Fundamental solutions such as shared growth of content and platforms and global distribution of videos and films are needed in order to improve the competitiveness of the Korean media industry, which is facing a crisis due to the rise of global over-the-top (OTT) service providers such as Netflix. This is according to experts at the Future of the Korean Media Industry Conference held by the Korean Cable Television Association (KCTA) at the Westin Chosun Hotel in Seoul on Sept. 4.
As generative AI has penetrated the media industry, there are also calls for upgrading the data capabilities of the Korean media industry and significantly strengthening Korea’s media and content pipelines.
“For the new normal of the Korean media industry, we need to expand the globalization of the Korean media industry and seek new growth momentum in advertising and commerce,” said Lee Sung-min, a professor of media and video at Korea National Open University. He continued, “We need to create new ground to seek innovative future growth engines in response to the expansion of AI services.”
Korean OTT service providers are facing growing deficits as content investment surges amid fierce competition for original content. With growth slowing due to the emergence of the endemic, concerns are growing among them over operating losses. The average production cost per episode of a Korean show stood at 100 million won in 2011, but it has risen to 1 to 1.2 billion won (US$906 million) this year. While Netflix invests about 20 trillion won in production annually, Korean OTT service providers only invest about 1 trillion won. Experts say that amid the evolution of AI and globalization of OTT services, the Korean OTT service industry needs to overcome the crisis by creating dual production markets for global and local target audiences, securing basic data, and expanding collaborations and partnerships.
Jessica Fuk, a researcher at S&P Global Market Intelligence, analyzed that the Korean market is still dominated by TV services, as the cord-cutting and cord-never trends are less prevalent than in the United States, China, and the United Kingdom. However, globally, cord-never is intensifying, especially among Generation Z, she said. Fuk cited profitability, content, collaborations and partnerships, and OTT regulations as key factors in the media industry.
“Streaming services are all about entertainment at home, and one way to strategize is to combine them with home internet of things (IoT) services,” Fuk said. She also recommended that OTT service providers make the most of bundled plans, partnerships with telecoms operators, and mergers and acquisitions (M&As).
The experts all agreed that the Korean media industry is in a difficult situation due to the expansion of global OTT services, an increase in single-person households, and the expansion of fast channels. In Korea, compared to overseas countries such as the United States, cord-cutting (4.1 percent) is low due to low rates for cable and pay TV services and high-speed Internet service-cable and pay TV service bundles. But an increase in the number of single-person households makes a long-term outlook for the pay and cable TV markets poor, as it relies on a bundled product structure. They call for content and platforms to grow together under these circumstances.
“In the long run, it is impossible to maintain the existing industry structure when cord-never becomes the mainstream or cord-cutting prevails due to an increase in single-person households in Korea,” said Kwak Dong-gyun, a researcher at the Korea Information Society Development Institute. “There is a significant possibility that sustainability will be weakened as the Korean broadcast video industry ecosystem is reorganized.”