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Antitrust watchdog approves plan to establish ‘Netflix of Asia’

Fair Trade Commission approves merger of Pooq and Oksusu services to launch integrated streaming platform

Aug. 20, 2019 - 18:13 By Yeo Jun-suk
Korea’s antitrust watchdog on Tuesday approved the integration of two popular video streaming businesses, giving the nod to the local companies’ ambition to establish a massive home-grown streaming platform to compete with Netflix.

The Fair Trade Commission said it greenlighted the merger of SK Telecom and territorial broadcasters’ over-the-top video services. Combining SK Telecom’s Pooq and the broadcasters’ Oksusu, new OTT service Wavve will be launched next month. 


(SK Telecom)

While the approval came with several conditions designed to ensure fair competition in the country’s growing online content market, the companies expressed the hope that the merger would improve the homegrown service’s capabilities.

“By offering unique and innovative content, Wavve will assume a crucial role in leading the country’s media industry,” said an SK Telecom official. “We will do our utmost to protect Korea’s content business.”

With original contents targeting the Korean audience such as “Kingdom,” Netflix has been gaining popularity among local viewers. According to market research firm Wiseapp, Netflix subscribers here numbered 1.84 million in June, nearly tripling from 630,000 a year earlier.

The influence of global streaming giants is expected to increase when Disney launches its own Disney Plus in November. Starting from its service launch in the US, Canada and the Netherlands, the streaming platform is seeking to penetrate countries around the world.

If the launch of Wavve is to take place as planned on Sept. 14, the new streaming service’s subscribers in Korea is likely to outnumber that of Netflix. According to the FTC, the number of monthly active users for Oksusu and Pooq is about 4 million.

“It is significant that the country’s major mobile carrier and broadcasters joined hands when an increasing number of people rely on Netflix for streaming services,” said Seong Dong-kyu, a professor of media communications at ChungAng University.

While the companies pinned high expectations for the homegrown streaming service with its massive subscriber base, the antitrust watchdog warned against attempts to undermine the spirit of fair competition.

In announcing its permission for the merger of Pooq and Oksusu, the FTC banned the terrestrial broadcasters from offering their content exclusively via Wavve. Other OTT operators must be granted equal access to the broadcasters’ new TV shows, the FTC said.

The watchdog also prevented SKT from requiring viewers to subscribe to the company’s telecom and internet TV services. The FTC said those who are not using an SKT mobile fee plan and SK Broadband’s internet TV must not be discriminated against when applying for Wavve services.

“It was the first time that (the FTC) imposed corrective actions regarding the merger in the telecom and media industry,” said Hwang Yoon-hwan, who deals with business merger policy at the FTC. “We believe the measure will encourage market competition and protect average consumers.”

While SKT said it “respects” the FCC’s attempt to ensure equal access to its streaming contents from broadcasters, some industry watchers raised concerns that the measures could amount to reverse discrimination.

This is because Wavve’s original content will mostly be produced by the terrestrial broadcasters that will hold a stake in the service due to their ownership of Pooq, while Netflix produces its own shows in-house.

According to the FTC’s rules, the broadcasters’ content must be available to every OTT operator, even though they are created by the broadcasters themselves. For example, Netflix subscribers can watch Munhwa Broadcasting Corporation’s latest TV series such as “Spring Night.”

However, Netflix’s original series are not subject to the restriction and not available outside of its streaming platform. The same can be applied to Disney Plus, which will provide exclusive streaming of upcoming theatrical releases like “Avengers: Endgame” and the “Aladdin” remake, industry sources noted.

“It would be like going to the war with a major armor being removed,” said an industry source. “Given the challenges surrounding the media industry, the authorities should give more thoughts into it.”

By Yeo Jun-suk (jasonyeo@heraldcorp.com)