Netflix has reported over 1 trillion won in revenue in South Korea for the first time last year. However, more than 80% of this revenue was paid to its U.S. headquarters, leaving the local subsidiary with an operating profit of only 20.3 billion won.
While Netflix dominates the domestic online video service (OTT) market, local platforms are struggling with chronic losses. Amid this growing polarization among platforms, there are calls to improve the revenue distribution structure to ensure that K-content production companies, which have driven Netflix's success, receive their fair share.
On October 14, Han Jun-ho, a member of the National Assembly's Science, Technology, Information, Broadcasting and Communications Committee, analyzed Netflix Services Korea's audit report. He revealed that Netflix's domestic revenue amounted to 1.0542 trillion won last year, a 1.7-fold increase from 631.7 billion won in 2021.
However, of last year's revenue, 853.9 billion won (81.0%) was paid to Netflix's U.S. headquarters under the guise of subscription membership fees. As a result, the local subsidiary's operating profit was limited to 20.3 billion won, with an operating profit margin of just 1.9%.
Han also pointed out the structural issue of Netflix monopolizing the intellectual property (IP) rights of its original content. Production companies typically receive only 3% to 10% of the production costs, meaning that even if a project becomes a global hit, the additional profits for the production companies are minimal.
“Netflix has become a service that nearly half the population pays for, yet it pays 80% of its 1 trillion won in domestic revenue to its headquarters, resulting in only 20.3 billion won in operating profit for the local entity,” Han explained. He emphasized that K-content is what made Netflix the number one platform in South Korea and that there should be corresponding responsibilities and additional compensation based on its success.
In contrast to Netflix, local OTT companies are struggling to escape poor performance and losses. Last year, Tving reported an operating loss of 69.8 billion won, while Wavve recorded a loss of 12.2 billion won.
According to the Broadcasting, Media, and Communications Committee's '2025 Media Usage Behavior Survey,' Netflix's paid user rate stands at 46.7%, significantly ahead of Tving's 13.0%.
* This article has been translated by AI.
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