South Korea has long been known for its manufacturing prowess, but the Netflix hit 'Squid Game' is taking the country's cultural clout to another level that augurs well for a new driver of economic growth.
While Korean pop acts and TV dramas have been scoring hits overseas for years, only a handful -- boy band BTS, for example -- have managed to win many fans outside of Asia. 'Squid Game,' set to become the most-watched show worldwide on Netflix, is changing all that.
Building on the success of the 2020 Oscar-winning film 'Parasite,' the new Netflix show about indebted people fighting in a deadly survival game has caught the global mood and is projecting Korea's growing soft power. It could also help make the country's cultural exports into much bigger economic contributors.
Netflix says its business last year added $1.9 billion to Korea's economy, but overall the entertainment industry is starting to pull more weight. Here are three charts showing that:
The size of Korea's content industry is small relative to the vast manufacturing sector, but has been growing steadily. Content exports totaled $10.8 billion last year, roughly one tenth of chips -- Korea's main cash cow -- but already earning more than some other key export items such as household appliances and cosmetics.
The value of Korea's entertainment exports, which include publishing, games, music, movies, and TV shows, rose 6.3% last year even as overall shipments of goods fell 5.4% due to the pandemic.
Even consumer products related to the so-called Korean wave, such as cosmetics, clothes and food items, rose 5.5% last year, according to a report by the Korea Foundation for International Cultural Exchange.
The popularity of Korean soap operas and idol stars led to a surge in Chinese visitors in the years before Covid struck, but that over-reliance has become a vulnerability for the tourism industry.
When relations between the two nations sourced in 2017 over the deployment of the THAAD US missile defense system in Korea, a Chinese ban on tourists to the country sent overall arrivals plunging. That shaved 0.4 percentage points off GDP growth that year.
Among total inbound tourists, 13% are estimated to have visited Korea in 2019 specifically for the purpose of experiencing pop culture and attending fan events, with their spending totaling $2.7 billion that year, according to KOFICE.
Korea's key challenge is to broaden its visitor base beyond Asia, and the growing appeal of its pop culture aids that mission.
While still small in size, entertainment is one of Korea's fastest-growing sectors along with technology. The number of workers in creative and artistic services grew 27% between 2009 and 2019, while that in manufacturing, a traditional engine for economic growth, increased 20% in the same period, according to data from the website of Statistics Korea.
In a report last month, Netflix said it helped create 16,000 full-time jobs in Korea from 2016 to 2020 across entertainment and related industries. The firm estimates it contributed $4.7 billion to the economy in the period.
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.