"Partnership or Competition?" Global OTT Giants Landing in Korea... Telecom 3 Companies Face Deepening Dilemma

[Asia Economy Reporter Seulgina Jo] Following Netflix, the entry of global online video service (OTT) giants such as Disney+, Apple TV+, and others into Korea has deepened the concerns of the country's three major mobile carriers. To strengthen their own content competitiveness, such as IPTV which is about to surpass 20 million subscribers, partnerships with overseas OTTs are essential. However, they cannot ignore the cultivation of their own OTT platforms, which have emerged as new growth engines. In other words, the era of 'Coopetition'?a blend of cooperation and competition?has begun.

◇Catch overseas OTTs or grow own platforms?

According to the industry on the 18th, SK Telecom offers its own OTT service through Wavve, a joint venture with the three terrestrial broadcasters; KT operates Season; and LG Uplus provides U+tv Mobile. At the same time, these three companies are strengthening their media service capabilities through partnerships with overseas OTTs such as Netflix, Disney+, Apple TV+, and HBO.

While SK Telecom and KT have secured intellectual property (IP) content and are actively fostering their own platforms, LG Uplus places more emphasis on collaboration with overseas OTTs.

First, SK Telecom is vigorously growing its own platform by leveraging Wavve, Korea's representative OTT jointly established with the three terrestrial broadcasters. Wavve, which was reassigned under the newly established investment company SK Square through a spin-off earlier this month, plans to invest 1 trillion won in original content by 2025. It is expected that SK Square will lead related mergers and acquisitions (M&A) and initial public offerings (IPO) to expand its media content business in the future.

KT launched KT Studio Genie this year to serve as the group's 'media content control tower' and also spun off KT Season, a specialized OTT corporation. It plans to invest 400 billion won solely in original content by 2023. KT is pursuing a 'two-pronged' strategy by nurturing its own OTT Season while expanding cooperation with overseas OTTs, recently signing a mobile partnership with Disney+.

LG Uplus takes a somewhat different approach. Although it operates its own platform U+ Mobile TV, it is more proactive in partnerships with overseas OTTs. LG Uplus, which enjoyed significant subscriber growth effects by partnering with Netflix for the first time in Korea in 2018, recently signed exclusive IPTV and mobile partnership agreements with Disney+.

An industry insider evaluated, "In the era of coopetition where cooperation and competition coexist, each company's strategy differs depending on which side they place more emphasis on." Following the recent launches of Apple TV+ and Disney+ in Korea, other OTT giants such as HBO are also expected to officially enter the market soon.

◇‘Media and Content’ as new growth engines for telecom companies

As the global OTT market rapidly grows, the three telecom companies' perspectives on content have long moved away from the concept of 'value-added services attached to telecom services.' All three companies appear to be targeting the media and content business as new growth engines instead of the saturated mobile communication sector. Wavve and others are also considering global expansion soon. According to Statista, the global OTT market size is expected to grow from $178 billion this year to $254.2 billion in 2024.

However, there are repeated concerns that it is virtually impossible for these telecom companies' own OTT platforms to compete one-on-one against global OTTs with formidable capital. This is why the three telecom companies have no choice but to cling to partnership strategies with overseas OTTs, even though it could be a self-defeating move that undermines their own OTT competitiveness.

Currently, the three telecom companies also see securing content competitiveness as the solution in the IPTV sector, which is experiencing growth slowdown. Since differentiation of each company's content is not achieved through existing video-on-demand (VOD), the strategy is to compete with their own OTT-led original and exclusive content. This is also why fierce behind-the-scenes partnership competition took place to secure IPTV partnerships ahead of Disney+'s entry into Korea. At a conference hosted by the Korea IPTV Broadcasting Association the day before, Kang Gukhyeon, President of KT's Customer Division, emphasized, "It is difficult to grow a platform without content, so investment in content is necessary."

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