Spend game: investment in original drama in Asia soars

Producers in Asia are spending more than they ever have making content. Can it last? 

The markets with the biggest numbers are China and Korea. In both, streaming platforms have driven prices to record levels of, depending on who you believe, up to US$2.5 million per episode of drama. And then there's India, where commissioning is on steroids and, rather than talk about a bubble, the best minds in the business think about the current situation as the day one of a new dawn.

Again, the question: Can this, or rather will this, last? In China, probably not. In Korea, opinions vary. In India, probably yes.

Let’s talk about China. The most expensive dramas ever made are this year’s Novoland: Eagle Flag, which premiered with a massive marketing campaign that is said to have raised eyebrows (and ire) of mainland media authorities, and Chinese period drama The Longest Day in Chang’An. Production insiders say these two series cost between RMB7 million/US$986,000 and RMB10 million/US$1.4 million to make per episode aired, including episodes that never saw the light of day because of external censorship and broadcasters’ internal review processes.

Novoland: Eagle Flag’s total budget was RMB500 million/US$70 million for all 68 episodes, 12 of which were never aired. The sweeping good-versus-evil series, set in the fictional kingdom of Novoland, aired/streamed on three platforms in China – Zhejiang TV, Tencent and Youku. Rival platforms Tencent and Youku are said to have paid a combined RMB15 million/US$2.1 million per episode for the rights.

The Longest Day in Chang’An, which some say soared to US$2.5 million per episode (although that number is disputed), was reduced from the original 60 episodes shot to its final 48 episodes aired. Alibaba platform Youku is said to have paid RMB8 million/US$1.1 million per episode for exclusive rights, which means the platform covered the full production cost.

If the numbers sound high (even though media authorities have already reigned in talent costs), the risks are higher.

China’s official approvals process and broadcaster/platforms’ review systems mean episodes may never be seen. Novoland: Eagle Flag, for instance, was whittled down from the original 68 episodes to 56 episodes after review. That’s 18% pure waste. This rose to 20% on The Longest Day in Chang’An. All this means production costs are spread across fewer episodes, driving up final amounts.

There’s also the unpredictability of the response to marketing campaigns; local sources say the heavily promoted Novoland was almost pulled off air because the pre-release promotion was deemed to be excessive. Anything jaw-dropping in China should set off warning bells, including records like the US$750,000 per episode licensing fee paid in China for Korea’s Running Man before China slammed the door in Korea’s face.

So that’s China. Nerves of steel required. What about Korea?

Korea’s video production/licensing industry was pretty much decimated by China’s decision in 2017 to punish the country for its support of the U.S. Thaad missile defence system. And then along came Netflix.

Korean budgets right now are on steroids, driven by domestic spend on shows like Mr Sunshine, Kingdom and Arthdal Chronicles, which is said to be the most expensive drama ever made in Korea at KRW54 billion/US$44.5 million for 18 episodes. CJ ENM-affiliated Studio Dragon produced Arthdal Chronicles, which aired on tvN in Korea and on Netflix in the rest of the world.

Will this continue? Maybe not at the level of Arthdal Chronicles. But who knows? Even though Korean viewers didn’t exactly flock to the kingdom of Arth, Netflix has the whole world across which to amortise those costs. In the rest of Korea, producers say budgets range from US$600,000 per episode to US$1 million (incl talent fees) for limited series, less for long-running mini-series. Without lead actor costs, per-episode costs drop to around US$250,000.

India is a long-running miniseries market and has been since clunky state broadcaster Doordarshan was the only game in town. It's now the scene of the region's biggest premium drama battleground, spending more than they ever have but still nowhere near China and Korea.

What about the rest of Asia?

Most producers not working with Netflix can only dream of being able to spend more than US$100,000 per episode. Developing markets like Indonesia are still putting shows on air that cost US$10,000-US$15,000 per episode. US$50,000 is envy territory. US$80,000 makes jaws drop. US$100,000 is heaven.

What happens next? We watch Viu, Netflix, GagaOOlala, Apple TV, iflix ... And we wait to see.

Adapted from ContentAsia's October 2019 magazine, which includes a look at production budgets in 11 markets in Asia.

www.contentasia.tv/issuefive2019