Mobile carrier SK Telecom and Korea’s three terrestrial TV broadcasters will merge their over-the-top (OTT) video service platforms into one to better compete with Netflix and YouTube, the global leaders in OTT services. The new OTT platform with more than 13 million subscribers is expected to challenge the dominace of Netflix in the Korean market.
SK Telecom and the three broadcasters signed a memorandum of understanding (MOU) to cooperate in OTT service at the Korean Broadcasting Center on Jan. 3. SK Telecom's OTT platform “Oksusu” and the broadcasters’ “Pooq” service will be integrated into a new platform. After analyzing the business value of each other’s platform, the two sides will calculate stakes in the merged entity. Industry analysts say that SK Telecom will initially have a 30 percent stake in the new company but gradually increase its share.
The integrated OTT platform will have more than 13 million subscribers -- 9.6 million from Oksusu and 3.7 million from Pooq. Industry watchers expect the new OTT platform is large enough to compete with Netflix and YouTube.
Netflix has made a full-scale foray into the Korean market since forging a partnership with LG U+, the fourth-largest pay-TV operator in Korea, in November of last year. Experts have expressed concerns that the Korean pay-TV market would be dominated by Netflix like Europe due to the video streaming giant’s strong content. Netflix is enjoying a market share of over 80 percent in major OTT markets in Europe including the United Kingdom.
The proposed new OTT platform will not only defend the domestic market from an invasion by Netflix but also seek to advance overseas. The promoters say they will make inroads into Southeast Asian countries, which are gripped by a Korean cultural wave fever. The addition of terrestrial broadcasters’ shows and programs to Oksusu’s various video-on-demand (VOD) services has enhanced their confidence in overseas advancement.
On top of that, they will attract domestic and foreign investment to create new content. Netflix is pouring US$8 billion in content production annually, so they need capital to compete in the OTT sector. "We plan to attract large-scale investment and utilize it for contents production,” an SK Telecom official said. “We will take part in global competition based on differentiated original content."