X

Will coalition of SK Telecom, media giants be a match for Netflix?

By Yeo Jun-suk
Published : Jan. 7, 2019 - 17:09

With South Korea’s biggest mobile carrier pledging to integrate its streaming service with that of the country’s major broadcasters, focus is on how much the collaboration will affect the growing competition between domestic and global streaming service companies.

On Jan. 3, SK Telecom and Korea’s three territorial broadcasters agreed to establish a new entity designed to manage their over-the-top video services. Their new OTT platform is expected to be available in the first half of this year.

SK Telecom’s internet service subsidiary, SK broadband, has been operating its own video streaming service, called “Oksusu.” The platform is to be combined with “Pooq,” another video streaming service run by the country’s three terrestrial broadcasters -- KBS, MBC and SBS.

“We will grow (the new video service) into the Asian version of Netflix,” SK Telecom said in a statement. “We will become a leading South Korean video streaming service that can compete in the global market.”


Chiefs of SK Telecom and South Korea’s major broadcasters announce their decision to integrate streaming service during a press conference in Seoul on Jan. 3. From left are: MBC CEO Choi Seoung-ho; KBS CEO Yang Seung-dong; SK Telecom CEO Park Jung-ho; and LG Uplus CEO Ha Hyun-hoi. Yonhap


The integrated OTT platform will boast more than 13 million subscribers, according to statistics from SK Telecom and the broadcasters, who say about 9.5 million people are subscribed to Oksusu, while Pooq has some 3.7 million users.

The move came as part of efforts to present a united front against global streaming services. Chief among them is Netflix, which has been making a foray into the South Korean market and joining forces with South Korea’s third-biggest mobile carrier, LG Uplus.

Following Netflix’ pervasive entry into the contents market here, Korea’s major cable news companies have also been collaborating with Netflix to diversify their contents. The industry’s third-biggest company D’live launched Netflix service in 2016. The biggest player, CJ Hello, followed suit in 2017.

“Netflix is replacing the roles of traditional broadcasters and cable networks at a stunning pace,” said Lee Seung-yoon, a professor of business administration at Konkuk University. “They know how to read the minds of viewers.”

Along with easy access to Netflix platform, the company is known for its sophisticated algorithm and machine learning for effective recommendations, along with innovative original content. In Korea, the company will release its first original Korean TV show “Kingdom” later this month.

In terms of mobile access, the number of people who use Netflix apps reached about 900,000 in September, a threefold increase from the previous year, while other platforms witnessed minor increase, according to industry tracker Wiseapp. In comparison, Pooq’s viewers increased only about 30 percent.

Consequently, the streaming platform’s remarkable growth has prompted concerns among the Korean telecom tycoons that they would see a collapse in the pay TV market – similar to the one in the UK. According to the report by UK media regulator Ofcom in July, the number of British people subscribing to the streaming platforms has exceeded those who pay for traditional satellite and cable services.

“UK opened up its market to Netflix without such a platform (of its own). About a year later, the country saw its broadcasting platform being slaughtered,” SK Telecom chief Park Jung-ho told reporters last Thursday.

While the BBC has dominated the UK TV and radio landscape, the broadcasting company has recently faced challenge from Netflix. According to the Guardian, the BBC said last March young people spent more time watching Netflix than BBC.

Some analyst voiced concern that incorporating content from territorial broadcasters is not enough to compete with Netflix, as the traditional broadcasters have been struggling to keep their viewers from cable channels and other media platforms.

According to the data released by Korea Communication Commission in July, terrestrial broadcaster SBS’ viewership share reached about 8 percent, lagging behind CJ ENM by about 3 percentage points in 2017. CJ ENM is a producer of mega-hit dramas such as Mr. Sunshine. It also came after that of JTBC by about 1 percentage point. KBS and MBC enjoy about 27 percent and 12 percent viewership share, respectively.

Given the mounting challenge in terms of content diversity, SK Telecom chief Park said the company’s new streaming platform was open to joining forces with cable networks and other media companies.

“We are seeking open platform, not closed ones. Everyone who creates content can join us,” Park said. “While it has not been finalized, entertainment companies could also participate (in the new platform) with small capital.”

SK Telecom’s coalition with terrestrial broadcasters is expected to create a more dynamic business climate in video streaming services, with other telecommunication giants gearing up for acquisition of cable networks.

Among those seeking to diversify their supply chain are LG Uplus, which has been providing Netflix content via its IPTV platform since forging a partnership with the US company in November last year.

LG Uplus has been working to acquire CJ Hello, a cable TV channel provider under Koraen entertainment corporation CJ Group. Some speculate that LG Uplus would join forces with CJ ENM to create its own content.

“I believe that coalition of Oksusu and Pooq is designed to compete with Netflix and YouTube,” LG Uplus CEO Ha Hyun-hoi said Friday. “We will constantly try to find ways to deliver better content.”

(jasonyeo@heraldcorp.com)


MOST POPULAR

More articles by this writerBack to List