By Kang Hyun-kyung
Korea's cultural content providers rely on a single income source as they make money by exporting only cultural products, such as dramas and animation.
But their Japanese counterparts earn more profits through multiple income sources, a report released Friday said.
The National Assembly Research Service said Japanese content providers made the most of "cultural derivatives" of the Korean wave such as characters, games, videos and music, explaining how the Japanese became more business-savvy.
KBS earned 30 billion won in revenue by selling soap opera "Winter Sonata
" (2002) to Japan. Yet, on the island nation, importers and distributers made 1.2 trillion won with the hit drama.
The drama was a phenomenal success in Japan, spurring the export of several Korean dramas afterwards.
In the current issue paper, the parliamentary think tank said Japan's strong marketing infrastructure for cultural products explains how they came to benefit more from the Korean wave known as "hallyu".
"For example, after Pocket Monsters became a hit game, Japanese content providers produced a variety of cultural derivatives such as comics, posters and toys", the paper said.
The think tank said those derivatives were thoroughly planned from the very beginning of the production of the game. However, Korea's relatively poor marketing infrastructure makes it difficult for made-in-Korea content products to go global.
According to the report, Korea's animation industry stands at a crossroads.
Korean animation businesses had long lasted under contract manufacturing, dubbed original equipment manufacturing (OEM).
Under the contract, local manufacturers produced products that were purchased by global leaders in animation and sold under the brand of those who purchased them.
In the 1990s, leading global animation businesses switched their original equipment manufacturers from Korean companies to businesses in other nations in search of a cheaper workforce and lower production costs.
The shift dealt a blow to local animation businesses.
"The industry is also struggling because of other factors such as creativity that still fall far short of global levels", the paper said.
"Compared with other content products, it takes longer for animation products to be released.
Producers have difficulty attracting investment partly because of such risks".
According to the Global Entertainment and Media Outlook (2008 to 2012), Korea ranked 9th in the overall ranking of global content business, accounting for 2.45 percent of the global market.
The United States is unrivaled, taking up 36.7 percent of the world market, followed by Japan with 7.93 percent and Britain with 7.43 percent.
Industry experts said the nation's standing in global content business is one of the core standards determining the national competitiveness.
Cultural power also has something to do with national branding as hit cultural products not only draw a global audience but also disseminate culture to other countries.
"In particular, the influence of animation is greater than that of other products because young children are the major audience and people's exposure to made-in-Korea animation at early ages affect their future content choices", said the paper.
The think tank called for establishing funds for the promotion of content business.
"Policymakers can consider levying taxes on those who purchase content products to raise funds for the animation and content business", the paper said.