Logo of Phnom Penh Post newspaper Phnom Penh Post - Will coalition of SK Telecom and media giants be a match for Netflix?

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

Content image - Phnom Penh Post
Chiefs of SK Telecom and South Korea’s major broadcasters announce their decision to integrate its streaming service during a press conference in Seoul on January 3. From left to right 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 KOREA HERALD

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

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 January 3, SK Telecom and Korea’s three territorial broadcasters agreed to establish a new entity designed to manage their over-the-top (OTT) 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”, which means “corn” in Korean. 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.”

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 Konkuk University business administration professor Lee Seung-yoon. “They know how to read the minds of viewers.”

Along with easy access to the 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 per cent.

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 on Thursday.

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

Some analysts 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 eight per cent, lagging behind CJ ENM by about three per cent in 2017. CJ ENM is a producer of mega-hit dramas such as Mr Sunshine. It also came after that of JTBC by about one per cent. KBS and MBC enjoy about 27 per cent and 12 per cent viewership share.

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 platforms, not closed ones. Everyone who creates content can join us,” Park said. “While it has not been finalised, 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 Korean 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 on Friday. “We will constantly try to find ways to deliver better content.” THE KOREA HERALD/ANN

MOST VIEWED

  • Omicron patients can stay home: PM

    The Ministry of Health has issued a directive on the treatment of people who have tested positive for the highly transmissible Omicron coronavirus variant, following a suggestion from Prime Minister Hun Sen on the night of January 21. The directive permits home quarantine for those who

  • The effects of the USD interest rate hike on Cambodian economy

    Experts weigh in on the effect of a potential interest rate expansion by the US Federal Reserve on a highly dollarised Cambodia Anticipation of the US Federal Reserve’s interest rate hike in March is putting developing economies on edge, a recent blog post by

  • Cambodia’s first ever anime festival kicks off Jan 22 at capital’s F3 centre

    Phnom Penh's first ever Anime Festival will bring together fans, artists, shops and other local businesses with ties to the Japanese animation style for cosplay competitions, online games, pop-up shops and more on January 22, with Friends Futures Factory (F3) hosting. F3 is a project that

  • Hun Sen gets 4th Covid shot, urges compatriots to follow

    Prime Minister Hun Sen and his wife Bun Rany on January 14 received their fourth dose of Covid-19 vaccine and called on compatriots to follow suit as the Omicron coronavirus variant continues to spread in the community. This marks the launch of Cambodia's fourth-dose vaccination campaign,

  • Fourth dose Covid booster drive jabs 43K in two days

    In the first two days of the fourth-dose Covid-19 vaccination campaign, more than 43,000 people volunteered to get the jabs, while over 4.6 million people have received a third shot. Health ministry spokeswoman Or Vandine said that fourth-dose vaccinations, which began on January 14 exclusively with the Pfizer

  • Singapore backs Cambodia's efforts on Myanmar

    Singaporean Prime Minister Lee Hsien Loong supports Cambodia in its efforts to seek a solution to the ongoing Myanmar crisis as the chair of ASEAN. Lee expressed his support during a meeting with Prime Minister Hun Sen via videoconference on January 14, with the talks focused