Tving, a streaming platform operated by Korean entertainment giant CJ ENM, sets up a promotional booth at the Busan International Film Festival on Oct. 6, 2022. (Yonhap)
SEOUL, Feb. 16 (Korea Bizwire) — Major Korean streaming services have experienced rapid growth in recent years but are now turning their eyes abroad amid mounting losses and tougher competition with foreign rivals in the crowded domestic market.
Homegrown over-the-top (OTT) players, which were made out of alliances among major entertainment companies, broadcasters and telecom operators, have expanded their subscriber base on their home turf amid pandemic lockdowns as people spent more time with home entertainment.
As the momentum built at the onset of the pandemic is slowing down, local platforms are exploring ways to overcome the limitations in the subscription-based business model to recoup rising production costs for high-quality content.
Unlike industry leader Netflix that turned to a profit in South Korea in 2021 thanks to its economies of scale, local companies are still losing money due to price pressure and intensified competition.
Korean media and entertainment giant CJ ENM’s Tving, the nation’s largest streaming platform in terms of its subscriber base, posted 119 billion won (US$92.9 million) in operating losses last year, up from 76.2 billion won in 2021.
“We have made aggressive investments in original content development since 2021, which led to operating losses,” Tving CEO Yang Ji-eul said during a conference call in November.
Wavve — a rival platform owned by mobile carrier SK Telecom, as well as three broadcasters, KBS, MBC and SBS — posted an operating profit of 55.8 billion won in 2021, which is expected to have increased in 2022.
Another home platform, Watcha, has been up for sale after years of losses, but it is struggling to find a buyer for its money-losing business.
Despite worsening profitability, leading players are not cutting back on their investment plans to attract new customers with differentiated content.
Wavve — a Korean streaming platform owned by mobile carrier SK Telecom, as well as three broadcasters, KBS, MBC and SBS — sets up a promotional booth at the Busan International Film Festival on Oct. 6, 2022, in this photo provided by Wavve.
Tving said it will invest 400 billion won in content development this year, while Wavve announced plans to spend 1 trillion won on content production by 2025, beginning with 300 billion won this year.
As a way to foster new growth drivers and turn a profit from their sizable investment, Korean companies are stepping up efforts to tap into overseas markets.
In December, Wavve acquired a 40 percent stake in Kocowa, a U.S.-based streaming provider, for 90.1 billion won to pave the way for its entry into the North American market.
Under the deal, Kocowa plans to stream Korean programs in a number of languages in about 30 countries, including the United States, Canada, Brazil and Mexico.
Last year, CJ ENM forged a strategic partnership with Paramount Global to collaborate on content production, licensing and distribution, setting a goal of co-producing seven original content releases by 2024.
As part of the deal, Tving began streaming Paramount+’s content on its platform at no extra charge in June 2022.
Netflix’s logo is displayed at its Seoul office on Dec. 16, 2022. (Yonhap)
This move comes at a perfect time as Korean content is in high demand in the global market following the big successes of the Netflix series “Squid Game” and the Oscar-winning film “Parasite.”
The Netflix survival show “Physical: 100″ topped the streamer’s non-English TV show chart this week, making it the most successful Korean variety show on the platform to date.
Industry watchers said local companies’ global strategy could add a financial burden in the early stage but agreed that it is inevitable for their long-term growth in the face of heated competition in the OTT industry.
“Given global OTT players, such as Netflix, are realizing the economies of scale in the global market, local players have to explore ways to tap into the global market to recoup rising investments in original content,” said Lee Sang-won, a professor at Kyunghee University.
“They need to forge strategic partnerships with broadcasters and telecom operators in regions where Korean content is enjoying popularity and analyze big data to customize their services in local markets.”
(Yonhap)
