domestic IP retention (for example, 30%+) while offering platforms first-look distribution rights as a market-compatible incentive.

Third, concrete incentive mechanisms can be introduced through weighted fiscal support. Projects that include revenue-sharing clauses, reversion clauses, or joint IP ownership clauses could receive enhanced tax/fiscal multipliers (for example, 1.2x-1.5x). This preserves contractual freedom while encouraging better deal terms and may reduce legal risk under trade commitments such as KORUS FTA Article 12.6 and GATS.

3. Platform Coexistence Model: Qualified-Expenditure Design

The presentation correctly identifies overdependence on global platforms and associated risks of structural subordination. In policy response, international models from France, Canada, and Australia are informative, but Korea needs a trade-compatible coexistence framework built around qualified domestic expenditure.

France’s SMAD regime mandates local investment at 20-25% of revenue. Canada’s Bill C-11 imposes a 5% contribution. Australia’s 2025 reform requires either 7.5% of revenue or 10% of Australian program expenditure. However, direct revenue-based local investment mandates could generate legal friction in Korea under trade rules, so direct transplantation is difficult.

As an alternative, a platform could be deemed compliant when qualified domestic expenditure reaches a specified share of Korean revenue. The key advantage is that existing spending in Korea (production, labor, post-production) is recognized as eligible. This functions less like an additional tax and more like a domestic-spend alignment mechanism. Given Netflix’s announced USD 2.5 billion investment in Korea (2023-2027), significant spending could naturally qualify, improving policy acceptability.

The cooperation duty could be structured as a best-efforts obligation, paired with public disclosure of qualified expenditure performance to create practical accountability. Weighted credits can further steer outcomes: joint IP projects (1.5x), non-capital-region filming (1.2x), and contributions to co-production funds (1.3x-1.5x). This gives platforms a way to satisfy policy expectations while building stronger content pipelines.

An agreement-based voluntary contribution channel can be added in parallel. Framing it as “voluntary contribution plus incentive package” rather than a statutory quasi-tax may improve both trade defensibility and implementation feasibility.

4. Building Globally Competitive Tax and Fiscal Support

The proposed KRW 1-2 trillion strategic fund is directionally meaningful, but fund architecture and execution mechanisms require further design. Given the national objective of a “KRW 300 trillion K-culture era,” Korea urgently needs support systems comparable to global competitors.

First, Korea should adopt an international production cash rebate. Major jurisdictions already offer aggressive incentives: the UK (net 25.5%, up to 39.75% for independent film), Canada (federal + provincial up to 60%), and Hungary (30%). Korea could offer a 15-25% base rebate on qualified domestic spend plus add-ons for tourism/nation-brand contribution (+5%), Korean crew hiring (+5%), and domestic post-production (+3%), with a maximum around 35%. A safe-harbor pre-certification model would improve investor predictability.

Second, regional production tax credits outside the capital area (base 15%, up to 28%) can both address local ecosystem decline and support regional clusters such as Busan, Jeonju, and Daejeon.

Third, deductions for IP acquisition/development, accelerated depreciation, and tax benefits for IP fund participation can help domestic rights holders repeatedly monetize IP across games, merchandising, and tourism.

Fourth, stable financing calls for a dedicated special account funded by general-budget transfers, voluntary platform contributions, and lottery fund transfers. To preserve fiscal discipline and WTO subsidy compliance, combined support ceilings should be capped (for example, at 50% of production cost) with a five-year sunset and performance review.

The UK’s AVEC payable cash rebate model is also worth benchmarking. A phased introduction of partial direct cash refunds for SMEs and loss-making firms could be a realistic first step before broader expansion.

5. Governance: Designing a Committee With Real Coordinating Power

The presentation rightly highlights fragmented governance across multiple authorities and proposes a national strategic committee linked to the President’s Office or Prime Minister’s Office. Two design conditions are critical for feasibility.

First, institutional fit with existing law. Rather than creating a brand-new body, it may be more effective to upgrade and expand the existing committee framework under current content industry law into a “Content Industry Strategy Committee.” Chaired by the Prime Minister and including key ministries, competition and media regulators, and private experts, such a body could better combine cross-ministerial coordination with political authority.

Second, enforceable coordination authority. Korea has seen many whole-of-government committees with limited practical impact. Legal force is needed for core decisions on five-year plans, implementation strategies for national goals, and budget coordination. To avoid conflicts of interest, the committee’s role should focus on strategy and inter-ministerial coordination, while detailed regulatory enforcement remains with independent regulators.

6. Conclusion: Realizing Strategic Industrialization Through a Win-Win Framework

Professor Lee’s presentation provides a timely and valid framework for diagnosing the crisis and justifying strategic industrialization of K-media content. This discussion agrees with the core direction while proposing practical refinements: incentive-based IP policy, qualified-expenditure platform cooperation, globally competitive fiscal tools, and governance with real coordinating power.

The key principle for effective strategic industrialization is a design that provides real benefits to both global platforms and domestic content firms. A regulation-heavy approach risks discouraging investment; a laissez-faire approach accelerates domestic hollowing-out. Policy should instead reduce uncertainty and align incentives so firms can invest, create, and scale.

The government has already set national goals around a KRW 300 trillion K-culture economy and 30 million inbound tourists, alongside a KRW 10 trillion policy finance commitment. To make these goals operational, Korea should promptly establish globally competitive tax incentives, trade-compatible cooperation mechanisms, and cross-government governance that overcomes ministry silos. In the end, media content competitiveness depends on creative freedom and market dynamism; national strategy should focus on ecosystem conditions that let this dynamism thrive while ensuring domestic value recirculation.

February 25, 2026

Yonghee Kim (Professor, Sunmoon University / Research Fellow, OpenRoute Research Institute)