Netflix Cuts Korean Drama Budgets and Actor Salaries After 2024 Flop, Shifts Focus to Cheaper Markets

Netflix Scales Back Investments and Resources Amid Korean Drama Struggles

Netflix's journey in the Korean entertainment industry has been nothing short of transformative, reshaping global perceptions of Korean content. However, 2024 marked a turbulent year for the streaming giant, leading to a recalibration of its investments in the region. While Netflix achieved unprecedented success with Korean dramas and movies in 2022 and 2023, the underwhelming performance of several high-profile projects in 2024 has prompted a shift in strategy. With reports of reduced production budgets and slashed actor salaries, Netflix's future in Korea raises pressing questions about the sustainability of its content pipeline and its ability to meet evolving audience expectations.

Cuts to Actor Salaries and Production Budgets

Industry insiders reveal that Netflix has implemented drastic pay cuts for actors involved in its Korean productions. Male lead salaries have been capped at 500 million Korean Won, while female leads are limited to 250 million Korean Won. These changes reflect a broader reduction in overall production budgets, with resources concentrated on sequels to proven franchises rather than riskier, original content.

This trend reportedly began in 2023, indicating a deliberate shift that has nothing to do with already-completed 2024 projects but will heavily impact Netflix's 2025 drama and movie lineup. Insiders suggest that Netflix is reacting to the declining probability of breakout hits—a pattern exacerbated by the company's ambitious 2024 slate, which invested hundreds of billions of Korean Won into underperforming dramas.

Focus Shift: Japan and Variety Shows

Netflix’s strategic pivot stands in stark contrast to competitors like Disney+, which remains "all-in" on the Korean market. Instead, Netflix has redirected its focus toward the lower-cost Japanese market, seeking to maximize returns by producing content with reduced financial risk.

However, Netflix is not entirely abandoning Korean content. Variety shows, which are cost-effective and deliver strong viewer engagement, remain a key focus. For instance, the success of last year's hit Black and White Chef has encouraged Netflix to expand its Korean variety show offerings, reinforcing its preference for high-impact, low-cost formats.

Morale and Industry Criticism

The fallout from these changes has impacted Netflix Korea's internal operations. A source from Netflix Korea disclosed that the company's pressure to deliver results has intensified, creating a tense and morale-depleting environment among staff. Additionally, Netflix has reportedly reduced its workforce in the Korean market.

Criticism has also emerged over Netflix’s handling of actor salaries. While Netflix previously inflated pay rates to attract top talent, industry voices are now accusing the company of "turning its back" on the same actors by slashing compensation. This abrupt shift underscores the volatile relationship between streaming platforms and local production ecosystems, particularly in highly competitive markets like South Korea.

Netflix's 2024: A Year of Mixed Results

2024 proved to be a challenging year for Netflix's Korean slate, with several anticipated projects falling short of expectations despite a few notable successes.

Disappointing Performances

"Hierarchy": This teen drama, released in June 2024, faced criticism for its formulaic plot and lack of innovation. While it ranked second in Netflix's Global Top 10 TV (Non-English) shortly after release, critical reviews labeled it as "a lazy redo of every teen drama you've seen."
"Sweet Home 3": The third installment of the apocalyptic horror series received mixed reviews, making it one of the year's least impressive Korean dramas, as ranked by industry experts.
"Gyeongseong Creature 2": Despite the anticipation surrounding this thriller’s second season, it garnered significant criticism, further highlighting Netflix's struggles with sequels.
"Dare to Love Me": This romantic comedy achieved historically low ratings for a prime-time Korean drama, prompting KBS2 to suspend its Monday–Tuesday drama slot.

Notable Successes

"The Frog": Released in August 2024, this mystery crime thriller earned critical acclaim and was featured in NME's list of the 10 best Korean dramas of the year.
"Squid Game" Season 2: Although highly anticipated, the sequel received mixed reviews, with an 86% critic approval rating but a lukewarm audience score of 62%. The release also impacted South Korean companies tied to the franchise, with shares taking a hit.

