Asian Media's Elusive Crown
The rapturous reception for Korean pop stars on the European leg of their world tour made the front pages of newspapers back home. Pictures of thousands of adoring fans in Paris, described in the Korean press as the cultural center of Europe, seemed to confirm that the appetite for Korean culture abroad is stronger than ever, and increasingly global in nature.
It has been almost ten years since Korea’s national broadcaster KBS aired Winter Sonata, the drama that started it all by showing Korean producers how much money they could make abroad. Before long, local actors and actresses were international stars as Korean studios turned out hit after hit, inspiring Korean media companies to define success in international rather than national terms.
Korea's production powerhouse
One of the latest aspirants is CJ E&M, profiled here. A production powerhouse at home, CJ E&M is eyeing some major acquisitions as well as organic growth overseas to help it achieve some ambitious targets: doubling in size by 2015 with foreign markets contributing up to 40% of revenues, up from 10% today.
Few dramas in Korea get greenlit today without an eye on international revenues – a slate that should dramatically increase next year with the impending launch of four new general entertainment channels, already making their impact felt by driving up content costs and poaching key talent.
CJ E&M offers more than drama and more than TV however, with separate arms focused on music, movies and online games – a portfolio that could not only deliver an international edge over rivals at home but also help achieve a hitherto elusive goal: becoming Asia’s first regional media company.
It is a crown CJ E&M hopes to wear.
The aim is to build mini versions of CJ E&M abroad, but executives are pursuing a case-by-case strategy to get started, seeking a foothold through any one of the company’s four divisions and adding others as opportunities arise. Rising broadband penetration should speed up progress, allowing CJ as well as others to build multi-platform franchises, an area where CJ E&M in particular is well positioned to play.
Change to media’s status quo is more likely to start at the fringes of the industry rather than at the core of revenues and profits, and media-neutral franchises might provide a better route to regional success than TV.
Although broadcast is the biggest of CJ E&M’s divisions, it is the sector least impacted so far by the internet, which has already overturned the marketing and distribution models for the gaming and music industries, and is in the process of doing the same for movies.
Advance, then retreat
Recent foreign adventures by leading media companies in Asia have generally ended in retreat, usually followed by a tighter focus on other opportunities at home.
Media is tightly regulated, limiting the control international companies can exercise in many overseas markets, while foreign content’s appeal diminishes as local production industries mature, increasingly evident in Asia’s emerging markets.
Japanese TV used to be awash with US shows in the 50s and 60s – now, with the exception of the occasional big budget Hollywood movie, there are hardly any. In turn, the popularity of Korean dramas in Asia has also started to fade, although not to the degree many observers expected, and new productions still retain an international appeal.
Charismatic Korean pop stars on the other hand are also energizing markets where Korean dramas failed to take off, such as Japan.
While Korean drama appears to have reached its limits, the enthusiasm around Korean music is still building momentum – a potential international springboard for CJ E&M, which has its own stable of stars as well as a music channel, Mnet.
Gaming can also be used as an entry point into other markets – a strategy employed by some of China’s internet giants – though music and celebrities, leveraged through non-linear interactive networks, could also pave the way for broadcast, the main engine of CJ E&M’s revenues, to follow.
Perhaps the Korean wave has only just begun.
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