No More YouTube

 

Major broadcasting companies and online video platform providers in the country are actively seeking to counter YouTube. Broadcasting companies have decided not to provide programs to YouTube any more, and to supply content to Naver and Daum Kakao instead. Hence, the industry is paying attention to whether or not the decision will cause a change in the dynamics of the local online video market dominated by YouTube.

According to industry sources on Nov. 24, people in the nation won't be able to watch SBS video clips through YouTube, using either their PCs or mobile devices, starting on Dec. 1. An official at SBS said, “We will not provide our TV programs on YouTube from Dec. 1.” The official added, “Other online video suppliers are going to follow suit.” SBS was the first broadcasting company to provide its programs to YouTube in 2010. Major terrestrial broadcasting companies and cable companies are also going to discontinue their YouTube services soon.

Last June, these companies established Smart Media Rep (SMR) to better negotiate with YouTube for streaming services. This time, SMR member companies decided not to provide their content to YouTube. Responding to it, local online video platform providers like Naver, which felt a crisis at the dominance of YouTube, made an incredible offer to sign contracts for content supply.

As a result, those who access YouTube via local IP addresses won't be able to watch related broadcasting companies' programs. The content will be distributed through local platforms like NAVER tvcast and Daum tvPot.

The reason for cooperation between local content providers and online video platform providers to curb YouTube's dominance lies in the fact that their interests fit together well. Since YouTube dominates the Korean online video streaming market, other companies cannot exert leverage in that market.

Even though local content providers can make programs with high cost, profits from content go directly to Google. From early this year, SMR has constantly asked YouTube to negotiate, but to no avail.

An industry source remarked, “Google takes away 60 percent of sales from video ads on YouTube.” The source added, “Broadcasting companies have contributed to the growth of YouTube with Hallyu content, but they rarely get profits from sales occurring on YouTube. So, YouTube is just one method to promote programs.”

Thanks to Hallyu, or the Korean Wave, YouTube accounts for 79.9 percent of the local video streaming market as of October of this year. Its market share was only 2 percent in 2008.

Naver and Daum Kakao have also joined the trend. Their combined share is said to be less than 5 percent of the market, which is dominated by YouTube, followed by Pandora TV.

Therefore, Naver and Daum Kakao have decided to distribute 90 percent of sales from content to SMR. Unlike YouTube, SMR has the right to select ads and arrange programs on NAVER tvcast and Daum tvPot.

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