The success of ‘The Squid Game’ it was something totally unexpected for Netflix, as the platform has already explained on several occasions. In 2019, the story created by the South Korean Hwang Dong-hyuck finally found a platform after being rejected by local distributors and ending up in a drawer for ten years. Netflix’s bet was a winner, although it is true that the risk was much lower than that of other productions. Each episode of dystopian thriller in which several marginalized characters risk their lives for a large sum of money by participating in disturbing children’s games cost 2.4 million dollars, a quarter of the cost of ‘Stranger Things’. A profitability that has led the platform to continue exploring the South Korean market in search of new productionshowever what could be an opportunity shows the problems of the sector, as revealed by the Los Angeles Times in a report.
The premiere in 2019 broke all the records of the platform and made a profit of 900 million dollars, as it was leaked at the time. An unusual benefit that was not reproduced in the case of the creator who, despite becoming the man of the moment, did not become rich, far from it. The problem was that the contract he signed included his Waiver of intellectual property rights and collection of royalty payments, that is, what creators, scriptwriters, directors and actors receive when their work is reused after a first broadcast. Precisely the guarantee of these clauses is among the claims of Hollywood scriptwriters during the strike that has led to the stoppage of numerous productions.
Precisely, the strike has led Netflix and the rest of the platforms to focus on international production to maintain the arrival of titles to its catalog. South Korean fiction is a gold mine since 60% of subscribers have seen some series from South Korea. The phenomenon reveals the lights, but also the shadows of the business model that the creator of ‘The Squid Game’ himself has criticized: “For there to be another ‘Squid Game’ or the new ‘Parasites’, the livelihood of the creators must be guaranteed,” said Hwang Dong-hyuck.
In this sense, Ted Sarandos justified his policy of not including royalty payments in the contract because they ensure that his initial compensation is already more than fair and it is above the market. “When we make deals, we guarantee our studios and creators fair compensation,” Sarandos said in June during his first visit to Korea since his appointment. “It’s a competitive market, and we compensate well above the market. Overall, it’s important to us to remain competitive and promote a healthy ecosystem. We will provide sufficient support. And in case of success of a program, we make sure that the creators receive adequate compensation in the following season.”
The thing it changes in other territories such as in the European Union where there is already a regulation in this regard which regulates that if a series produced in Europe exceeds 10 million accounts that reproduce 90% of a series, the platform must pay ‘royalties’. This is the case, for example, in Spain and Germany. For example, two series with which this has happened are ‘La casa de papel’ or ‘Elite’.
In addition to contractual issues, the precarious and abusive conditions of the audiovisual sector in the country are added described in that report. In response to questions from the ‘Los Angeles Times’, Netflix unloads its responsibility on the Korean production companies with which it partners for the creation of content. “We pay fair and very competitive rates to our Korean content creators and set clear standards for our Korean production partners, who produce all of our shows and movies,” the company said. “These standards meet or exceed Korean legislation,” says the platform.
