IPTV 3 Companies Jointly Invest 300 Billion Won in Content... What Is the Background?

IPTV3 Companies Seeking Survival Breakthrough
Plans to Secure IP Including Drama Production

[Asia Economy Reporters Hye-seon Lim, Min-young Cha] KT, SK Broadband, and LG Uplus, three Internet TV (IPTV) providers that had been losing ground to online video services (OTT), are launching a counterattack. They will jointly invest 300 billion KRW to strengthen their content competitiveness.

Raising 300 Billion KRW to Secure Exclusive Content

According to the Korea IPTV Broadcasting Association on the 8th, the three IPTV companies signed a "Business Agreement for Joint Content Strategy Procurement" to jointly invest 300 billion KRW to protect the domestic media ecosystem and enhance customer value on IPTV platforms. This is the first time since the commercialization of IPTV services in 2008 that IPTV operators have voluntarily established a joint operating fund.

The three companies will proceed with investments through a "Joint Procurement Operating Committee" and collaborate on securing exclusive resources such as IPTV original content and intellectual property (IP). As their first project, the three companies plan to jointly procure director Choi Dong-hoon's film "Alien+I." This agreement is expected to enable collaboration not only on the IPTV platforms of the three companies but also across various resources such as channels and online video services (OTT).

The fund will also be used to increase the procurement of video on demand (VOD). In particular, movie VOD is considered a major cash cow for IPTV. Until now, movies that finished theatrical runs were screened on IPTV through pay-per-view services due to holdback periods, and later made available on subscription-based OTT services. However, in recent years, OTT platforms have made large-scale investments in exclusive content, leading to an increase in movie content going directly to OTT without passing through IPTV. As a result, IPTV's VOD revenue has been declining.

Responding to OTT Growth, Developing the Media Industry

The alliance formed by the three IPTV providers, who have been fierce competitors, is a proactive response to the rapidly changing media ecosystem driven by OTT market growth. An IPTV official analyzed, "Since entering the era of 30 million paid broadcasting subscribers in 2017, the market has become saturated and growth has slowed. OTTs have been increasing their influence in the market by promoting original content, causing IPTV to fall behind in the content ownership competition." In fact, although the domestic IPTV market had maintained subscriber growth for several years, the net increase in subscribers sharply slowed last year, raising warning signs.

As of December last year, the cumulative number of subscribers was 19.69 million, with a net increase of only 370,000 compared to the end of the first half of the year. This is about half the increase of 600,000 to 700,000 subscribers seen in previous first halves. In contrast, the domestic OTT market is growing. According to the Korea Foundation for International Cultural Exchange, the domestic OTT market, which was about 993.5 billion KRW in 2020, is expected to grow to 1.9104 trillion KRW by 2025. OTT platforms are actively investing in securing killer content to attract subscribers. Netflix invested 550 billion KRW in the Korean content market last year, and domestic OTTs plan to invest 5 trillion KRW by 2025.

The association stated, "This agreement is meaningful in that it expands viewing rights through win-win cooperation rather than restricting them by securing exclusive content, and strengthens collaboration with domestic content producers and investors. It aims to increase IPTV customer value and normalize the value chain that is collapsing due to exclusivity."

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