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Squid Game spurs search for next Korean hit

With the massive success of Netflix's survival series Squid Game, the race to discover the next hit property out of Korea is on 

A still from Squid Game
A still from Squid Game

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From boy band BTS to the addictive “Baby Shark” songs and Oscar-winning movie Parasite, Korean entertainment has become hugely popular with consumers and stock investors alike, prompting some chatter about where the next hits will come from.

Survival drama Squid Game, the country’s latest sensation topping Netflix Inc. charts around the world, has also sparked some big share-price gains. Bucket Studio Co., which holds a stake in the agency representing the show’s lead actor, has more than doubled this month. ShowBox Corp., whose predecessor had invested in Siren Pictures, the show’s privately-owned production firm, has climbed 55%.

Also read: How 'Hallyu' became key to Korea's business boom in India

Global streaming services are stepping up their investment in Korean content, with Netflix boosting its planned spending on the country’s movies and TV shows to $500 million this year. Still, like winning stocks, hit content can be hard to foretell.

“Any company can produce a hit,” said Lee Kihoon, an analyst at Hana Financial Investment Co. who has buy ratings on Studio Dragon Corp., CJ ENM Co. and Jcontentree Corp. “We cannot tell who will produce the next Squid Game because anyone can make it,” he said.

Still, Studio Dragon is a “must-buy” for investors who want to make bets in the Korean entertainment space given its sizable $2.2 billion market valuation in a field with many small players, Lee said. The producer of “Hometown Cha-Cha-Cha,” another currently high-rated Netflix show, Studio Dragon is a subsidiary of Korean movie giant CJ ENM.

In contrast, Oh Taewan, an analyst at Korea Investment & Securities Co., likes smaller names that don’t have long-term partnerships with Netflix, giving them more flexibility. One he believes may have growth potential is Astory Co., the firm behind the Netflix period zombie thriller series Kingdom.

For analyst Douglas Kim, shares of Pan Entertainment Co. and Barunson Entertainment & Arts Corp. could outperform on growing demand for Korean content. Parasite producer Barunson jumped more than 30% in February 2020, the month the film won the Oscar, though it has since wiped out all of that gain.

“Over the next 2-3 years, there is a strong probability that other Korean dramas and movies on the Netflix or Disney OTT platforms could become very popular as well,” Kim wrote in a recent note on Smartkarma. 

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