President Kim Young-jun of the Korea Creative Content Agency (KCCA) (Photo: KCCA)

The Korean content industry is growing fast on the back of hallyu (Korean Wave). Figures released by the Ministry of Culture, Sports and Tourism (MCST) showed that the content industry saw sales increasing to 119.1 trillion won last year, a 5.2 percent rise over the previous year. The annual average growth rate in the past five years stood at as much as 5.8 percent.

The past and the present have one thing in common: content companies are small-sized, about 90 percent of which posted less than 1 billion won in sales, and have 10 or fewer employees.

The MCST and the Ministry of Science and ICT (MSIT) announced three innovation strategies for the content industry on Sept. 13, calling for eliminating “blind spots for investments” and nurturing innovative content companies.

The government plans to further upgrade the content industry by expanding policy funds and fostering content.

President Kim Young-jun of the Korea Creative Content Agency (KCCA), which is responsible for executing content policies, said keys of the strategies are to alleviate bipolarization of the content industry and allow companies to continue new challenges after initial failures.

To this end, he said, “Companies will be allowed to invest and receive support based on only intellectual properties.”

So far, most investments on content companies have been focused on the distribution stage. They have received small amounts of money from a stage of planning. Content companies find it hard to borrow loans from commercial banks demanding material collateral and personal security like ordinary companies.

VR content companies, turning on investments from the private sector, go out of business and fail to create the market. KCCA President Kim stressed the need for making such companies compete by letting them receive financial support from the government and equity investments.

To this end, KCCA plans to introduce a content venture investment fund next year. The fund is designed to help small companies receive investment from the stage of planning.

The government is studying a plan to raise its stake in the fund so that fund managers can invest in companies with high risks. The introducing of a content company guarantee would allow content companies to take out loans based on intellectual property. An additional 1 trillion won will be channeled for such policy financing innovation.

The Ministry of Culture, Sports and Tourism, the Ministry of Science and ICT, and the Financial Services Commission now extend 1.7 trillion won in policy financing for the content industry.

Earlier, KCCA introduced guarantee programs provided by Korea Credit Guarantee Fund. “Guarantee for New Hallyu Overseas Market Companies” and “Content IP Guarantee” have allowed content companies to borrow loans from commercial banks based on only intellectual properties.

Kim also said a system needs to be in place in which officials are exempted from responsibility to spread guaranteeing based on intellectual properties.

KCCA is considering converging the consumer industry and hallyu intellectual properties efficiently to develop the Korean Wave, a driving force behind the development of the content industry.

As shown as the success story of Bangtan Boys (BTS), a seven-member South Korean boy band, the private sector is leading hallyu, President Kim said.

The government needs to provide support to connect excellent hallyu content with related industries such as beauty, food, fashion and bio so that they can be consumed abroad extensively.