Overview of Korea’s Industries 2012 Cultural Contents • Parts and Materials • Auto Parts • Displays • Semiconductors • Tourism and Leisure • Aerospace • Medical / Bio • Finance • ICT Industry • Fine Chemicals • Logistics and Distribution • Cultural Contents • New and Renewable Energy PROMISING INVESTMENT OPPORTUNITIES 02_ Industry Overview and Prospects 08_ Business Trends 09_ Promising Regions and Sectors for Foreign Investment 11_ Current Status and Successful Cases of Foreign Investment in Cultural Contents 12_ Incentives for Foreign-Invested Cultural Contents Companies 13_ Relevant Organizations Cultural Contents 02 03 1. Industry Overview and Prospects Growth Rate and Shares of Global Cultural Contents Market 1. Industry Overview and Prospects (USD billion) 2006~2010 2010~2015 Share in 2006 2010 2015 CAGR CAGR 2010 total Global Cultural Contents Market North America 489 481 607 -0.4% 4.7% 33.9% Europe, Middle East, Africa 422 477 614 3.1% 5.2% 33.6% Current Status and Prospects by Region Asia 310 395 541 6.2% 6.5% 27.8% ·In 2010, the global cultural contents industry amounted to USD 1.42 trillion, up 12.1% compared to South America 45 66 109 10.1% 10.5% 4.7% 2006. It is expected to grow to USD 1.87 trillion by 2015, jumping 31.8% from 2010. Total 1,266 1,420 1,871 2.9% 5.7% 100% ·The world’s largest cultural contents market is North America, at USD 481 billion, followed by Source: PWC, Global Entertainment and Media Outlook: 2011-2015, 2011. Europe, the Middle East and Africa at USD 477 billion, Asia at USD 395 billion, and South America at USD 66 billion. Status and Prospects of Major Countries Cultural Contents Market Size by Region · The market size of the top 12 countries combined stood at USD 113.9 billion as of 2010, accounting for 80.3% of the global market. 2,000 1,871 (Unit: USD billion) World · The United States is the largest cultural contents market in the world, accounting for 31.2% of the Asia global market, followed by Japan (12.3%), Germany (6.1%), China (6.0%), and the United Kingdom North America 1,500 1,420 Europe, Middle East, Africa(5.4%). 1,266 South America · Korea’s cultural contents market (USD 33 billion) ranks 9th in the world in terms of size, accounting 1,000 for 2.4% of the global market. 607 614 541 Size of Major Countries’ Cultural Contents Market 500 489 481 477 (USD billion) 422 395 310 Size of market 109 45 66 0 Size Market share Ranking 2006 2010 2015 Global market 1,419 100% - Source: PWC, Global Entertainment and Media Outlook: 2011-2015, 2011. USA 443 31.2% 1 Japan 174 12.3% 2 · The global cultural contents market has grown, on annual average, by 2.9% from 2006 to 2010, and Germany 87 6.1% 3 is expected to record an average annual growth rate of 5.7% between 2010 and 2015. · From 2010 to 2015, the greatest growth in the cultural contents market is expected to take place in China 85 6.0% 4 South America (10.5%) and Asia (6.5%). UK 76 5.4% 5 · In particular, Asia is seeing a higher growth rate than advanced markets, and as of 2010, its market France 66 4.7% 6 accounted for as much as 27.8% of the global market. Italy 42 3.0 % 7 Canada 38 2.7 % 8 Korea 33 2.4 % 9 Brazil 33 2.3 % 10 Australia 32 2.3 % 11 Spain 26 1.9 % 12 Top 12 countries combined 1,139 80.3 % - Source: PWC, Global Entertainment and Media Outlook: 2011-2015, 2011. * The PWC market size is measured by the size of the domestic market, and survey subjects are different from those of the Ministry of Culture, Sports and Tourism. Cultural Contents 04 05 1. Industry Overview and Prospects Status and Prospects by Sector Domestic Cultural Contents Market · As of 2010, publishing (consumer magazines, newspapers, consumer books, educational books, Status and Prospects by Sector B2B publishing) accounted for the largest part of the global market, at 34.5%, followed by television (television licensing and subscription, advertising) at 26.3% and the internet (internet connection, · As of 2010, the domestic market stood at KRW 72.12 trillion, increasing by 9.1% compared to the online advertising) at 24.0%. previous year. It grew by 4.7% every year on average since 2005. The Korean cultural