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Will Netflix Dominate Domestic OTT Market?
Foreign Media Power
Will Netflix Dominate Domestic OTT Market?
  • By Cho Jin-young
  • April 28, 2015, 08:30
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As Netflix, the world’s biggest provider of Internet streaming media, is expected to enter the domestic market next year, the pay broadcasting market at home is in disarray.

While some providers are examining the cooperative potential of Netflix, most of them are scrambling to come up with measures to strengthen media services in order to compete.

According to the media industry sources on April 27, Netflix is actively trying to tap into the domestic market. The company has recently completed domestic market research and is discussing cooperation in the domestic media market with IPTV service providers of three mobile carriers.

An official from the pay broadcasting industry said, “When Netflix finds a cooperation partner like mobile carriers, it will start services in the domestic market in earnest. The over-the-top [OTT] market at home is not vitalized yet, unlike its global market. Also, the domestic market is reluctant to pay usage fees. Considering these two factors, Netflix seems to decide to enter the market with a partnership, rather than providing services by itself.”

OTT refers to the broadband delivery service of video and audio any time and anywhere through smartphones, tablet PCs, and notebook computers, using Internet and telecoms networks, unlike conventional TV broadcasting. Numerous providers, including Netflix, Google Chromecast, and Apple TV provide services.

Netflix is the world’s largest OTT service provider with 57 million paid subscribers alone worldwide. With its low price, Netflix already changed the paradigm of the conventional pay broadcasting market led by cable TV and satellite broadcasting in the U.S. Announcing the result of Q4 last year at the beginning of this year, Netflix announced that it would increase the number of service provided countries to 200 within two years.

The domestic pay broadcasting industry is keeping a close watch on the movement of Netflix. CJ Hellovision CEO Kim Jin-seok said, “While the U.S. OTT market has rapidly grown to outrun existing pay television, Korea's market remains in the infant stage. Since the OTT service business has little entrance barrier, the domestic OTT market can be dominated by global enterprises like Netflix once they make inroads into Korea.”

Also, there are some providers preparing for competition with Netflix. In a press conference to celebrate the 5th anniversary of Tving, CJ Hellovision announced that it would compete with Netflix and Apple TV with its new OTT device called the “Tving Stick.” The company launched the Tving Stick on the same day and presented its vision to become a leader in the Asian OTT market. The Tving Stick allows access to TVing, a multi-device content service, on television. By connecting a Tving Stick to a television, users can choose 140 channels and 100,000 VODs for movies or television programs on demand from their PCs and smartphones to watch on TV with a larger screen.

In a bid to prepare for the market invasion of Netflix, cable TV VOD is pushing ahead with a plan to integrate the VOD user interface (UI) of cable TV service providers. Until now, the zones were divided by service provider in the case of cable TV. Therefore, there were no unified channels or UI. When a viewer moves to a new house, he needs to adopt to new television-watching circumstances.

Cable TV VOD CEO Choi Jung-woo said, “Even though the concrete procedure to integrate a UI has not started yet, most service providers agree with the need for change. Before Netflix taps into the domestic market next year, we will unite at least the VOD interface of cable TVs so that users can use the service more conveniently.”