Conditions for the Second Generation of 'Suldonyeo·Tracer' Birth [Cha Min-young's Post-it]

"To Prevent Reverse Discrimination Against OTT and YouTube,
Calls for Introduction of Voluntary Rating System"
Global OTTs Accelerate Concentration on Major Producers
54% of Production Industry Say "Need to Foster Our Companies"

[Asia Economy Reporter Cha Min-young] #. "We must start with 'necessary' policies, not the easy ones." This is part of the presentation by Professor Kim Jeong-hwan of Pukyong National University at the seminar on "Activation of the Online Video Service (OTT) Market and Industrial Promotion Policy" held on the 24th. He emphasized the need for "sincere policies" to support Tving, Content Wave, Watcha, and others struggling against global companies with significant scale differences.

In 2020, a consensus was reached on the need to nurture "Korean OTT (K-OTT)" and a "Digital Media Ecosystem Development Plan" was established at the government-wide level. However, two years later, the industry's current status remains at a "standstill." Time has passed amid conflicts among the main ministries such as the Ministry of Science and ICT, the Ministry of Culture, Sports and Tourism, and the Korea Communications Commission, as well as debates between ruling and opposition lawmakers in the National Assembly. Domestic OTT tax support policies have not been implemented at all, and the video content production tax credit system is set to expire at the end of this year.

Among many policies, the most urgent demand from the OTT industry is the introduction of a self-rating system. Currently, the OTT self-rating system is pending in the National Assembly. Under current law, OTTs must receive rating classification from the Korea Media Rating Board as video materials under Article 50 of the Film and Video Act. The proposal is to change this to post-review so that the industry can operate more flexibly. The Korea Media Rating Board’s pre-rating review period can be up to 14 days, which leads to reverse discrimination against domestic OTTs with a high proportion of broadcast content. Content is first uploaded and consumed extensively on platforms free from regulation such as YouTube, Instagram, and general portals, and then introduced on Netflix or Wavve. This is criticized as excessive regulation compared to general broadcast materials, which are excluded from pre-rating classification under the current Broadcasting Act and undergo post-review instead.

A bigger problem is the significant increase in review volume as large companies such as Netflix, Disney Plus (+), and Apple TV Plus (+) expand in Korea. It is reported that the OTT review volume surged last year, extending the review period to 3 to 4 weeks. Chinese iQIYI is also known to be considering entry into Korea. Yang Ji-eul, CEO of Tving, pointed out in December last year, "There are cases where promised content cannot be released to customers, and delays including those involving global operators are causing difficulties."

Some question the necessity of nurturing Korean OTT companies, asking, "Is it really necessary to grow Korean OTTs when there are so many OTTs?" The domestic video content production and distribution industry answers "Yes (54%)." The proportion responding that "dependency on global OTTs is increasing" reached 65%. Dr. Oh Ha-young of the Korea Culture and Tourism Institute, who conducted the policy research, pointed out that global OTTs are intensifying the concentration on "works with high success potential." This leads to a prioritization of "large production companies" in the production industry, naturally marginalizing small and medium-sized producers. Dr. Oh suggested, "It is necessary to expand support linking OTTs and video content producers" and "to visualize production support budgets according to support goals and genres."

The industry is pinning hopes on the "will" of government ministries. They call for a shift from past regulatory frameworks to promotion. Lee Hee-joo, Content Wave’s director, said, "What matters is having a sense of urgency," adding, "I don’t think it’s a matter of not knowing what to do." Hwang Hye-jung, Tving’s Content & Marketing leader, said, "We have seen excellent cases with potential in the global market like 'Work Later, Drink Now' and 'Tracer' in Korea," and added, "If we accelerate production costs, systems, and various support policies much faster, we can seize the growth timing." Professor Lee Sang-won of Kyung Hee University also agreed on the need for promotion policies, saying, "If OTT competitiveness falls behind in the domestic media industry, it could mean losing much more for the national economy as a whole, including convergence with other industries."

The market is expressing concerns about the OTT industry, including Netflix. Netflix’s stock price, which soared to the $690 range last December, recently plummeted to the $370 range. This is analyzed as a red flag for growth due to the slowing increase in paid subscribers. Netflix’s situation in the same industry is not a distant story for Korean OTT companies. Attention is focused on whether the new government will respond to the desperate appeals of our companies.

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