contents market consists of publishing (KRW 21.24 trillion, 29.5%), broadcast- · Other major sectors include films (6.1%), games (3.9%), outdoor advertising (1.8%), and music · ing (KRW 11.18 trillion, 15.6%), games (KRW 7.43 trillion, 10.3%), knowledge information (KRW 6.2 (1.7%). trillion, 8.6%), characters (KRW 5.9 trillion, 8.2%), films (KRW 3.43 trillion, 4.8%), and music (KRW Global Cultural Contents Market Size by Sector 2.96 trillion, 4.1%). (USD billion) ·The industries that have recorded double-digit annual growth rate between 2005 and 2010 are characters (23.2%), animation (17.1%), knowledge information (15.3%), contents solutions (11.5%), 2006 2010 2015 2006~2010 2010~2015 Share in CAGR CAGR 2010 total comics (11.2%), and music (10.6%). (Wired/wireless) The rapid growth of the contents solution market (authoring tools, mobile solutions, CMS, CDN), 167 270 408 12.7% 8.6% 19.0% · Internet access which is the foundation of the distribution of digital contents, is expected to result in the growth of Online advertising 37 71 130 16.8% 13.0% 5.0% not only the digital contents market but also the entire cultural contents market. TV license and subscription 154 203 285 7.1% 7.0% 14.3% TV advertising 158 170 233 1.8% 6.5% 12.0% Size of the Domestic Cultural Contents Market by Sector Music (performance) 33 23 22 -8.5% -1.2% 1.7% (KRW billion) Films 81 86 115 1.5% 5.9% 6.1% 2010 2005 2006 2007 2008 2009 2010 Games 34 56 82 13.0% 8.2% 3.9% YOY share Growth CAGR Consumer magazines 81 73 82 -2.8% 2.4% 5.1% Films 3,282 3,623 3,183 2,886 3,307 3,433 4.8% 3.8% 0.9% Newspapers 186 160 176 -3.7% 1.9% 11.3% Animation 234 289 311 405 419 514 0.7% 22.9% 17.1% Radio 47 45 53 -1.1% 3.5% 3.2% Music 1,790 2,401 2,358 2,602 2,741 2,959 4.1% 8.0% 10.6% Outdoor advertising 28 26 34 -1.6% 5.6% 1.8% Games 8,680 7,449 5,144 5,605 6,581 7,431 10.3% 12.9% -3.1% Consumer books and 104 109 119 1.1% 1.9% 7.7% educational books Characters 2,076 4,551 5,116 5,099 5,358 5,897 8.2% 10.1% 23.2% B2B publishing 162 147 175 -2.4% 3.5% 10.4% Comics 436 730 762 723 739 742 1.0% 0.4% 11.2% Total 1,266 1,420 1,871 2.9% 5.7% 100% Publishing 19,392 19,879 21,596 21,053 20,609 21,244 29.5% 3.1% 1.8% 8,635 9,720 10,534 9,355 9,885 11,176 15.6% 13.1 5.3% Source: PWC, Global Entertainment and Media Outlook: 2011-2015, 2011. Broadcasting Independent - - - 727 796 737 1.0 -7.4 - production Advertising 8,418 9,118 9,435 9,312 9,187 10,323 14.3% 12.4% 4.2% Knowledge information 3,041 3,468 4,297 4,777 5,255 6,204 8.6% 18.1% 15.3% Contents solutions 1,275 1,542 1,680 1,866 2,036 2,196 3.0% 7.9% 11.5% Total 57,259 62,769 64,415 63,682 66,116 72,120 100% 9.1% 4.7% Source: Ministry of Culture, Sports and Tourism, 2011 statistics on the contents industry, 2012. Cultural Contents 06 07 1. Industry Overview and Prospects Exports and Imports of Cultural Contents Trends in Exports and Imports of Cultural Contents by Region Exports and Imports of Cultural Contents by Year ·Exports of cultural contents in 2010 were USD 3.2 billion, rising by 23.9% compared to the previous year, while imports recorded USD 1.7 billion, down 4.1%. ·Until 2007, imports exceeded exports, but since 2008, exports have exceeded imports. Exports and Imports of Cultural Contents by Year (Unit: mil.USD) Exports Imports 3,500 3,352 3,278 3,226 3,000 2,986 2,604 2,500 2,338 Source: Ministry of Culture, Sports and Tourism, 2011 Statistics on the contents industry, 2012. 2,000 1,945 1,987 1,770 1,697 30 (Unit: %) 1,500 1,373 27.2 1,301 China 26.2 25 23.8 Japan 1,000 24.1 24.5 23.2 Southeast Asia 22.0 20 18.9 North America 500 19.1 18.3 15.9 Europe 15 Others 0 13.2 2005 2006 2007 2008 2009 2010 10 8.9 Source: Ministry of Culture, Sports and Tourism, 2011 statistics on the contents industry, 2012. 9.0 8.8 6.3 5.2 5 5.2 Exports and Imports of Cultural Contents by Region 0 ·As of 2010, Korea’s largest export market for cultural contents was Japan (26.2%), followed by 2008 2009 2010 China (24.5%) and Southeast Asia (22.0%). ·Japan has remained the largest export market since 2008, and exports to China are increasing drastically, exceeding exports to Southeast Asia since 2009.