Failing, by comparison

Can Chinese video firms ever produce a global hit like Korea’s Squid Game?

Jong Ho-yeon w

Jong Ho-yeon says her modelling inspired her Squid Game performance

Dalgona candy was invented in post-war South Korea. Made with just sugar and a pinch of baking soda, the confection was an inexpensive treat for children who had grown accustomed to the free chocolates given away by American soldiers, according to one food historian. Dalgona street vendors started to disappear in the early 2000s as e-commerce took off, pushing small candy makers out of business.

Thanks to Netflix’s massively popular series Squid Game, the candy has made a comeback. The show should require little introduction by now. It is the most-watched drama ever to stream on Netflix with more than 142 million having seen it since its debut on September 17. The previous record was held by the titillating English period drama romp Bridgerton, which attracted 82 million viewers in its first 28 days.

Squid Game follows a group of hapless protagonists, sequestered on a remote island, forced to play elaborately staged but deadly versions of childhood games like Ppopgi (using a needle to break out the stamped shape on dalgona candy) and squid game (after which the show is named). Losers of the games are gunned down by masked guards.

The show has also gone viral in China despite no Chinese streamers or broadcasters picking up the domestic distribution rights (Netflix does not operate in China). Critics reckon that it is highly unlikely that the Chinese censors would have approved of the dystopian nature of Squid Game or the graphic violence and sex scenes in the show.

However, Chinese audiences were so desperate to watch Squid Game that the show has been pirated on nearly 60 streaming sites across the country, according to South Korea’s ambassador to China Jang Ha-sung. It has also generated over 412,000 discussions and almost two billion views on Sina Weibo.

On the review site Douban, Squid Game received a rating of 7.6 out of 10, with as many as 100,000 Chinese admitting to having watched it on illegal streams.

“The non-stop survival games are so exciting and bloody. There is also the insinuation of social injustice. I am so happy that I watched it,” one viewer gushed.

The success of Squid Game once again proves that Netflix’s bet on Korean content has paid off. In March, Kim Min-young, the content director of Netflix Korea and Asia, revealed that the online streaming platform had invested a total of W770 billion ($650 million) in Korean-language series such as Kingdom and Extracurricular, as well as feature films like Space Sweepers and Night In Paradise. While not every show has been a global phenomenon, Netflix has successfully used its catalogue of K-dramas to build demand for its platform in markets around the world.

The success of Squid Game also begs the question – given that most people around the world have watched it via subtitles as they would for a Chinese drama – why China hasn’t produced a series that’s become a similar worldwide sensation.

To begin with, a global TV phenomenon requires a global platform such as Netflix. China’s three biggest streaming firms iQiyi, Tencent Video and Youku have so far made few inroads in expanding overseas.

Getting the cultural mix right is always tricky. Netflix has been trying to acquire more Asian content since 2015. That year it bought the rights to Empresses in the Palace, one of the most-watched TV dramas in China in 2011. However, it ended up flopping in the US after Netflix shortened the epic 76-episode series into six 45-minute instalments.

It is increasingly expensive to acquire a blockbuster web series in China anyway. Part of the problem is that competition between the three Chinese streaming giants is so fierce that it drives up the prices of even mediocre content. The salaries of Chinese stars also suck up the majority of the production cost. Prior to the recent salary caps imposed by local regulators, most of a drama’s budget went to paying the bumper salaries of so-called “high traffic stars” who enjoy vast followings online. Actress Zheng Shuang, for example, was famously paid Rmb160 million ($25 million) for her role in a costume drama.

Another problem for the Chinese streaming platforms is their struggle to increase revenue. After iQiyi raised its basic membership fee last November from Rmb15 to Rmb19 a month, the number of paying subscribers in the subsequent quarter went down, proving that there were plenty of people who could not accept a monthly increase of just Rmb4.

“In comparison, Netflix, which refuses to advertise, charges $8.99 for a basic monthly subscription and $13.99 for standard streaming plan in its main market, the US. The price difference between Netflix and iQiyi is so big it doesn’t even look like the two are in the same type of business,” 36Kr opined.

One way to improve profitability at the Chinese platforms was recently shot down. In early October, iQiyi and Tencent Video were told by the government that they were no longer allowed to charge subscribers an extra fee for advanced screenings of some of their hottest shows, alleging that this practice violated consumer rights.

Worse, Chinese regulators’ recent crackdown on the TV and film industry has seen a number of popular variety shows simply banned. Online video platforms now enjoy less freedom to create popular content.

All three Chinese streaming platforms now mainly rely on advertising to make ends meet. Even the premium viewers who pay for the subscription service cannot totally avoid glaring product placement ads.

“With the sluggish growth in membership and profitability, online streaming platforms are facing a very dire situation. Just relying on reality talent shows or breakout series is no longer enough to keep up with the times. Additional advertising or changing the subscription model is also not going to fix the shortcoming of content. Audiences nowadays are not easy to fool with. If they want to expand market share, they must really fix the content,” one critic wrote.

An increasingly censored environment also doesn’t bode well for any of the Chinese studios to deliver a global phenomenon like Squid Game – even if all the manifest commercial challenges were resolved…

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