The Fair Trade Commission (FTC) of Korea has decided to look into competition in the over-the-top (OTT) industry. It will zero in on YouTube and Netflix which are growing rapidly in the Korean market.
The FTC believes that Korea’s regulatory system for the broadcasting industry has failed to keep up with changes in the market. While network TV stations, pay-TV service providers and OTT platforms are competing with one another, they are subject to different acts such as the Broadcasting Act and the Telecommunication Business Act.
The FTC said on March 23 that the Market Structure Improvement Department of the FTC asked an outside agency to conduct research on competition in the broadcasting and media industry due to rapid growth of OTT services. The study will focus on the current state of the broadcasting and media industry, competition issues, and trading practices. It will also present recommendations on how to improve the regulatory system.
Currently, terrestrial and pay-TV broadcasters are subject to regulations different from those for OTT platforms. Terrestrial TV and multi-channel pay-TVs are subject to the Broadcasting Act that restricts entries, prices, and business activities of broadcasting companies, while OTT platforms are subject to the Public Telecommunication Service Act. "Competition among service platforms has become possible when taking a drop in TV viewing ratings and a spike in OTT users into consideration," the FTC said. “We made the decision to map out a plan to promote competition by analyzing the institutional and behavioral causes that restrict competition and distort the market."
Application analyst WiseApp said on April 23 that it estimated Korean subscribers of global OTT giant Netflix at 1.53 million and they paid about 20 billion won a month for the service as of March of this year.
The number of Korean Netflix users has been on a sharp rise. The figure arrived at 1.09 million in December 2019, rose to 1.07 million in January and 1.14 million in February this year. The number of subscribers grew 43 percent over the past two months.
So the FTC’s decision suggested that the FCT began to analyze the broadcasting industry as the broadcasting industry saw sudden and rapid changes such as the rapid growth of OTT platforms including YouTube and Netflix and the expansion of their presence that threatens terrestrial and pay-TV broadcasters.
If the results of the study come out in the second half of this year and the FTC clarifies its position, it is expected to affect the revision of OTT related laws submitted to the National Assembly. The National Assembly has a pending bill to change the legal status of OTT platforms into that of a paid broadcasting company or to force global OTT players to have representatives in Korea.