In a groundbreaking move to fortify the K-Content industry, the Ministry of Culture, Sports and Tourism announced a robust investment plan of 1 trillion won ($766.5 million) over five years. The focus is on bolstering the competitiveness of Korean Online Video Services (K-OTT) amidst the global dominance of OTT platforms.
Minister of Culture, Sports and Tourism Yu In Chon unveiled the ‘Video Industry Jump-start Strategy,’ including plans to consider OTT subscription fees for cultural expenses tax deductions at the Modeda Arts Theater in Seodaemun-gu, Seoul, on November 14. This is the first noteworthy strategy announcement since Minister Yu took office. This initiative aims to stimulate economic growth, supporting the industry’s resilience and global reach.
Vision to build a $30 Billion Industry by 2027
Through this strategy, the Ministry of Culture, Sports and Tourism plans to grow the video content industry, worth 28 trillion won ($21 billion) last year, to 40 trillion won ($30 billion) by 2027. The goal is to increase export volume from $920 million (about 1.2 trillion won) to $1.8 billion (about 2.4 trillion won) over the same period. They also proposed a plan to increase explosive content and create five major award-winning films, including the Emmy Award and Academy Award, over five years.
Minister Yu said, “We felt that there were many urgent tasks in the video industry and the problems were serious, so we prepared countermeasures first,” and added, “After listening to the difficulties of creators and platforms, we will find a way to do it and implement it starting next year.”
Creation of K-Content Strategy Fund and Release Promotion Fund
To drive explosive content and intellectual property (IP) globally, a K-Content Strategy Fund of 1 trillion won ($845 million) will be established from 2024 to 2028, with an initial release of 600 billion won ($460 million) next year.
The Ministry of Culture, Sports and Tourism will raise 45 billion won ($35 million), the Ministry of Science and ICT will raise 35 billion won ($26 million), and content companies will raise 120 billion won ($92 million) to create a 200 billion won ($153 million) fund. The remainder will be covered by private investment. The existing Fund of Funds (Cultural Accounts) focuses on small and medium-sized enterprises and is intended to overcome the difficult situation in which investment in large-scale projects is complex.
Additionally, a ‘Release Promotion Fund’ will aid in releasing unreleased movies, recovering investments, and rejuvenating the market. The plan is to support the recovery of demand for movie theaters by supporting voluntary holdback (the time it takes for a movie to move from the previous distribution channel to the next distribution channel), agreement, and compliance within the industry.
Tax Deductions on the Horizon for OTT Subscription Fees
The Ministry is also considering including OTT subscription fees, which have become a part of our daily lives, as tax deductions for cultural expenses. Through this, the plan is to alleviate the economic burden on the people and promote industrial revitalization. The plan is to deduct some of the cultural expenditures of wage earners with a total salary of 70 million won ($53k) or less. In addition, a new system will be established so that warranty support can be received even at the planning and development stage, beyond the existing warranty system provided only for content with a pre-sale contract. A separate guarantee is also provided for content export.
Support for expanding and using IP will also be increased to encourage more revenue-generation models. For small and medium-sized production companies to advance into the global market, a permanent space will be established at Sangam Digital Magic Space (DMS) in Seoul. It will be established as a base to provide business model sharing, business matching, and contract-related consulting.
Supporting IP Expansion and Combatting Illegal Distribution
Specialized funds, such as IP and main investment funds, are also created to secure the production company’s IP. It aims to prevent the illegal distribution of content such as ‘Nunu TV,’ strengthen investigations, including tracking illegal advertisements on copyright infringement sites, and strengthen criminal punishment. An international cooperation system will also be established to respond to copyright infringement with the investigative agencies of each country, including Vietnam, Indonesia, and Interpol.
Related industries have commented that this policy is encouraging and hope that effective policy implementation will occur. Regarding this plan, an industry official said, “It is very encouraging that the government has shown its strong will to foster the video content industry,” and added, “We look forward to strengthening the competitiveness of K-content and continuing its global expansion through effective policy implementation.”
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