The greatest love story this Valentine’s Day

TL;DR

• News about Korean stars Hyun Bin and Son Ye Jin getting married has reignited interest in Crash Landing on You, the hit TV series that can be found on Netflix.
• K-Drama is an important source of content for Netflix, and the Squid Game has also become the most watched series on the streaming platform.
• However, the success of a series may not translate to significantly more new subscribers. On this metric, Netflix has lagged Disney+ in recent quarters.
• Increasing competition between different streaming platforms has also led to a trend of providing exclusive content to subscribers, thereby benefiting production houses.

Biggest news for Valentine’s Day? 

Hyun Bin and Son Ye Jin are getting married! Screams!

This fairytale story of the Korean celebrity couple has fascinated everyone, especially the die hard fans of K drama. I mean who can forget Captain Ri and Yoon Se-Ri in Crashing Landing on You (CLOY) and not be fascinated by a reel life couple turning into a real life couple?

While we are celebrating this fairy tale wedding, why don’t we look at what it means for our investments too?

The K-drama wave is also sweeping Netflix

Hyun Bin and Son Ye Jin’s pairing as a couple was made known after they starred in “Crash Landing on You” in 2020. The drama went on to become the 3^rd highest rating show in Korean cable history in terms of viewership.

Most of us watched Captain Ri and Yoon Se-Ri on Netflix in the midst of the lockdown in 2020. This reflects a change in media consumption from mainstream TV to streaming platforms such as Netflix, HBO and Disney+ and IQiyi. 

K Drama is an important source of content for Netflix. Scrolling through the content, there is a category dedicated to K Drama. However, it is interesting to note that the phenomenal success of Squid Game which is Netflix’s most watched content in history did little to improve Netflix’s financials. This might be due to the intense competition between the various platforms, notably from Disney+.

What is worth noting when looking at Netflix is their Net Adds (net number of subscribers added every quarter). As Netflix is still not profitable, what we are trying to understand is whether more people are signing for Netflix plans. 

Disney+ has added 11.8m new subscribers in 4Q21 compared to 8.3m by Netflix, which took investors by surprise. What is evident is that Netflix is still the leader within the streaming platform space but Disney is catching up fast with Netflix.

What you need to know about Studio Dragon, the production house behind CLOY

The other important thing to know is that Crash landing on you was produced by Studio Dragon, a production house which is listed on the Korea stock exchange. Apart from Crashing Landing On You, Studio Dragon is also behind the hit television series Vincenzo and Hometown Cha Cha Cha. 

Investing in production house is not an easy task. Essentially we do not know if the dramas or movies they produce will be a hit or a box office bomb until they are released. Buying the stock of a production house is almost playing Sic Bo in casinos.

However, there are certain things to look out for when evaluating the prospects of production houses.

• Track record: We can get some assurance that they have history of producing hit shows, as this may mean that they have found a formula to cater to viewers’ taste.
• Content pipeline: This allows us to gauge how much potential revenue the studio could generate for the year. The bigger the pipeline, the higher chance the studios get to generate more revenue. 
• Distribution channels: Success of the dramas and movies also depends on studios’ ability to find the right partners to distribute their content beyond domestic markets.

What would Beansprout do?

• Streaming platforms face intense competition: Content streaming platforms like Netflix may see competition from the likes of Disney. We need to track the new subscribers closely to understand how the businesses are doing.
• Content is king: Due to the competition between different streaming platforms, there has been a trend of providing exclusive content to subscribers. Content providers such as Studio Dragon could benefit as long as they continue to produce attractive dramas to cater to consumers’ changing needs.
• Rewatch CLOY on Valentine’s Day. And celebrate the great love story of Captain Ri and Yoon Se-Ri.