1 Tril. Won to Be Invested in Content Creation
The Korean government has rolled up its sleeves to foster Korean platforms that can compete with multinational OTT services such as Netflix and YouTube.
The government laid out the Digital Media Ecosystem Development Plan at a meeting of the Information and Communication Strategy Committee on June 22. The plan is aimed at sharpening the Korean digital media industry’s global competitiveness.
The support plan was made out of a sense of crisis to keep up with the fast-changing digital media market. Currently, the use of OTT services is spiking with Netflix leading the market. The size of the global OTT market has more than tripled between 2014 and 2019. Global OTT service providers such as Netflix and YouTube now account for 78 percent of the domestic market, with Korean OTT platforms such as Wavve and Naver TV taking up the remaining 22 percent.
Media industry experts point out that separate regulations for each platform such as IPTV, cable TV, and satellite broadcasting have impeded the differentiation and expansion of Korean media platforms.
The government has set the goal of expanding the Korean media market to 10 trillion won by 2022. To that end, it has decided to abolish or ease regulations on market shares and charges in the broadcasting market. It plans to abolish the regulation that limits the market share of a paid broadcasting company. Currently, an IPTV or a cable TV operator is not allowed to control more than one-third of the IPTV or cable TV market. Media industry experts have pointed out that this goes against the global trend towards large-scale M&As among media powerhouses. In fact, Disney enlarged its size by taking over Fox and Hulu, while AT&T acquired Time Warner. In the domestic market, telecom carriers are seeking to acquire cable TV opertors.
The government is also planning to dial up its investments to help the Korean media industry make inroads into overseas markets. Although Netflix spent US$15 billion in production of content and Apple US$6 billion in 2019, Korean companies are in poor conditions.
Accordingly, the government plans to raise more than one trillion won in cultural content promotion funds by 2024 to help Korean media companies strengthen their capacity to produce content and expand overseas. It will also provide 100 billion won worth of specialized guarantees between 2020 and 2022 to promising content companies. Through such support measures, the government plans to drastically increase Korea’s content exports from US$9.62 billion in 2018 to US$13.42 billion in 2022.