IHQ, ASTORY, Studio Dragon concerned about struggling Netflix

By Kim Jae-heun

IHQ, ASTORY, Studio Dragon and other media production firms here are increasingly worried about the sudden plunge of Netflix's stock price last Friday which fell by 21.79 percent to finish at $397.5 from Thursday due to disappointing earnings, according to industry analysts Monday. Its operating income fell 34 percent in the fourth quarter from a year earlier.

Analysts said the unsatisfying number of newly registered Netflix subscribers in the fourth quarter is said to have attributed to the unfavorable share price decline. The market expected about 8.4 million people to sign up for the paid-membership service, but only 8.28 million did.

Netflix's deteriorating profits are feared to scale down investments in media production companies here, which will adversely affect their bottom lines.

Following the huge drop in Netflix's stock price, IHQ, ASTORY and Studio Dragon also saw their stock values decline on Monday by 4.82 percent, 5.71 percent and 5.07 percent, respectively.

"Media stocks reflect future values. Both American and Korean stock markets are currently experiencing corrections and production companies have been falling vulnerable to these factors," Heungkuk Securities analyst Hwang Seong-jin said. "It started from the end of last year and investors are not fond of it."

Studio Dragon, which put five of its television series on Netflix's "Worldwide Top 10" list last year, will continue to introduce new content on the U.S. OTT platform.

"We are creating TV dramas that can both succeed in local and overseas markets. We will continue to expand the influence of K-dramas and try new things on various channels," a Netflix official said. Studio Dragon is making some 30 new original content shows every year regardless of genre.

Netflix also said it will invest 850 billion won ($710.7 million) in Korean content in 2022.

Meanwhile, Netflix saw its sales and operating profit soar by 16 percent and 33.8 percent in the fourth quarter of 2021, year-on-year.

Market insiders see that Netflix needs more global hits for its stock value to rebound.

"It is working on the spinoff of 'Money Heist' that will be made into a Korean version. It wants to utilize the popular intellectual property. However, Netflix needs more momentum which could come from its gaming program," Samsung Securities analyst Choi Min-ha said.

Netflix announced that it would enter the gaming market last August and acquired the game developer Night School Studio the following month.

"Last year, Netflix introduced over 10 mobile games and it will diversify their genres. This could be a game changer for the OTT service if it utilizes its popular intellectual property well," Choi said.

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