Broadcasters in the Era of Deficits: Can AI Solve Skyrocketing Production Costs? [★22nd Anniversary] Part 2

*This content was translated by AI.

• StarNews 22nd Anniversary Special: [Asking the Path of K-Content in the AI Era]

[Editor’s Note] Artificial intelligence (AI) has deeply penetrated our daily lives. Now, AI is also reshaping the landscape of content. Beyond being a simple auxiliary tool, it is driving changes across the entire K-content ecosystem, from directing techniques in films and dramas to production cost structures. While expectations grow for technological innovations that break through the limits of direction, concerns are also rising regarding content copyright issues and the encroachment on human jobs. On the occasion of its 22nd anniversary, StarNews examines the current state of K-content entering the AI era, explores the challenges we must address, and looks ahead to future prospects.

Will AI be the 'relief pitcher' for K-content? From 'Manager Kim's' action scenes to Son Seok-gu's child actor roles ①

Broadcasters in the Era of Deficits... Can AI Solve Skyrocketing Production Costs? Part 2

"Change the technology, preserve the story": Survival strategies for K-content in the AI era (3)

"We Created It with an AI, Not a Human": The Air Strike of 'AI Short-form' That Has Conquered SNS (4)

The comprehensive channel JTBC declared a default of 20 billion won, sending shockwaves through the entire pop culture industry. Since the COVID-19 pandemic in 2020, OTT services have grown rapidly, surpassing TV broadcasting in both buzz and viewership. In response, the broadcasting sector has felt a sense of crisis regarding financial difficulties. While OTT platforms have bolstered their content competitiveness backed by massive capital, traditional TV broadcasters have struggled to catch up, leading to increasingly severe management challenges for broadcasting companies.

This is not a problem unique to JTBC. Recently, KBS also announced that it expects an annual deficit in the range of 100 billion won this year and has entered a company-wide restructuring phase. Terrestrial broadcasting advertising has generally followed a steady downward trend over the past 15 years. The scale of terrestrial broadcasting advertising in the first half of 2026 is projected at 310.4 billion won. Fifteen years ago, in 2011, the scale was 1.1164 trillion won, and ten years ago, in 2016, it was 793 billion won. Compared to 15 years ago, it has shrunk to nearly one-quarter of its former size, and compared to 10 years ago, it has been cut in half.

Accordingly, opportunities for producing programs are decreasing. The number of drama broadcast days and titles is shrinking, and pilot productions testing new formats have also declined in variety shows. As popular original manga and novel IPs are adapted into dramas, production approaches are becoming more conservative.

Amid this trend, AI technology is gaining attention as a new alternative for the broadcasting industry. There is hope that it can reduce production costs and timelines while enabling scenes and formats that were previously difficult to attempt due to cost constraints. We heard from those on the ground about whether AI can truly alleviate the production cost burden of broadcasters struggling with deficits and open up new avenues for growth.

Each broadcasting station is currently diagnosing the situation as a "crisis for terrestrial broadcasters." An official at MBC said, "Looking only at MBC's advertising sales in July this year, they have decreased by 10 percent compared to July last year."

According to the official, total advertising sales for all terrestrial broadcasters fell from 125.3 billion won in July 2016 to 54 billion won in July 2026, a drop of less than half over a decade. Meanwhile, production costs per episode of drama miniseries have surged from an average of 600 million to 800 million won ten years ago to an average of 1.5 billion won today. With advertising revenue shrinking to less than half while program production costs more than doubled, the explanation is that broadcasters' deficit structures have become entrenched.

A source said, "The question of whether terrestrial broadcasters have a future was raised even 10 years ago. However, it feels more pressing now. Internal members feel a strong sense of crisis." They pointed out, "Broadcasting advertising regulations will be relaxed starting this October. However, compared to OTT and YouTube, which can broadcast ads without any restrictions, there are still many asymmetric regulations on terrestrial broadcasters. Keeping the proportion of advertisements during prime time at 20% is also problematic."

An official from EBS also stated regarding the decline in advertising revenue, "This is a reality common to all broadcasters. As viewers shift to OTT and YouTube, the traditional advertising funding base itself is shrinking, leading to industry-wide phenomena such as the reduction of drama schedules and a contraction in pilot program production. In EBS's case, advertising revenue once reached the level of 40 billion won, but recently has been cut in half to 18 billion won. Furthermore, EBS is subject to much stricter advertising regulations than commercial broadcasters, facing the double burden of declining revenue and strengthened regulations."

The crisis felt on production sites is becoming more concrete. A PD at a terrestrial broadcaster said, "It is visible numerically that advertising revenue is steadily declining. There are even jokes that dramas will turn a profit if they are not produced. As production costs rise accordingly, the conditions for producing pilot programs are gradually diminishing."

In particular, he cited the rise in actors' appearance fees as one of the main causes. He stated, "Among them, I believe that the exorbitant rates set by OTT platforms for actors are a major issue. It feels like they are monopolizing with capital so vast that it is destroying the industry ecosystem." He further pointed out, "As production companies negotiate appearance fees with broadcasters based on these standards, they are forced to accept budget overruns and proceed." He added, "Especially in the drama sector, there is no competition against OTT's massive capital, and I foresee the gap widening even more."

Analyses indicate that the core of the broadcasters' deficit lies in the imbalance between "declining advertising revenue" and "rising production costs." Although TV advertising still maintains high reach and exposure effects, viewers are rapidly shifting their media consumption to OTT platforms and YouTube, causing advertising budgets to follow suit. Compounded by rising prices and labor costs, the burden on production expenses continues to grow.

A representative of a management company specializing in actors stated, "The root cause of broadcasters' deficits is ultimately the shift of advertising markets to new platforms. As viewing habits have shifted, advertising revenue has declined and sales have dropped, leading broadcasters to rely on proven formats rather than new initiatives. Consequently, content loses its strength, viewership ratings fall, and advertisers leave again, creating a vicious cycle that continues."

Rising actor fees also play a role. As global OTT platforms leverage massive capital to drive up actor appearance fees, these levels have effectively become the new market standard, forcing broadcasters to shoulder higher costs in appearance fee negotiations. While the rise in appearance fees has been an ongoing trend even before the OTT era, it has worsened broadcasters' revenue structures by coinciding with declining advertising sales.

The three-minute action scene featuring Ji-jae-sook in the recently aired SBS drama "Manager Kim" has become a prime example of leveraging AI technology. The scene was produced entirely using generative AI without any actual filming, marking the first such challenge in a Korean commercial drama. The entire long sequence, ranging from building explosions to vehicle chases and underwater shots, was created solely with the AI video platform "AICRON." While AI videos are typically used as VFX aids for clips lasting only a few seconds, "Manager Kim" successfully rendered a minute-long scene naturally, without any awkwardness in the characters' movements.

The production team of "Manager Kim" explained regarding the filming process of that scene: "We proactively introduced generative AI technology to high-cost and high-risk sequences such as large-scale explosions, vehicle rollovers and falls, and underwater scenes, which traditionally incur significant costs for building large sets, special effects, and equipment damage. By concentrating the budget and time saved from CG and special effects into on-site filming that enhances actors' action and dramatic density, we were able to maximize the overall completion of the work within a limited production environment."

When asked about how much AI technology might be integrated into future dramas and variety shows, the response was: "AI usage is expected to increase in scenes that require significant production costs and time, pose substantial safety risks, or were previously difficult to realize due to budget constraints. AI is not a technology meant to replace production teams but is closer to a 'creative partner' that helps directors bring their imagination to life on screen."

EBS actually expected to reduce production costs by expanding the number of AI education animation projects this year. An EBS official stated, "We believe we must actively embrace AI. Major studios have already adopted generative AI for special effects and post-production, significantly shortening production timelines and cutting costs. Similarly, the advertising industry is increasingly lowering unit prices through AI-based video production. In a situation where broadcast production costs are soaring to unprecedented heights, rather than ignoring this trend, we believe proactively adopting AI to enhance production efficiency is key to securing competitiveness. EBS is already making new innovative attempts through projects such as 'AI Classics: 100 Books That Changed History,' 'AI Drama Revival Class,' and 'AI Figures in Korean History.' We believe that AI should be actively utilized across all aspects of broadcast production going forward."

Can AI technology be the solution for broadcasters struggling with financial difficulties due to soaring production costs and declining advertising revenue? An MBC official stated, "AI utilization is useful not only for production but also for transforming the fundamental structure of broadcasting companies. It can simplify and streamline work processes. At MBC, we have begun cutting costs by handling tasks that were previously outsourced to external parties internally with the help of AI. For example, MBC uses an AI clip production program, allowing staff members to create short-form clips directly themselves. In the past, short-form clip production was outsourced to external companies at a per-clip production fee; once the clips were completed, staff would review them. Now, staff members sit at their desks and produce large volumes of clips on their own. This has increased clip production volume while reducing costs previously incurred for outsourcing."

MBC plans to introduce company-wide AI agents early next year. Once the AI agents are deployed, a significant portion of broadcasting-related tasks, including various statistics and ratios, will be handled by AI. The introduction of AI agents is also expected to streamline production processes such as editing. In the technology sector, the broadcaster is improving operations and reducing costs by utilizing generative AI-based Vibe Coding.

AI utilization has already begun on production sets. In morning information programs, insert clips are being replaced with AI-generated videos instead of being filmed directly. MBC's "Late Night Ghost Stories" also utilizes AI-generated video content. In drama production processes, AI is being introduced to reduce costs and filming time in large-scale crowd scenes and action sequences, reportedly cutting existing costs down to one-tenth.

A KBS AI production official stated, "Utilizing AI can contribute to reducing time and costs for certain aspects of the existing production process while improving quality. It can assist with research in the planning stage, idea generation, drafting scripts and structural proposals, searching vast video archives, generating subtitles, translation and dubbing, and optimizing workflows for multi-cam video editing. Particularly in special effects such as graphics or VFX, it can significantly contribute to budget savings and shortened production periods."

A source stated, "AI support for repetitive and time-consuming tasks enables the production of better and more content with the same workforce and budget, allowing production teams to focus on more creative work. However, the competitiveness of broadcast content ultimately stems from planning, creativity, and trustworthiness. Copyrights, portrait rights, personality rights, and related issues are also important, making human final judgment and responsibility crucial. The issue of production costs for broadcasters is not something that can be solved by AI alone; it requires improvements in production structures, distribution, and business models as well. In this process, AI can serve as an important tool to alleviate upward pressure on production costs, enhance quality, and make the broadcast production system more efficient."

A broadcast outlet Hong Bo-sa (CEO) noted that "it seems to be a time when it is important to create a structure that can diversify revenue from a single content through measures such as securing intellectual property, global distribution, and linkage with digital content, rather than simply cutting costs."

On the other hand, there is a view that it will be difficult to solve the problem of skyrocketing production costs in the short term through AI. This is because a significant portion of the production costs for dramas and variety shows consists of expenses that are hard for AI to replace. Representative examples include actor fees, labor costs for filming crews, set and location expenses, equipment rental fees, and copyright royalties.

AI can demonstrate particular efficiency in repetitive and labor-intensive tasks. It can be utilized across production and marketing for activities such as research, translation, subtitling, post-production of video segments, image and data organization, and draft creation. In actual professional settings, the use of AI is increasingly common. This offers the advantage of rapidly processing tasks that previously required considerable time from multiple people, including accounting, clipping, proposal development, image editing, and simple video editing.

However, it is difficult for AI to immediately replace the significant portion of production costs accounted for by actors' fees, labor costs for creative personnel such as writers and directors, and expenses required for large-scale filming. There are clear limits to the costs that AI can reduce.

Ultimately, the key lies not in how much AI is adopted, but in how it is utilized. Criteria and guidelines must be established to enable efficient use of AI between cost reduction and the roles and rights of creators. Finding this balance point is expected to become the core key to leveraging AI as a practical solution for broadcasters' deficit issues.

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*This content was translated by AI.