While some projects shone, the underperformance of flagship titles contributed to the perception of a lackluster year for Netflix's Korean content.

A Stark Contrast: The Highs of 2022 and 2023

In sharp contrast to 2024, Netflix enjoyed immense success in 2022 and 2023, cementing its dominance in Korean content.

2022 Highlights

"Extraordinary Attorney Woo": A legal drama that became a global phenomenon, celebrated for its portrayal of autism and unique storytelling.
"All of Us Are Dead": This zombie high-school thriller captured global attention, becoming one of Netflix's top-performing non-English series.
"The Glory" (Part 1): A revenge drama that captivated viewers with its gripping narrative and stellar performances.
"20th Century Girl": A nostalgic romance film that resonated with audiences worldwide.

2023 Highlights

"The Glory" (Part 2): The conclusion of this hit series sustained its global acclaim.
"Physical: 100": A reality survival series that became one of Netflix's most popular shows of the year.
"Queenmaker": A political drama praised for its strong female leads and compelling storyline.
"Crash Course in Romance": This heartwarming romantic comedy captured viewers' hearts.

The success of these projects was fueled by high production quality, strong storytelling, and strategic marketing, setting a high bar for 2024.

Reasons Behind the 2024 Underperformance

The challenges of 2024 can be traced to several interrelated factors:

High Expectations: Following the successes of 2022 and 2023, audiences anticipated groundbreaking narratives and high production value. However, sequels like Sweet Home 3 and Squid Game 2 struggled to meet these lofty standards.
Creative Fatigue: Familiar tropes and formulaic storylines led to audience disengagement, exemplified by the lackluster reception of Hierarchy.
Oversaturation: With an abundance of Korean content from competing platforms, Netflix struggled to differentiate its offerings.
Shifts in Audience Preferences: Viewers increasingly demanded diverse and innovative storytelling, which some 2024 titles failed to deliver.
Market Competition: Rivals like Disney+ (Moving) and local platforms such as TVING and Coupang Play released acclaimed content that overshadowed Netflix's efforts.

Strategic Shifts: Budget Cuts and Focus on Proven Franchises

Reports from industry insiders reveal significant changes in Netflix's Korean content strategy:

Reduced Budgets: Actor salaries have reportedly been slashed, with male leads capped at 500 million Korean Won and female leads at 250 million Korean Won.
Focus on Sequels: Netflix is concentrating on proven franchises, limiting risks associated with original content.
Increased Investment in Variety Shows: Following the success of cost-effective productions like Black and White Chef, Netflix is doubling down on Korean variety shows.

These changes reflect Netflix's attempt to balance cost-efficiency with audience retention in a competitive streaming landscape.

The Broader Impact on Korean Entertainment

Netflix’s evolving strategy has far-reaching implications for the Korean entertainment industry:

Creative Challenges: A focus on profitability may stifle innovation, with studios prioritizing commercially safe projects over experimental narratives.
Industry Dependency: Smaller production studios reliant on Netflix face financial uncertainty as the platform scales back investments.
Cultural Exports: Reduced investment in Korean dramas could slow the global spread of the Hallyu wave.

Future Outlook: Challenges and Opportunities

Despite a challenging 2024, Netflix's Korean content pipeline holds potential for recovery:

Diversification: Expanding into untapped markets and experimenting with new genres could revitalize Netflix’s Korean offerings.
Collaborations: Partnering with local creators and studios may yield culturally authentic and innovative content.
AI Integration: Leveraging AI to analyze audience trends could help Netflix refine its content strategy.

By embracing creative risks and adapting to audience demands, Netflix has the opportunity to reclaim its leadership in Korean entertainment.

Conclusion

Netflix’s mixed results in 2024 highlight the challenges of maintaining dominance in the ever-evolving streaming market. While the year lacked the groundbreaking hits of previous years, it offers valuable lessons for the platform to recalibrate its approach. With strategic adjustments and a renewed focus on quality, Netflix can continue to play a pivotal role in shaping the future of Korean entertainment on the global stage.