Entertainment service providers are putting all their bets on South Korean content to expand their reach, boosting the cultural clout of region's fourth-largest economy.
Netflix is just the latest entertainment service provider to jump on the bandwagon. The service provider announced an original 12-episode drama series that will be adapted from a popular South Korean online comic series.
The announcement came after the company revealed its content creation budget for 2017 amounts to $6 billion, topping a projected $4.3 billion at NBCUniversal, parent company of CNBC.
"The Korean content category is becoming vital... it has high production value and the content travels," said Vivek Couto, executive director of consultants Media Partners Asia.
This move opens the Asian market for Netflix as major consumers of South Korean cultural exports include Southeast Asia and greater China. Netflix entered Asia in 2015 and, therefore, is rolling out original productions in the region.
Other entertainment companies that have invested in the South Korean pop culture entertainment business include Hong Kong telecommunication giant PCCW Ltd. with its Viu streaming service and Turner Broadcasting's Oh!K subscription-based TV channel. South Korean content takes precedence in the programming on both channels that are available in various Asian countries.
Mirae Asset Daewoo's analyst Jee-hyun Moon and Amazon Video and YouTube Red said that Netflix is not yet popular in South Korea so local content will help boost a foothold for Netflix in South Korea.
"In the Hallyu (Korean Wave) trend, the major genre is drama. Films and variety shows can be popular, but the lifespans of these shows are shorter," said Moon.
Netflix may also have potential in China, where South Korean pop culture is predominant despite efforts by authorities to curb performances by Korean celebrities.
Breaking into the world's second largest economy might be a challenge due to strict censorship laws that limit Chinese market to many foreign media players. For instance, social media platforms like Facebook, Instagram and Twitter are banned in the country.
Despite the obstacles, Netflix hasn't given up on breaking into the Chinese market.
"The regulatory environment for foreign digital content services in China has become challenging. We now plan to license content to existing online service providers in China rather than operate our own service in China in the near term," Netflix said in a letter to shareholders. The company also acknowledged that licensing revenues in China will be "modest".
According to Moon, Netflix needs to play within the rules of the game to be the first one to take over the Chinese market once regulations are relaxed.
"Netflix wants to generate other revenue streams including that from content licensing to the Chinese platforms. If Netflix gains some brand awareness in China and other Asian countries through licensing content, they can get other opportunities in the future," she said.
Netflix is the world's leading internet entertainment service with over 109 million members in over 190 countries enjoying more than 140 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments.