On March 15, 2026, at the Dolby Theatre in Los Angeles, Maggie Kang walked to the stage. She held up the Oscar for Best Animated Feature and spoke about pride in a Korean story reaching the world. As the camera cut to the credits behind her, one line scrolled past: Sony Pictures Animation, Culver City, California.
That single line captures the paradox at the heart of the Korean animation industry in 2026. KPop Demon Hunters is Korean in almost every way that a story can be Korean. In addition, the film is set in Seoul, driven by K-pop, laced with folk motifs, and directed by a filmmaker born in the country. Nevertheless, on paper it is an American film. It was produced by an American studio, financed by an American streamer, and classified as such by every awards body honouring it.
Meanwhile, Korean webtoons dominate the world’s manhwa markets. K-pop groups fill stadiums on six continents. Korean dramas make up nearly one-fifth of Netflix’s non-English original television slate. Yet the one adjacent sector — animation — is the only piece of the K-content puzzle Korea does not actually own. Instead, exports have shrunk while global animation has boomed. Furthermore, the studios that Koreans built into world-class contractors still finish other people’s stories, not their own.
This is the story of the one K-content sector still stuck in the contractor economy.
The KPop Demon Hunters Paradox: A Korean Story With No Korean Producer
By any measure of scale, KPop Demon Hunters is a landmark. Netflix has confirmed the film crossed roughly 628 million views worldwide since its June 2025 premiere, making it the platform’s most-watched English-language movie of all time. In addition, the animated feature spent more than 52 straight weeks on Netflix’s global Top 10 chart. Its hit single “Golden” then won an Oscar, a Grammy, and two Golden Globes. It became the first K-pop song to sweep both American film and music awards.
Meanwhile, the production credits look nothing like the marketing. The film is a 2025 American animated musical urban fantasy, produced by Sony Pictures Animation for Netflix. In particular, its reported budget sits above $100 million. That is larger than the entire annual output of most Korean production houses combined.
Director Maggie Kang’s own biography reflects the same displacement. She was born in Seoul and moved to Toronto with her family at age five. She then studied animation at Sheridan College and spent two decades storyboarding at DreamWorks. As a result, the Korean-Canadian creative pipeline that produced her runs entirely through North American schools and studios. There is no equivalent Korean-based path that could have brought her back home to make the same film.
For context, the follow-up is already spoken for. Netflix and Sony have officially confirmed the sequel, though production leads at Sony Pictures Animation have signalled release will not happen before 2030. Furthermore, Kang and co-director Chris Appelhans have signed an exclusive multi-year deal with Netflix for future animation projects. That contract sits with a streamer in Los Gatos, not Seoul.
The uncomfortable question follows naturally. If the most Korean animated film ever made was not made in Korea, what exactly is the Korean animation industry making instead?
How the Korean Animation Industry Actually Looks in 2026
The answer is smaller and shrinking. According to KOCCA data cited by Hankyung’s industry report on animation exports, first-half animation exports fell from $64.4 million in 2019 to $37 million in 2024. That is a 42.5% drop. Over the same period, the global animation market expanded from $312.2 billion in 2019 to $389.1 billion in 2023, a 24.6% gain. In other words, Korea lost share in a growing category. In an era when practically every other K-content sector was breaking records, animation was the one going in reverse.
The domestic picture is starker. Theatrical animation admissions in Korea collapsed from 4.59 million in 2019 to 1.01 million in 2023. Cinema animation revenue then fell 74.4%, from ₩35.4 billion to ₩9.05 billion over the same span. Meanwhile, the total Korean animation industry did post ₩1.1 trillion in revenue in 2023, up 23% year-on-year. That growth was well above the 2.1% average for content industries overall. However, most of it came from online animation production, not from studio-driven feature or series work.
Structurally, the sector remains dominated by kids’ content. Meanwhile, Korean webtoons, dramas and K-pop matured into adult-oriented global properties. In addition, most Korean studios employ fewer than 50 people. Industry surveys show 78.9% of Korean animation companies report labour shortages, and roughly 40% of staff work on non-regular contracts. That structure works fine for absorbing overseas contract work. However, it works poorly for developing and financing original IP.
Government support underlines the gap. As part of the ₩600 billion K-content fund, only ₩10 billion was allocated to animation — about 1.7% of the pool. In addition, KOCCA’s animation support budget rose only 10.3% year-on-year to ₩28.8 billion. For a full profile of the Korean government’s content agency, see our KOCCA overview.
The Korean animation industry, in short, is not collapsing. Instead, it is stalled. Profitable enough at the margins, but nowhere near the scale required to compete for the projects that matter most.
The Webtoon Loophole: Korean IP, Japanese Animation
If Korean studios cannot make Korean animation at scale, someone else will. Increasingly, that someone is Japan.
Consider the four largest webtoon-to-anime hits of the past five years. Every one was Korean at the source and Japanese at the finish line.
Tower of God, the SIU webtoon that began serialising on Naver in 2010, was adapted by Telecom Animation Film. It premiered on Naver Series On in Korea and aired in Japan immediately afterward. Meanwhile, The God of High School went to MAPPA. Noblesse went to Production I.G. In each case, the pattern held. The original IP was Korean, but the animation production, the voice cast, the theme music and the international licensing all flowed through Tokyo.
Solo Leveling is the sharpest illustration. Chugong’s web novel, published on KakaoPage, expanded into a webtoon with 14.3 billion cumulative views worldwide. When the anime adaptation dropped in 2024, it was animated by A-1 Pictures, the Japanese studio behind Sword Art Online. Motion graphics came from Production I.G. Furthermore, the setting itself was moved: the anime places Sung Jinwoo’s story in an alternative modern Japan rather than the Seoul of the original. At the 2025 Crunchyroll Anime Awards, the series then swept nine major categories including Anime of the Year and Best Action. It was the first Korean-origin work to do so. However, the trophies went home to Japan.
The pipeline is now formalised. In February 2025, Naver Webtoon’s Japan arm announced it would launch 20 webtoon-to-anime production projects in a single year. That was up from 12 in 2024 and just one in 2022. Furthermore, most of those adaptations will be produced by Japanese studios. For a deeper look at how Korea’s webtoon industry built the source material in the first place, Seoulz has covered that arc in detail.
The result is a strange kind of round-trip trade. Korean creators produce the story. Japanese studios produce the animation. Meanwhile, global platforms — Netflix, Crunchyroll, Amazon — do the distribution. Korean audiences then watch dubbed or subtitled versions of their own IP. That version was animated somewhere else, streamed by someone else, and celebrated on award stages in a third country. It is a form of soft-power export in which the story travels but the manufacturing base does not.
Studio Mir: The Korean Animation Studios’ World-Class Exception
Not every Korean studio has been sidelined. Studio Mir, based in Seoul, is arguably the most successful animation studio in the country. Nevertheless, most of its audience has no idea it is Korean at all.
Founded in 2010 by veteran animator Yoo Jae-myung, the studio was created for a specific job. Yoo previously worked as an animation director at JM Animation, the Korean studio that produced most of Avatar: The Last Airbender. Studio Mir’s first assignment was to animate Nickelodeon’s The Legend of Korra. From there, the credits list reads like a tour of prestige Western animation.
Studio Mir has animated The Boondocks, Voltron: Legendary Defender, Dota: Dragon’s Blood, Harley Quinn, and My Adventures with Superman. Its recent credits also include Star Wars: Visions, The Witcher: Nightmare of the Wolf, and Watchmen: Chapters 1 and 2. In 2024, the studio led animation on Disney+’s celebrated X-Men ’97. Then, in 2025, its adaptation of Devil May Cry premiered on Netflix.
The reviews were unambiguous. “They’re the best of the best,” Devil May Cry showrunner Adi Shankar told IGN. Similarly, when Netflix started development on the project, executives gave Shankar four studio options. They then steered him toward Studio Mir because they knew the studio would “execute” his vision. The studio’s own management describes its identity as “advance through collaboration.” That is a philosophy that has served it well as a partner but poorly as a principal.
That distinction is the heart of the paradox. In April 2026, Studio Mir signed a new production and supply agreement with Netflix, deepening a partnership that began with a five-year deal in 2019. It also has ongoing partnerships with Warner Bros. and Paramount. Furthermore, it is now co-producing the theatrical Legend of Aang: The Last Airbender feature film. However, the studio still owns almost none of the underlying IP behind its most famous work. For an overview of how Korean studios contribute to global anime and Western animation alike, see AWN’s profile of South Korean animation.
The company has tried. In 2018, Studio Mir developed Koji, an original pilot pitched to international investors as a step toward escaping subcontracting roles. In addition, in 2022 it co-produced Lookism with Netflix. That project adapted a Korean webtoon and marked one of the few times a global Studio Mir output traced back to a Korean original source. Nevertheless, both remain exceptions. The studio’s core business is still to be the world’s most reliable animator — of everyone else’s stories.
Why Korean Animation Studios Don’t Own What They Make
The reasons are structural, not artistic. In the standard OEM model that has defined Korean animation for four decades, contracts assign completed-work IP to whichever company commissioned the project. As a result, when Studio Mir finishes an episode of X-Men ’97, Disney owns it. When DR Movie animates The Simpsons, Fox and Disney own the episodes. Meanwhile, when JM Animation delivers Avatar frames, Nickelodeon owns them.
The commercial consequences compound quickly. Without owned IP, there is no merchandising revenue. There is also no sequel royalty stream, no format-licensing income, and no downstream franchise value. Consequently, Korean studios that finish other companies’ most valuable animated properties do not get to participate in the licensing, toy, theme-park, or streaming-window economics that follow.
The Korean labour market absorbs the difference. A recent industry report found that 78.9% of Korean animation companies report labour shortages. In addition, the sector’s roughly 40% non-regular employment share drives experienced staff to leave the industry or emigrate abroad. Similarly, animators from Korea now populate teams in France, Canada, the United States and Japan. As a result, the outflow becomes a compounding penalty. Every senior artist who leaves Korea to work on an original foreign production removes another candidate for the domestic industry’s own future IP projects.
Compare this to the country’s other creative sectors. In webtoons, Naver and Kakao retain publishing rights, distribution rights and derivative-work rights that flow directly back into their P&L. Similarly in K-pop, agencies such as HYBE, SM and JYP consolidate management, publishing, merchandise and live-tour revenues under a single roof. Over in Korean drama, Netflix invested $2.5 billion but leading local producers — Studio Dragon, SLL, Studio Genie — still retain equity stakes in the franchises they help create. Across each of these categories, Korean companies fought to control the IP layer. Furthermore, when they succeeded, the derivative revenues built the industries into what they are today.
Animation missed that fight. Korean animation studios optimised for execution quality rather than IP ownership. As a result, they became indispensable and invisible at the same time — celebrated by showrunners, unknown to audiences. Meanwhile, they built no franchise-level assets to lean on when contract work slowed.
Where the Money Isn’t: Korean Animation Industry Funding Math
Policy has followed the market rather than led it. When the Ministry of Culture, Sports and Tourism unveiled the K-content fund at ₩600 billion in early 2025, animation received a ₩10 billion allocation. That was just 1.7% of the total pool. Meanwhile, KOCCA’s separate animation support budget rose modestly to ₩28.8 billion, up 10.3% year-on-year.
There have been course corrections. In April 2026, the ministry announced the Animation Industry Promotion Plan (2025-2030). It pledged a dedicated ₩20 billion animation fund for 2025, split evenly between ₩10 billion from the government and ₩10 billion from private investors. The target is ₩150 billion by 2029. In addition, at least half of the total pool must be invested in domestic animation projects. Similarly, 10% of the pool is earmarked for theatrical animation, with preferential terms for IP-based projects. Furthermore, there is a proposal to rebate part of production costs when international co-productions run their main production in Korea.
Nevertheless, the numbers are still small measured against global animation economics. A single mid-budget animated feature routinely costs $80 million to $150 million to produce. For example, KPop Demon Hunters itself sat comfortably above the $100 million line. Meanwhile, the entire 2025 Korean animation fund of ₩20 billion converts to roughly $14 million. That is enough for one significant project, or one down payment on a franchise starter.
Direct project grants tell the same story. Under KOCCA’s 2025 animation production support programmes, the maximum grant per season or feature project is ₩500 million, with 4 to 11 projects selected per category. Those are useful subsidies for small studios doing focused work. However, they are not budgets that will attract a Maggie Kang home from California.
For a country that has spent two decades demonstrating what state-backed content policy can achieve in other sectors, the underinvestment reads as a choice — not an oversight.
What Would It Take? The K-Drama and K-Pop Playbook
The upside is that the playbook exists. Korea has already done this three times over in adjacent sectors. Furthermore, animation is not being asked to invent something new so much as to copy something proven.
The K-drama route began in the early 2010s when CJ ENM built tvN into a premium cable channel to compete with the terrestrials. Then in 2016, it spun off Studio Dragon as a dedicated drama producer. Studio Dragon got equity stakes across its productions rather than treating them as work-for-hire. When Netflix arrived, Studio Dragon negotiated as a principal, not a supplier. By late 2025, Studio Dragon reported ₩136.5 billion in Q3 revenue, up 51.1% year-on-year. Netflix Worldwide Production also holds a 4.68% equity stake in the company. Meanwhile, its IP catalogue now holds 278 premium properties.
K-pop followed a different route to the same endpoint. Specifically, agencies vertically integrated everything from training and publishing to concerts, merchandise and platform ownership. As a result, when BTS became a global act, HYBE captured value across at least eight adjacent revenue streams. Similarly, when NewJeans emerged, ADOR did the same. The industry deliberately built an IP-ownership stack — because the founders understood that without it, they would be trainer-suppliers to foreign labels.
Meanwhile, webtoons chose scale and platform control. Naver Webtoon and Kakao Entertainment now sit at the top of a vertical stack. Their layers include discovery, publishing, translation, licensing and video-adaptation partnerships. Furthermore, when a Korean webtoon becomes an anime — even a Japanese-produced one — the original platform still collects licensing income. The IP layer stays home.
The Korean animation industry could follow any of these paths. Elements of each are visible in early-stage attempts. Studio Mir has probed international investment for its own pilots. Similarly, Nawoo Animation is shifting toward IP-based projects and licensing revenue. Naver Webtoon’s LDF is bundling animation deals through its Japanese platform. Nevertheless, none of these has yet produced a franchise on the scale of what one hit K-drama or one BTS album can generate. In addition, none has retained the kind of leverage over a Netflix or Sony that Studio Dragon retained over its own Korean drama slate.
The template is not mysterious. In practice, what is missing is capital patience and policy scale — the same two ingredients that got the other K-content sectors to escape velocity.
Can the Korean Animation Industry Escape the Contractor Trap?
The next five years will decide it. On one hand, momentum is real. In particular, the KPop Demon Hunters effect has done for Korean creative branding what Squid Game did for Korean drama. In addition, KOCCA’s promotion plan finally acknowledges IP ownership as the strategic priority. Furthermore, Studio Mir’s steady climb from anonymous contractor to named partner is one of the more impressive quiet industry stories anywhere in global animation.
On the other hand, the structural gaps have not closed. Meanwhile, Korean webtoons continue to feed Japanese anime studios. Furthermore, Netflix’s most successful “Korean” animated film remains an American production. Similarly, the Korean animation industry as a whole is still smaller in export terms today than it was seven years ago. Government funding, though rising, remains an order of magnitude below what one franchise-scale feature actually costs to make.
The honest summary is this. Korean animation is not a failed sector. Instead, it is a sector that never got to make the leap the rest of K-content made. In addition, unless someone — the state, a private conglomerate, or a returning creator — writes the missing chapter of that story, the next KPop Demon Hunters will be made somewhere else too. The audience will still be global. However, the industrial dividend will still not flow home.
