Tuesday, October 22, 2019
Korea’s Major Mobile Carriers Show Meager Sales of Over-the-top Video Services
Due to Lack of Competitive Contents
Korea’s Major Mobile Carriers Show Meager Sales of Over-the-top Video Services
  • By Cho Jin-young
  • November 9, 2017, 02:45
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South Korea’s top three mobile carriers fail to make profits in the business of over-the-top (OTT) mobile video services.
South Korea’s top three mobile carriers fail to make profits in the business of over-the-top (OTT) mobile video services.

 

South Korea’s top three mobile carriers, such as SK Telecomm, KT and LG U+, are competing in media platforms with over-the-top (OTT) mobile video services, but they show meager sales in the sector due to a lack of competitive contents. The companies have opened the OTT platforms to allow their competitors’ subscribers to use and advanced big data-based services. However, they fail to make profits. 

According to industry sources on November 8, information technology (IT) giants at home and abroad, such as Naver, Google and Netflix, are in a fierce “borderless media competition.” Global IT companies are competing with their own original contents on the high-speed communications network established by the nation’s three mobile carriers – SK Telecom, KT and LG U+ – through a large-scale equipment investment. 

SK Telecom has jumped into the OTT market with ”Oksusu” through its subsidiary SK Broadband, while KT and LG U+ have launched with “Olleh TV Mobile” and “LTE Video Portal,” respectively. According to the data from global app data analysis firm App Annie, however, the three mobile carriers failed to rank top of the domestic OTT app sales list in the first half of this year. 

Instead, Pooq, a joint venture set up by the nation’s top three TV channels, ranked first, followed by Naver’s V Live, Netflix, Watcha Play’s Frograms and Google’s YouTube. Frograms is especially an eye catcher in the way that it is a start-up that runs Watcha, which provides movie recommendation service, and Watcha Play, which offers monthly video-on-demand (VOD) subscription service. 

Market watchers pointed out that the three mobile carriers are still approaching media services as a means to increase mobile data consumption, though the global ICT industry is focusing on the convergence of broadcasting and communication services. 

In fact, according to the data from App Annie, LG U+, SK Broadband and KT placed third through fifth in terms of the number of monthly active users (MAU) of OTT services in the first half of this year. In short, the three mobile carriers have approached the OTT services as the means to boost the share of high-priced plans that offer unlimited use of data so the number of free subscribers are on the rise. On the other hand, OTT paid subscribers show a high level of loyalty to global media platform operators that have abundant competitive contents including Google’s YouTube and Netflix. 

In this regard, industry experts say that the three mobile carriers should become a “smart pipe” that can create added values rather than just advancing the information superhighway, which means the network. In particular, the OTT services are expected to become a core business model in 5G as well as 4G by converging with virtual reality and augmented reality. 

According to the wireless data traffic statistics released by the government in December last year, videos accounted for 56.1 percent of the total wireless data consumption. 

The average monthly data usages of LG U+’s high-priced 4G LTE subscribers increased to 7.6 GB from 5.8 GB in the third quarter last year. They are considered premium consumers because they tend to upgrade a higher level of premium plans or add data-related supplementary services when the data speed slows down after using the certain amount of data from their LTE services. 

An official from the OTT industry said, “The three mobile carriers are overlooking the huge power of the media market. It is urgent to secure competitive contents that can target the young generation who watches web dramas through YouTube and Facebook and enjoy live chats with idol stars through Naver’s OTT service.”