Hello, This is Pipeman.
Today, I studied about Studio Dragon, the Korea drama production company.
If you need more detail, please watch my youtube video. :)
Why did I study Studio Dragon?
First of all, I thought about what Korea should do well.
What just came to mind was manufacturing and entertainment.
As a result, I am interested in contents like this YouTube video, so I am interested in entertainment.
Studios Dragon stood out when I looked at the market capitalization ranking.
So I chose Studio Dragon.
So let's look at Studio Dragon's asset status first.
It's about 2.5 Billion USD in market capitalization.
It looks good because the debt ratio is low with a capital of 4.6 billion USD and a debt of 1.8 billion USD.
The retained earnings have been steadily accumulated and now there are about 1.3 billion USD.
Next is performance.
The chart on the left is one year cumulative and the chart on the right is an annual comparison of cumulative performance up to the third quarter.
First, if you look at the chart on the left, the blue sales have steadily increased, but the red operating profit and yellow net profit have decreased in 2019.
But if you look at the chart on the right, based on the 3rd quarter accumulation, the performance has risen significantly again in 2020 this year.
I was curious here.
What's the reason for the decline in 2019? Why did it rise in 2020?
So I looked it up.
The reson why the performance decreased in 2019 is below.
The 'Mister Sunshine', which was popular in 2018, was weaker than I thought.
The 'Arthdal Chronicles', which cost all-time production costs, were also sluggish.
In addition, only six episodes of the emergency landing of love were broadcast due to delayed programming.
The production cost was high, but it didn't get as popular as expected.
Funnily enough, the stock price fell sharply when the 'Arthdal Chronicles' aired.
Concerns about huge production costs and disappointment with the drama?
But then the stock recovered to a certain extent.
There were about three points.
After the first episode of Arthdal Chronicles Part3, the stock price went up the next day.
Was it funnier than I thought? I haven't seen it.
And there was a day when video content sectors rose together.
The day of the partnership with Netflix also saw a significant increase in stock prices.
But the next day, It came back.
People wanted a bigger contract, but they didn't so the price came back.
I Guess...
At this time, the stock price is similar to the current stock price.
Let's look at the partnership agreement with Netflix.
It's about selling more than 21 pieces of content to Netflix for 3 years from 2020.
Anyway, they have a place to sell by 2022, so It is positive.
What's left is how well they make the drama fun and interesting.
So what made Studio Dragon recover in 2020?
According to the first quarter report, TV sales rose 2.5% compared to the previous year, while copyright sales increased 19%.
In the second quarter, sales increased significantly and overseas sales grew.
In the third quarter, they also improved profitability by selling to China and streamlining production costs.
In the fourth quarter of this year, webtoon-based 'True beauty' and ‘Sweet Home’ are waiting.
Did you see in the report that sales of OTT have increased significantly?
In fact, if you look at the sales structure, it's divided into TV programming, OTT sales, and others.
While TV sales have declined recently, OTT sales have grown significantly.
If you look at the business structure, here's the production company.
The production company receives an advertisement from an advertising agency, puts PPL in it, makes a drama, and broadcasts it after being organized by the broadcasting channel.
And they sell copyrights to IPTV or OTT operators and broadcast drama on VOD.
The report means sales of the global OTT platform are becoming more important these days.
In fact, the drama programming of each TV station remains unchanged.
That's because the channel and the broadcasting time are set.
For example, if it's a weekend drama, Channel A will air from 9 to 10 on weekends.
So that's not going to change much.
But the growth of the global OTT market is faster than that of TV.
The proportion of OTT is increasing.
As a result, not only Netflix, but also large companies such as Amazon, Disney, and HBO are entering the OTT market by investing trillions of dollars.
There are only Netflix in Korea, but globally, there are a lot of Amazon Prime, Hulu, Disney Plus, Apple TV, HBO Max, etc., right?
Among them, Netflix, the leader, entered Korea first and formed a partnership with Studio Dragon.
Netflix already has many subscribers, so the increase in new subscribers is slowing down, and 46% of new subscribers in the third quarter of this year are in the Asia-Pacific region. And sales in the Asia-Pacific region grew 66% compared to the same period last year, and Korea and Japan accounted for a huge portion of the total.
To sum up, Netflix is growing in Asia and the Pacific region, mainly in Korea and Japan.
So I looked up what content they were watching on Netflix.
If you log on to Netflix, today's top 10 will be selected and shown in order of popularity.
There is a website that scores based on this.
It's based on who made it to the top 10 and what rank it was.
Simply put, it's a popular ranking.
I investigated the cumulative statistics until December 4, 2020.
First of all, in Korea, 1st place is Hospital Playlist and 2nd place is Bimilui Soop.
The red square was made by Studio Dragon.
2, 3, 5, 7, 9 out of the top 10 are from Studio Dragon.
Next is Japan.
‘Crash landing on You’! The ‘Crash Landing on You’ took the first place, and Studio Dragon took the fourth place, the seventh place, and the tenth place.
Studio Dragon's works are gaining popularity in Korea and Japan, which led Netflix's growth in the Asia-Pacific region.
I'll look at other Asian countries in addition.
In Hong Kong, five of Studio Dragon's works were in Top Ten.
In Singapore, five of them were included in the top ten, including the first place.
The same goes for Malaysia and the Philippines, and five of the top ten are from Studio Dragon.
In Taiwan and Thailand, five and four works were included in the top ten, respectively top ten.
In Vietnam, four works were included in the Top Ten.
Interestingly, except for Korea, the first place is all Studio Dragon.
Studios Dragon's dramas are gaining huge popularity in East Asia.
But a little further west, Southwest Asia, West Asia.
In India and Saudi Arabia, you can't find Korean dramas in Top Ten.
The same is true of the United States.
The more you go to Western countries, the more Korean sentiment still doesn't work.
Let's go beyond Asia and look around the world.
Select the top 50 for a week, the ratio of American content is the highest, followed by Korean content. Of course, as you saw earlier, the popularity of East Asia has been the foundation.
So, when I sum up this situation, I sort of summed it up.
For now, the OTT market is growing worldwide.
And Korean dramas are popular in East Asia.
And many of them were produced by Studio Dragon.
Studio Dragon is the No. 1 producer in South Korea, with good assets and good performance.
In addition, the company has secured a place to sell as it signed a supply contract with Netflix by 2022.
And sales are slowly taking place in China, and other OTT platforms such as Amazon and Disney are also entering the market.
In other words, there is an expectation that the demand for Korean drama content will increase.
In this situation, I look forward to Studio Dragon's growth and rising stock prices.
But the biggest problem is, aren't all of these things already reflected in stock prices because these analyses have already been in place few months ago? That's what I think.
So Studio Dragon seems to have a possibility, but I think there should be something like a detonator to jump to the next level.
For example, when they enter the Chinese market in earnest, the sales of copyrights are huge.
Or they'll sign supply contracts with other big OTTs like Amazon and Disney.
Or maybe the upcoming drama will hit the jackpot globally...
I think they need these things.
But it's hard to get that kind of information in advance, so I'm just going to buy stocks and wait until 2022 with hope and expectation. Because, at least until then, they are working with Netflix, so I think that their performance will be stable.
And by the time the contract expires, I'll go back and see what's going on, buy more, sell more, or just hold it.
Now, next time, rather than choosing a company to study,
I'm going to study by selecting an industry first and finding a promising company in that industry.
I chose the company first and studied it, and it seemed like the confirmation bias was in the way.
Anyways, I think it'd be fun to share opinions about Studio Dragon in the comments.
See you in the next posting.
Thank you :)
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