The Three Major Telecom Companies Also Engage in a 40 Trillion Subscription Economy War... Highlighting Membership Strengths

LG Uplus, Naver Shopping & Millie's Library Cross-Reading Collaboration
KT Partners with KB Kookmin Card for 'Game Box' Collaboration
SKT Expands Lifestyle Subscription Services to Education & Rental

[Asia Economy Reporter Cha Min-young] Competition among the three major mobile carriers has heated up over the subscription economy market worth 40 trillion won annually. Leading the way with SK Telecom’s declaration to transition into a ‘subscription platform,’ KT and LG Uplus are also launching various cross-industry subscription services across sectors such as education, finance, shopping, and content. Synergies are expected by leveraging the carriers’ unique strength in their ‘membership’ systems.

LG Uplus Adds ‘Subscription’ to Membership Benefits

According to the telecommunications industry on the 25th, LG Uplus will include the subscription service benefit ‘Subscription Kok’ in its U+ Membership VIP customer-exclusive service ‘My Kok.’ This involves partnering with Naver to provide a ‘shopping’ service and with Millie’s Library (Millieui Seojae) to offer a ‘reading’ service. Various service vouchers for brands like Paris Baguette, Innisfree, and Coupang Eats are also provided. By adding subscription services as the third benefit following the existing membership perks ‘Life Kok’ and ‘Movie Kok,’ LG Uplus aims to secure ‘true fans.’

Starting today, KT is offering a partnership discount on ‘KT Game Box,’ which provides over 120 cloud-based games, to users of the ‘KB Nara Sarang Card’ in collaboration with KB Kookmin Card. When paying for the monthly subscription of Game Box with the KB Nara Sarang Card, users can enjoy the service free for one month from the subscription date and then pay 2,750 won monthly for the following five months.

Among the three carriers, SK Telecom is the most proactive. The company has already declared its leap into an AI-based subscription platform business. Yoon Poong-young, SK Telecom’s Chief Financial Officer (CFO), stated during the February earnings conference call, “Beyond telecommunications, we plan to launch impactful subscription products and services in partnership with various businesses in food and beverage (F&B), education, rental, travel, and more.” SK Telecom aims to secure 20 million subscription product subscribers by 2023 and generate 600 billion won in revenue through this.

Customer Lock-in Effect... Steady Revenue

There are two main reasons companies are approaching the subscription economy trend. They focus on offering subscription economy services as B2C products and on their potential use as marketing tools. Companies can earn steady subscription fee income while achieving a ‘customer lock-in effect,’ making subscription service models common across all industries. Especially since the core customers of telecom companies, the 20s and 30s age group, value experiences, subscription services are seen as a strategy to increase loyal customers.

It is not only the three telecom companies that are paying attention to the subscription economy market. According to the KT Economic Management Research Institute, the size of the domestic subscription economy market, combining content and non-content sectors, increased by 54.8% from 25.9 trillion won in 2016 to 40.1 trillion won last year. According to the ‘Digital Subscription Economy Trends and Business Opportunities’ report published by Samjong KPMG, global private equity (PE) and venture capital (VC) investments in subscription economy-related companies increased 3.6 times from $2.552 billion in 2010 to $9.286 billion last year. The number of investment deals increased 4.5 times.

Lee Hyun-seung, LG Uplus’s Head of Pricing Planning, said, “We introduced subscription service benefits reflecting the latest customer consumption trends to provide the best benefits to U+ mobile customers,” adding, “We will continue to discover and offer the most preferred benefits by customers.”

This content was produced with the assistance of AI translation services.