Success Factor

Naver has made investment in YG and will supply contents produced by YG to both domestic and global markets through Naver TV, V Live and Line.
Naver has made investment in YG and will supply contents produced by YG to both domestic and global markets through Naver TV, V Live and Line.

 

As letter and picture-based information services are now changing to video-centered services, the power of contents is growing in the global information and communications technology (ICT) industry. Contents, which were once considered a free offer to increase the number of subscribers, have now become a critical factor to determine the competitiveness in the ICT industry. Accordingly, the ICT industry sees the “'WEG THE DOG” phenomenon.

According to industry sources on April 2, an increasing number of ICT companies are producing their own contents, attracting attention. One of the key examples is that Naver has decided to work together with YG Entertainment to produce contents after making an investment on March 17. Naver has made investment in YG and will supply contents produced by YG to both domestic and global markets through Naver TV, V Live and Line.

Naver have already supplied contents in which hallyu stars starred through its V Live service. Naver V Live recorded an accumulated downloads of 2.8 million in 249 countries around the world as of December last year. It has 1.8 million monthly users and 160 million monthly playbacks. With YG’s entertainment contents, Naver is expected to secure more users in the V Live service.

Netflix, which entered the South Korean market last year, has started producing the Korean version of “House of Cards.” The U.S.-based Internet television network has decided to inject 50 billion won (US$44.9 million) in Okja, an upcoming South Korean-American action-adventure movie directed by Bong Joon-ho. Okja, which will release in the first half of this year, will be opened to 93 million subscribers all over the world through Netflix.

Netflix is said to be investing US$6 billion (6.68 trillion won) in contents a year. The company’s management plans to keep increasing its investments in contents every year. On the other hand, it only invests US$1 billion (1.11 trillion won) in IT technology and equipment a year. 

Based on the investment, Netflix is rapidly expanding its influence in the South Korean contents market. The company will produce the Korean original series Love Alarm, based on the webtoon by Kye Young Chon, one of South Korea’s most popular comic authors. It will also make an investment in “Kingdom,” a new television series written by Kim Eun-hee whose series Signal was one of the top K-dramas in 2016. Love Alarm and Kingdom will be released through Netflix next year.

The bold investment made by Naver and Netflix has become a stimulus to other ICT companies. Kakao, SK Broadband and KT are now expanding their own contents.

As Kakao launched Kakao TV, which combined Daum TV Pot and Kakao TV, in February, the company is expanding the investment in one-man broadcasting producers. KT is also prodcing its own contents including “Kim Joon-ho’s SNS Show – “Mountain upon Mountain.” SK Broadband produced and released two web drama series, such as “Something of 1%,” last year, and it plans to invest 5 billion won (US$4.49 million) in producing six other web drama series this year.

In particular, SK Broadband has recently expanded its content areas with eSports. The company will exclusively broadcast the national college competition of Overwatch, one of the popular games of Blizzard Entertainment. It is also planning to produce various eSports contents in the future, targeting its users in their 10s and 20s. 

This is happening in other countries as well. As Netflix has put up a good show, overseas ICT companies are competitively producing their own contents. Amazon and YouTube are already on the race for content production. Apple is also expected to produce its own contents soon.

ICT firms are trying to produce their own contents because good contents are directly connected to attracting more subscribers. An industry expert said, “Mobile carriers, broadcasters and Internet companies are fiercely competing in the content sector and this is the battle on how they can keep users longer than other competitors. As the boundaries between industries are crumbling down, ICT companies need to make an investment in securing their own contents in order to maintain the lead in the limitless competition.”

 

 

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