Netflix Korea’s revenue reaches 1 trillion won, with 81% going to headquarters

In South Korea, a check for 1,000,000,000,000 won (1 trillion won) was issued. How much money remains in the country?

Netflix Korea, which generated 1,054,200,000,000 won in revenue in South Korea, had a net profit of 20,300,000,000 won from domestic operations. For viewers who pay subscription fees every month, it is natural to ask: How much of the money I pay remains in South Korea, and where does the rest go?

Netflix Services Korea’s domestic revenue for 2025 was recorded as 1,054,200,000,000 Korean won. However, 853,900,000,000 won of this amount was paid to the US headquarters, Netflix, Inc., under the name “payment for subscription membership.” This means that 81.0% of the revenue went to the headquarters.

Looking solely at the numbers, a significant portion of the revenue generated from subscribers in South Korea is transferred to the overseas headquarters, while a relatively small amount remains within the South Korean subsidiary. However, it is important not to interpret this situation as simply “taking all the profits earned in South Korea.” The nature of these payments must be carefully considered.

Although sales have increased, why is the domestic operating profit only 20,300,000,000 won?

Netflix Services Korea’s domestic revenue increased from 631,700,000,000 won in 2021 to 1,054,200,000,000 won in 2025. The revenue in 2024 was 899,700,000,000 won. As Netflix’s presence in South Korea has grown, its revenue has also increased rapidly.

However, in 2025, the operating profit of the domestic corporation was 20,300,000,000 won, and the operating profit margin was 1.9%. When examining only the domestic operating profit from the income statement of a company with sales of 1,000,000,000,000 won, it appears that a small ripple remains after a large wave.

The key figure is 853,900,000,000 won, which lies between revenue and profit. According to the audit report, Netflix Korea resells Netflix service subscription memberships on behalf of Netflix, Inc., under a distribution agreement. This means that the Korean entity is more like a company that sells the parent company’s services domestically, rather than a headquarters that accumulates the final profits of the entire platform.

The audit report explains that the Korean entity pays the head office consideration for the purchase of subscription memberships, and that its operating profit is normal operating profit under the Netflix Group’s transfer pricing policy. Accordingly, the structure is such that the amount remaining after the payment to the head office is deducted from domestic revenue is reported as the Korean entity’s operating profit.

Reasons why 853.9 billion won should not be viewed solely as costs for Korean content.

There is a crucial point to be aware of here. The “subscription membership purchase cost” of 853,900,000,000 won does not only refer to the production costs of original Korean content. According to the data from the Broadcasting Media and Communications Committee, this item includes all content costs, both domestic and international, that the headquarters purchases in order to provide services in Korea.

Therefore, it is not possible to definitively classify the entire 853,900,000,000 won as revenue from Korean content being transferred overseas. This is because costs associated with overseas content viewed by Korean viewers, as well as expenses related to the operation and distribution of global platforms, may also be included. This figure represents “the amount paid to the headquarters,” and it is not the same as “the net profit that the headquarters receives from revenue generated by Korean original content.”

Conversely, this explanation does not dispel every question. The fact that the Korean entity’s operating profit amounted to only 20.3 billion won raises questions about how the global platform’s domestic accounting structure intersects with the domestic industry. The criteria used to determine transactions with headquarters, and how much actual Korean content production costs account for within that structure, are matters requiring separate disclosure.

Currently, there is no official data available regarding the costs of Netflix’s Korean original content. Therefore, it is impossible to compare the amount paid by the headquarters with the money that goes to Korean production companies on a one-to-one basis. The available figures are insufficient to definitively conclude that there is tax evasion or illegal money transfers.

If K-content fueled Netflix’s growth, how much did the production companies benefit?

The controversy is shifting from accounting figures to the actual content production environment. According to a survey conducted in 2025, Netflix’s domestic paid OTT usage rate was reported to be 46.7%, while TVing’s was 13.0%. The details of these figures are based on the data cited in media reports, and they serve as a reference indicating the significant presence of Netflix in the daily lives of Korean viewers.

Representative Han Jun-ho of the Democratic Party of Korea pointed out, “Netflix has become a service that nearly half of the Korean public pays to watch, but of its 1 trillion won in domestic revenue, it paid 80% to its headquarters, leaving its domestic subsidiary with an operating profit of just 20.3 billion won.” He further argued that K-content is what made Netflix the No. 1 service in Korea, yet the production companies that created it receive margins equivalent to only 3–10% of production costs, regardless of commercial success.

