The South Korean TV home shopping industry is facing a severe downturn with broadcast revenue plummeting to a five-year low. (Image courtesy of Lotte Home Shopping)
SEOUL, Jul. 4 (Korea Bizwire) – The South Korean TV home shopping industry is facing a severe downturn with broadcast revenue plummeting to a five-year low, reflecting the ongoing decline in television viewership. This slump comes amid rising transmission fees, further squeezing the industry’s profitability.
According to a report released by the Korea TV Home Shopping Association on July 3, the combined broadcast revenue of the seven major TV home shopping companies fell to 2.73 trillion won in 2023, an almost 6% decrease from the previous year’s 2.9 trillion won. This figure represents a substantial 13.3% drop from pre-pandemic levels of 3.15 trillion won in 2019.
The share of broadcast sales in total revenue dipped below 50% for the second consecutive year, settling at 49.1% in 2023. This continues a downward trend that started in 2019 and marking a significant shift in the industry’s revenue structure.
Concurrent with declining broadcast sales, annual operating profits for these companies reached a five-year low of 327 billion won in 2023. This sharp decline follows a peak of 744.3 billion won in 2020 during the COVID-19 boom, followed by 602 billion won in 2021 and 502.6 billion won in 2022.
The South Korean TV home shopping industry is facing a severe downturn with broadcast revenue plummeting to a five-year low. (Image courtesy of GS Shop)
The industry’s struggles are largely attributed to dwindling TV viewership. Data from the Korea Communications Commission shows average daily TV viewing time per household has steadily decreased from 189 minutes in 2020 to 186 minutes in 2021, 183 minutes in 2022, and 182 minutes in 2023.
The exodus is particularly pronounced among younger and middle-aged viewers. A survey on essential media perception by age group revealed that only 7.9% of those in their 30s and 12.6% of those in their 40s consider TV an essential medium. The figures are even lower for future consumers, with just 0.8% of teenagers and 3.9% of those in their 20s viewing TV as essential. Only the 60+ age group still considers TV crucial, with 50.8% of those in their 60s and 78.9% of those 70 and above deeming it essential.
In response to these challenges, TV home shopping companies are accelerating their digital transformation. Among the four major TV home shopping companies, GS Shop leads with 63.3% of its total gross merchandise value coming from digital sales, including mobile and online platforms. CJ OnStyle follows at 51.8%, Lotte Home Shopping at 50.0%, and Hyundai Home Shopping at 39.7%.
The South Korean TV home shopping industry is facing a severe downturn with broadcast revenue plummeting to a five-year low. (Image courtesy of Hyundai Home Shopping)
Despite this pivot, the industry faces mounting pressure from transmission fees paid to cable, satellite, and IPTV operators. In 2023, these fees totaled 1.94 trillion won, consuming 71% of broadcast revenue – an all-time high. This means for every 100 won earned through TV sales, 71 won goes towards transmission fees. These fees now account for 55.6% of total sales commissions, far outpacing other expenses such as logistics (4.5%) and credit card fees (6.8%).
Negotiations to reduce transmission fees for 2024 are ongoing, but prospects appear dim as pay-TV operators face similar challenges from declining viewership. There are fears that the standoff could lead to another “blackout” crisis similar to last year’s incident.
Some experts, like Kim Yonghee from media consulting firm OpenRoute, argue that government intervention may be necessary. “The gap between operators is too wide for autonomous standards and negotiations to resolve,” Kim said. “The government should actively mediate by verifying and monitoring the validity of transmission fees to revitalize the industry and enhance customer welfare, rather than dismissing this as a dispute between businesses.”
Ashley Song (ashley@koreabizwire.com)
