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South Korean broadcasting and production companies perceive that the environment for outsourcing production has become unfavorable due to the emergence of over-the-top (OTT) media platforms, according to a joint report by the Korea Information Society Development Institute (KISDI) and the Korea Communications Commission on Monday.

The report is based on a survey and in-depth interviews with eight broadcasting companies (four terrestrial and four comprehensive cable channels) and 97 outsourcing companies with experience in outsourcing production transactions in 2022 to gather insights on the need for improvement in outsourcing practices, adequacy of production costs, and rights ownership.

Regarding the impact of the OTT emergence on the outsourcing environment, broadcasters rated the impact on a scale of 1 to 5, with 1.00 to 2.00 for dramas, 1.00 to 2.00 for entertainment, and 1.75 to 2.00 for cultural programs.

By type, terrestrial channels were found to be under a sense of crisis compared to cable channels, with an average score of 1.30 for terrestrial channels and 2.00 for cable channels.

Production companies also reported being disadvantaged in all genres except for dramas, with only drama production companies dealing with terrestrial channels perceiving relative advantages with an average score of 3.50.

Specifically, for dramas, the scores were 3.50 for terrestrial channels and 3.00 for cable channels, for variety shows, 2.78 for terrestrial channels and 2.73 for cable channels, and for cultural programs, 2.67 for terrestrial channels and 2.79 for cable channels.

In particular, the overall sense of crisis increased compared to the previous year.

Regarding the need for improvement in outsourcing transaction practices, production companies dealing with terrestrial channels scored 3.71 for drama on a scale of 1 to 5, 3.75 for cultural programs, and 3.59 for entertainment, while production companies dealing with cable channels scored 3.50 for entertainment, 3.33 for drama, and 2.92 for cultural programs.

One referred to not necessary at all and five for very necessary.

In terms of various items such as production costs, rights and revenue distribution, sponsorship and advertising, attribution of liability and damages, contract changes or cancellations, and payment guarantees, production companies generally perceived a high need for improvement in transaction practices.

The survey results on rights ownership, including intellectual property rights, data usage rights, and sales rights, showed no significant difference in responses between broadcasters and production companies.

Both terrestrial and cable channels responded that they owned most of the rights to all but a few dramas, and production companies responded similarly.

While the growing power of drama production companies has led to production companies holding the rights for some dramas, broadcasters continued to hold the majority of rights for the rest of the genre.