South Korea's status as a global cultural superpower seems assured. From BTS dominating music charts to the Oscar-sweeping triumph of Parasite and the relentless popularity of K-dramas on Netflix, the 'Hallyu' or Korean Wave has never been more influential. In 2024, exports driven by the nation's arts and content reached a staggering record high of $15.18 billion (£11 billion).
The Dramatic Collapse of Korean Cinema
Beneath this glittering surface of international success, however, the twin engines of the Korean Wave—cinema and K-pop—are undergoing profound and destabilising transformations. The most severe crisis is unfolding in the film industry. Cinema admissions in South Korea, for both local and international films, have plummeted by 45% since 2019, falling from approximately 226 million to just 123 million. Box office revenue has mirrored this decline, dropping from $1.3 billion to $812 million.
With investment drying up, Korean distributors who once released over 40 local films annually are now projected to put out only about 20 in 2025. Industry warnings suggest 2026 could be "even more serious" as the backlog of pandemic-era productions is exhausted. Acclaimed director Kim Han-min delivered a stark assessment to lawmakers last year, stating the sector had "almost collapsed."
Jason Bechervaise, a professor of Korean film at Hanyang University, identifies a structural weakening, not a temporary slump. He points to years of tightening margins and rising costs that have eradicated the vital mid-budget film sector. This was once the crucial training ground for new directors and a space for established filmmakers to experiment. "Much of the talent pipeline is now moving toward streaming platforms, where investment is steadier and production schedules more predictable," Bechervaise notes.
The theatrical experience has been further undermined by the drastic shortening of the 'holdback window'—the period between a cinema release and a film's appearance on streaming services—to just a few weeks for many titles. This strain has triggered historic consolidation, with the operators of the Lotte Cinema and Megabox chains planning to merge their 1,682 screens. While cinemas are investing in premium formats like Imax, insiders argue that without a steady flow of compelling domestic films, such upgrades cannot fuel a lasting recovery.
K-Pop's Pivotal Reckoning and a Shift to Superfans
The tremors are not confined to cinema. The mighty K-pop industry, long a flagship of South Korea's cultural export strategy, is entering a period of significant uncertainty. In a major shift, physical album sales fell by 19.5% in 2024—the first decline in a decade—dropping from 115.2 million units to 92.7 million, with further decreases expected through 2025.
Major agencies have pivoted their business model towards global touring, where concert revenues now far surpass traditional album sales. Areum Jeong, a professor of Korean studies at Arizona State University, explains this strategic shift. "K-pop companies began catering mainly to the core fandom, and kind of forwent the idea of being widely known to the public," she says. "When companies cater to the core fandom’s needs, the core fandom will spend and support."
This intense focus on superfans influences everything from idol recruitment to marketing. While financially lucrative, this model raises questions about its ability to generate the kind of broad, global cultural phenomena seen in the genre's golden era, exemplified by groups like BTS and Blackpink. Meanwhile, smaller agencies that once provided essential diversity and experimentation are being squeezed out by rising costs and a concentrated fan economy.
Globalisation and the Threat of 'De-territorialised' Culture
A new, complex challenge has emerged: the global success of Korean cultural concepts no longer guarantees that Korean companies will reap the profits. Netflix's animated hit KPop Demon Hunters, while drawing heavily on Korean aesthetics and featuring Korean diaspora talent, was an American production. Professor Jeong describes it as a "de-territorialised, hybrid idea of K-pop" rather than an authentic Korean product, suggesting the underlying ideas have become portable enough for international reproduction.
This trend is echoed elsewhere, with groups trained in Korean methods now emerging in Japan and Southeast Asia, creating direct competition. Bechervaise observes a creative role reversal: "Korea had beaten Hollywood at its own game, but now it’s as though Hollywood’s beating Korea at its own game," he says, citing works like Minari and Beef that successfully harness Korean cultural elements.
The South Korean government has responded with a sweeping five-year, 51.4 trillion won (£26 billion) cultural investment plan, aiming to bolster the nation's global cultural footprint. President Lee Jae Myung has also appointed JYP Entertainment founder Park Jin-young to co-chair a new presidential committee to promote K-culture internationally. Major agencies like HYBE and SM Entertainment are aggressively expanding into new markets like Southeast Asia and India.
Critics, however, warn that this focus on overseas expansion risks neglecting the fragile domestic infrastructure that originally powered the Hallyu wave. The very cultural authenticity that attracted global audiences could be eroded in the process. As Professor Jeong concludes, while the industry will likely continue to profit, financial success alone cannot guarantee the creative renewal needed to produce the next groundbreaking, worldwide phenomenon. The foundations of the Korean Wave are being tested as never before.
