Media Business to Expand via KT Studio Genie
The author is an analyst of KB Securities. He can be reached at joonsop.analyst@kbfg.com. -- Ed.
Media business to expand via KT Studio Genie
— According to the online news source Chosun Biz (Mar 23), KT, during its Mar 23 online/offline press conference and investor forum, presented its long-term vision for KT Studio Genie, which was established in January—namely the positioning of its content production subsidiary as the centerpiece of the group’s content business. KT also plans to quadruple the subsidiary’s EV to KRW1tn and use it to lift revenue from IPTV and paid TV.
— According to Electronic Times (Mar 23), KT also disclosed that KT Studio Genie would invest at least KRW400bn by end-2023 to secure the rights to 1,000 IPs and 100 television shows.
— According to In the News (Mar 23), KT Studio Genie also confirmed in the forum that it would secure funds and outside investments to produce 10-20 major shows and other content. Initially, it plans to outsource production to 10 companies that have already released blockbusters as well as to 10 small-/mid-sized companies. KT Studio Genie expects to focus on co-production and content investments going forward.
Content investments to be easily recouped with paid TV subscriber base of 13mn
— One of the major risks of content production is failure to recoup production costs. KT’s content platforms, however, should mitigate these concerns. In addition to real-time channels on its IPTV, CATV and satellite broadcasting platforms, KT can sell primary and secondary distribution licenses through its IPTV and OTT platforms. Overall, KT’s ability to easily recoup production costs regardless of content popularity should be a major competitive advantage.
— During the forum, investors voiced concern over KT’s disappointing track record in the content business. In response, the company stated that investments could not be steadily recouped because the IPTV platform had not fully stabilized.
Big data to bolster ability to predict hits
— According to FETV (Mar 23), KT disclosed that it had developed a 10-stage model to predict the success of content utilizing 700bn units of data collected from its 13mn subscribers annually. This data includes viewer behavior (e.g., log data of real-time broadcasts, viewer engagement/disengagement) and information on directors, writers and actors. Accordingly, KT’s prediction model is about 3,000 times more accurate than data sampled from real-time viewer ratings.
— With the use of a prediction model optimized by its content-creating platform Storywiz, KT plans to develop IPs that can be packaged into content for KT Studio Genie. The model will be similar that of Netflix, in which all decisions, including those regarding genre, cast and story, are based on it.