Korean content faces critical 2026 as Netflix's investment cycle enters final year

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Korean content faces critical 2026 as Netflix's investment cycle enters final year

Published: 09 Dec. 2025, 07:00

Audio report: written by reporters, read by AI

Performers dressed as ″Squid Game″ (2021-2025) soldiers march in a parade through central Seoul, followed by a fan event with cast to celebrate the release of the third season of Netflix's hit series in Seoul on June 28. [REUTERS/YONHAP]

The year 2026 marks a critical juncture for Korea’s content industry. Next year, Netflix will decide whether to renew, reduce or maintain its investment in Korean content for 2027 and beyond.

While Netflix currently operates in over 190 countries, it produces original content in only about 50 of them. This reflects the company’s strategy of relying on a limited number of “strategic content supply countries,” rather than requiring local content in every market.

Fortunately for Korea, it was designated early on as one of those key content hubs. After entering the Asian market in 2016, Netflix invested some 700 billion won ($477 million) in Korea through 2022, generating returns that exceeded expectations. Starting with “Kingdom” (2019-20), Korea’s first Netflix original, and continuing with hits like “Extracurricular” (2020), “Sweet Home” (2020-24), “D.P.” (2021-23) and “Squid Game” (2021-25), Korean content solidified Korea’s role as Netflix’s Asian base — and arguably positioned it as a global contender in content production.

Emboldened by that success, Netflix announced it would invest $2.5 billion in Korean content from 2023 to 2026 — around 800 billion to 900 billion won annually.

That’s why 2026 matters: It is the final year of this investment cycle and the moment Netflix will decide what comes next. The company has three options — increase investment, decrease it or keep it steady.

Korea finds itself in a precarious position. Traditional broadcasters such as the three terrestrial networks (KBS, MBC and SBS), tvN and general cable channels have lost their programming clout. TV viewership is in decline, and advertising revenue is falling. As financial losses mount, broadcasters have cut their drama programming by more than half. Production companies say it is nearly impossible to recoup costs unless they secure an original or simultaneous release deal with Netflix.

Korea's streaming platform Tving and Disney+ Japan sign a partnership agreement in Tokyo, Japan, on Nov. 4. [TVING]

There is still some hope. Local streamer Tving has partnered with HBO Max and Disney+ Japan to diversify distribution channels, and some production companies are expanding into North America and Japan. But these moves will take at least two to three years to warm the market. Realistically, none of them can yet match Netflix in terms of capital or global reach. At the same time, the Chinese market remains closed under the ongoing ban on Korean cultural exports.

With few alternatives, all eyes are once again on Netflix — the only major player still willing to increase investment amid soaring production costs and a collapsed domestic market.

Netflix shifts focus to other regions

Netflix’s recent investment trends, however, point in a different direction. North America and Europe, especially Britain, remain untouchable pillars. With over $10 billion allocated annually for North America and more than $1.5 billion for Britain, these regions are nonnegotiable. In fact, investment in North America has grown, with a special focus on Spanish-speaking populations.

To target this demographic, Netflix has committed long-term investments in Spain and Mexico through 2028. Spain will receive 1 billion euros ($1.2 billion), and Mexico will receive $1 billion. The rationale is straightforward: both countries can cater not only to Latin America but also to the 20 percent of the U.S. population that identifies as Hispanic. In Mexico, Netflix can produce content at one-third the cost of equivalent U.S. productions.

Mexico’s rise as a content hub is strategic — and this same pattern is emerging in Asia.

Mexico's President Claudia Sheinbaum stands next to Ted Sarandos, CEO of Netflix, during a press conference to announce an investment to produce films and television series in Mexico, at the National Palace in Mexico City on Feb. 20. [REUTERS/YONHAP]

The rise of the ‘micro-region’

This shift signals a fundamental change in Netflix’s content strategy. Previously, Netflix built a three-tiered model: global content with universal appeal as the base layer, regional content for specific cultural zones and local content for high-subscriber markets.

Now, a new layer has emerged: the “micro-region.” Until recently, Korean dramas were seen as the key to unlocking Southeast Asia. But since 2021, Netflix has invested 240 billion won into Thai content to establish Thailand as a new micro-hub. Though Thai dramas cost one-fifth as much as Korean productions, they resonate strongly with viewers across Vietnam, Laos and Cambodia due to cultural similarities.

This strategy has paid off. The Thai horror and BL (boys’ love) genres are now overtaking Korean dramas in regional popularity rankings. One title, “Ziam,” even topped Netflix’s non-English global chart this year. From Netflix’s perspective, there is less need to spend tens of billions of won on a single Korean drama when lower-cost Thai content can generate comparable engagement.

Poster for Netflix’s anime live-action adaptation “One Piece” (2023) [NETFLIX]

Japan enters the blockbuster race

Japan’s entry into Netflix’s blockbuster ecosystem adds another challenge. Previously, Japan’s strong loyalty to local anime made it a tough market. But that dynamic has shifted.

Netflix has succeeded in live-action adaptations of major Japanese IPs such as “One Piece” (1997-), “Yu Yu Hakusho” (1990-94) and “Parasyte” (1988-95), backed by Hollywood-level funding. The recent release “Last Samurai Standing” even topped the global rankings — the first time a Japanese original achieved this. That production received three to four times the typical investment from a Japanese broadcaster.

Samurai-based epics that appeal to Western audiences have begun to outperform their Korean counterparts. And now Japanese IP, supported by a proven global fandom, threatens the return-on-investment superiority that Korean titles once held.

A performer dressed as a ″Squid Game″ soldier stands in front of the Netflix and ″Squid Game″ logos before a parade through central Seoul, followed by a fan event with the cast to celebrate the release of the third season of Netflix's hit series in Seoul on June 28. [REUTERS/YONHAP]

The cost-efficiency dilemma

Korea is no longer the cost-effective powerhouse it once was. From 2023 to 2025, Korea produced blockbuster-scale content that often failed to break out of the Asian market. Compared to North America, Korea no longer has a cost advantage — and against regional competitors, it looks increasingly expensive.

Spain and Mexico cover 500 million Spanish speakers. Thailand dominates local Southeast Asian markets. Japan brings global IP power. In contrast, Korean content sits awkwardly in the middle: high cost, limited language reach and few original IPs with global pull. Netflix may no longer see a reason to sustain such high investment in Korean content just for Asian markets.

Time is running out

The content industry is already in a cold and hungry state — and the real winter may still be coming. At this point, it seems unlikely that Netflix will significantly increase its investment in Korea. A freeze or marginal increase would be the best-case scenario. If that happens, the Korean content industry faces not just stagnation, but potential collapse.

A Netflix logo is on display at the Lucca Comics & Games 2025 event, one of Europe's largest pop culture conventions, as stars and creators of ″Stranger Things″ series launch Season 5 in Lucca, Italy, on Oct. 31. [REUTERS/YONHAP]

Netflix’s dominance has already drained the financial reserves of domestic broadcasters and local streaming services. If Netflix also begins to pull back, the consequences could be devastating.

Of course, a new market or investor might emerge unexpectedly. That would be ideal — but right now, that hope feels dangerously naive. What the industry needs is another global success on the scale of “Squid Game” — a breakout hit that convinces Netflix that Korean content is an irreplaceable asset even in English-speaking markets.

Without that, the end of the 2026 investment cycle may not just bring a slowdown — it may mark the start of a true winter for Korea’s content ecosystem. There’s no time to lose. The industry must urgently rebuild its competitiveness to survive.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY CHO YOUNG-SHIN [[email protected]]