However, it cannot be definitively stated that this figure of 3-10% applies equally to all Netflix productions and production company contracts. There may be contracts where Netflix bears the production costs and is responsible for global distribution, marketing, and platform operating expenses, in exchange for securing the intellectual property rights. This means that the contract terms vary from work to work.

Nevertheless, the questions remain: Does the production company receive additional compensation when a work is successful worldwide? To whom do the overseas box office revenues belong? Who owns the intellectual property? Viewers may not see the contracts behind the scenes, but those contracts have a significant impact on the production environment and the treatment of creators for the next season.

While a single hit can increase a platform’s subscriber base and boost a company’s value, if a production company is left with only the production costs it initially received, the gap between achievement and compensation can only widen. To maintain the competitiveness of K-content over the long term, receiving production costs and sharing in the fruits of success must be treated as separate issues.

The ultimate question for viewers is about subscription fees.

The 2025 Survey on Broadcasting Media Usage Patterns, conducted by the Broadcasting Media and Communications Commission among 5,566 households nationwide and 8,320 men and women aged 13 and over, found that eight in 10 people use OTT services. The commission also said that viewing OTT content on TVs is on the rise. OTT services are no longer merely supplementary channels on smartphones; they have become part of the living-room TV experience and monthly spending.

Therefore, this change in numbers does not immediately mean a monthly subscription price increase or a refund for viewers. However, it does raise questions about how the subscription fees paid by users are distributed between the Korean corporation and the US headquarters, and how much of that revenue goes to the content creators.

The issue becomes more complex when compared to domestic businesses. Tving and Wavve are often cited as examples of companies that, unlike Netflix, continue to operate at a loss due to the burden of content costs and amortization expenses. One company has a distribution agreement with its global headquarters and manages the profits of its domestic subsidiary as normal operating income, while the other directly bears the burden of content investment costs in its domestic income statement.

This difference is not simply a matter of which company is doing better business. It involves issues of fairness in accounting, taxation, and regulation between global OTT platforms and domestic businesses, the transparency of transactions with headquarters, and the sustainability of the domestic content ecosystem. These are the points that the Congress and the government will need to examine in the future.

Specifically, there are three things that need to be verified. These are: the amount of expenses related to Korean content within the 853,900,000,000 won budget; whether the transfer pricing was recognized as appropriate under tax law; and the actual settlement details and intellectual property (IP) conditions for each Korean production company. Currently, the actual corporate tax payment amount for Netflix in 2025, and the settlement amounts for each production company, have not been confirmed.

Netflix’s domestic revenue of 1,054,200,000,000 won (approximately $800 million USD) demonstrates the size of the market created by Korean viewers. However, the benefits of this market do not automatically translate into gains for production companies, creators, and the domestic industry. The future competition will likely be determined not only by which company attracts more subscribers, but also by how transparently they explain the flow of subscription fees and how they distribute the profits from successful content.

The most realistic question that viewers can ask is simple: “What work is being created with the subscription fees that I have paid?” Platforms that answer this question with specific numbers and details about the contractual arrangements will ultimately gain the trust of their audience.

Frequently Asked Questions.

What will be the revenue of Netflix Korea’s legal entity in 2025?

Netflix Services Korea’s domestic revenue in 2025 is 1,054,200,000,000 won.

What is the amount paid to the U.S. headquarters from the total revenue?

853,900,000,000 won was paid to Netflix, Inc., the U.S. headquarters, under the name of “subscription membership purchase fee.” This represents 81.0% of the total revenue.

Is the entire amount paid by the headquarters used for Korean content production?

No. This item may include costs related to domestic and international content provided in Korea, and does not solely refer to the production costs of Korean original content.

What is the operating profit of the Netflix Korea corporation?

The operating profit for 2025 is 20,300,000,000 won, and the operating profit margin is 1.9%.

Does Netflix’s corporate payment structure constitute tax avoidance?

Based solely on these figures, it is not possible to definitively conclude tax evasion or illegal money transfers. The audit report explains that the figures represent a normal profit structure resulting from distribution contracts and the group’s transfer pricing policies.

Has the amount of revenue allocated to each Korean production company, and Netflix’s corporate tax payment amount, been disclosed?

Based solely on the information currently available, it is not possible to determine Netflix’s actual corporate income tax payment for 2025, nor to finalize the settlement amounts for each Korean content production company.

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