KISDI News(detail) − KISDI KOREA INFORMATION SOCIETY DEVELOPMENT INSTITUTE

▲ Utilization rates of written contracts and standard contracts by broadcasters are 100%.
▲ Production companies perceive a higher need for improvements in external transaction practices than broadcasters.
▲ Both broadcasters and production companies recognize that the external production environment has worsened due to OTT.
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The Korea Information Society Development Institute (KISDI, President Bae Kyoung-Yul) has published the "2023 External Production Transaction Status Report for Broadcast Programs" in cooperation with the Korea Communications Commission (KCC, Chairman Kim Hong-Il).

This survey was conducted in 2022 and targeted eight broadcasting companies (four terrestrial broadcasters and four comprehensive programming PP broadcasters) along with 97 production companies that had experience with external production transactions. It aimed to assess the need for improvements in external production transaction practices, appropriateness of production costs, and rights allocation, using surveys and in-depth interviews. The Korea Communications Commission (KCC) and the Korea Information Society Development Institute (KISDI) conducted the survey for broadcasters, while the Ministry of Culture, Sports and Tourism (MCST) and the Korea Creative Content Agency (KOCCA) focused on production companies. For more detailed results, the survey categorized the respondents by genre (drama, entertainment, and informational/educational/documentary, hereafter referred to as educational) and broadcaster type (terrestrial broadcasters and comprehensive programming PP broadcasters).

◆ Broadcasters reported a 100% utilization rate of written contracts and standard contracts during external production. Broadcasters responded that they used standard contracts in all genres, maintaining a 100% rate as the previous year. However, production companies showed variations: ▲ 100.0% in drama for terrestrial broadcasters, 66.7% for PP, ▲ 88.9% in entertainment for terrestrial, 86.7% for PP, and ▲ 87.5% in educational content for terrestrial, 92.9% for PP. The overall standard contract usage among all genres decreased by 3.1 percentage points to 88.7% compared to last year.

◆ Production companies trading with terrestrial broadcasters recognize the greatest need for improvement in external production transaction practices. Regarding the necessity for improvements in external production transaction practices, ▲ production companies dealing with terrestrial broadcasters rated the necessity of improvements as follows, on a scale of 1 (not necessary at all) to 5 (very necessary): drama at 3.71, educational content at 3.75, and entertainment at 3.59, and ▲ those dealing with comprehensive programming PP broadcasters scored entertainment at 3.50, drama at 3.33, and educational content at 2.92, indicating a higher perceived need for transaction practice improvements with terrestrial broadcasters.

In terms of specific areas, production companies overall recognized a high need for improvements in transaction practices, ranked as follows: ▲ Production costs (terrestrial 4.11, comprehensive programming PP 3.66), ▲ Rights/revenue distribution (terrestrial 4.03, PP 3.34), ▲ Sponsorship/advertising (terrestrial 3.85, PP 3.16), ▲ Liability for damages (terrestrial 3.55, PP 3.13), ▲ Contract modifications, cancellations/returns, dissolutions (terrestrial 3.52, PP 3.13), ▲ Payment guarantees (terrestrial 3.26, PP 2.97).
On the other hand, broadcasters responded with relatively low necessity scores, highlighting a perceptual gap between them and production companies. ▲ Terrestrial broadcasters rated the necessity for improvements as 2.33 for drama, 1.33 for entertainment, and 1.33 for educational programs; ▲ Comprehensive programming PP broadcasters perceived the need as 2.72 for drama, 2.00 for entertainment, and 2.00 for educational content, indicating a comparatively lower recognition of the need for improvements in external production transaction practices. Notably, production companies trading with terrestrial broadcasters rated the need for improvements higher (average 3.72) compared to terrestrial broadcasters (average 1.63), showing a significant perception difference of 2.09 percentage points. However, overall, production companies responded that external transaction practices improved compared to the previous year, reducing the perception gap between broadcasters and production companies.
(Terrestrial broadcasters: 2.25 in 2022 → 2.09 in 2023; Comprehensive programming PP broadcasters: 1.58 in 2022 → 1.03 in 2023)

◆ The majority of rights, except for some dramas, are held by broadcasters.
According to the survey on the allocation of copyrights, data usage rights, and sales rights, the responses from broadcasters and production companies were not significantly different. Both terrestrial and comprehensive programming PP broadcasters indicated that they hold most of the rights, except for some dramas, and production companies similarly responded. Despite the growing power of drama production companies and the realization of their rights in some dramas, broadcasters still hold the majority of rights in other genres.

◆ Both broadcasters and production companies recognize that the emergence of OTT has disadvantaged the external production environment.
Both broadcasters and production companies have acknowledged that the rise of Online Video Services (OTT) has made the external production environment less favorable. Broadcasters rated the impact of OTT as disadvantageous as follows: ▲ In drama: terrestrial broadcasters 1.00, comprehensive programming PP broadcasters at 2.00; ▲ In entertainment: terrestrial broadcasters at 1.00, comprehensive programming PP broadcasters at 2.00; ▲ In educational content: terrestrial broadcasters at 1.75, comprehensive programming PP broadcasters at 2.00. Upon examining the different types of broadcasters, terrestrial broadcasters appear to have a greater sense of crisis compared to comprehensive programming PP broadcasters, with averages of 1.30 and 2.00 respectively.

Production companies, excluding those in dramas, also responded that the environment has become more disadvantageous, with drama producers trading with terrestrial broadcasters perceiving a relative advantage (average 3.50). Specifically, the scores were as follows: ▲ For drama, terrestrial broadcasters scored 3.50, comprehensive programming PP broadcasters scored 3.00; ▲ For entertainment, terrestrial broadcasters scored 2.78, comprehensive programming PP broadcasters scored 2.73; ▲ For educational content, terrestrial broadcasters scored 2.67, comprehensive programming PP broadcasters scored 2.79.
Notably, while little change was perceived last year, this year saw a general increase in the sense of crisis among producers, with the average score decreasing from 3.03 in 2022 to 2.78 in 2023.

This survey was conducted as part of the comprehensive measures to improve unfair practices in the broadcast program external production market, which were announced by the Ministry of Culture, Sports and Tourism (MCST), the Korea Communications Commission (KCC), and three other ministries in December 2017. The KISDI and the KOCCA jointly carry out this survey, and the results are published annually.

The "2023 External Production Transaction Status Report for Broadcast Programs" is available for download on the KISDI website (www.kisdi.re.kr).

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KISDI News

Publication of the “2023 External Production Transaction Status Report for Broadcast Programs”